Thursday, January 14, 2010

Ethics Reform Bill’s Financial Disclosure Changes are Inadequate Half-Measures

By Kelly Williams

Determined to keep their comfortable berths, state lawmakers yesterday proposed only the slightest changes to their personal financial disclosure obligations: forms will now be made available to the public online, and a previous practice of blacking out the amounts of income received will be eliminated. Also, one additional category of income was added to the disclosure. Calls for officials to itemize their sources of income, including clients of law practices, were ignored.

Instead, in a half-measure meant to patch over recent corruption scandals involving the “consulting” practices of Joseph Bruno and Antonio Seminerio, going forward officials will be required to report income in excess of $1,000 from consulting practices including the names of consulting clients, the compensation received and a description of the nature of the services rendered in exchange for such compensation. “Consulting services” is not defined in the bill other than a statement that this new reporting requirement does not apply to law practices, real estate brokers, anyone licensed by the Department of Education or several other regulated professions. People in these professions are allowed to accept paid work from anyone, without having to provide any additional information to the public about the nature of the services rendered.

Responding to justified protests, lawmakers argued that a back door disclosure rule, that requires registered lobbyists to disclose “reportable business relationships” they (or their clients) have with officials, gets us to the same place as a disclosure requirement for legislators, or close enough. We strongly disagree.

On its face, at this time of crisis in faith in our state government, it is simply wrong to shift responsibility for meaningful personal financial disclosure from our elected public officials to anyone else, even those who have been tarred as "registered lobbyists."

But digging a little deeper, legislators who accept paid work and whose outside employers fail to file the proper forms will face no consequences at all under the proposed bill, presumably even if they have knowledge of this failure. Businesses and others who employ legislators and are not themselves registered lobbyists or do not engage a professional registered lobbyist nonetheless have great influence over the decision-making of a legislator and will not have to disclose this relationship.

A “reportable business relationship” is defined in the bill as: a relationship in which compensation is paid by a lobbyist or by a client of a lobbyist, in exchange for any goods, services or anything of value, the total value of which is in excess of one thousand dollars annually, to be performed or provided by or intended to be performed or provided by (i) any statewide elected official, state officer, state employee, member of the legislature or legislative employee or (ii) any entity in which the lobbyist or the client of a lobbyist knows or has reason to know the statewide elected official, state officer, state employee, member of the legislature or legislative employee is a proprietor, partner, director, officer or manager, or owns or controls ten percent or more of the stock of such entity (or one percent in the case of a corporation whose stock is regularly traded on an established securities exchange.

In the ethics bill, the legislature has managed to craft the narrowest possible response to recent corruption scandals. Left looming is the larger question about whether the public has the information it needs to evaluate whether officials who accept paid employment are making decisions in their official capacity without regard to the interests of their employers. The best protection would be a system like those in place in states like Washington, California and Alaska, which require disclosure of all outside sources of income, including the names of important clients, as well as parties to business transactions that result in commission and incentive income.

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