2002 Annual Report
Barbara A. Remus Foster (Terry) J. Massie
I. Laws Administered by the Public Integrity Commission 1
A. Code of Conduct 2
B. Financial Disclosure 3
C. Compensation Policy 5
D. Registration of Lobbyists 6
II. State Public Integrity Commission - Structure 7
III. Commission Accomplishments in 2002 16
A. Training Sessions 16
B. Advisory Opinions, Actions on Complaints, and Referrals 19
C. Publications 24
D. Local Government Codes of Conduct 26
E. Legislative Matters 27
F. Administrative Issues 28
(1) Financial Disclosure Reports 28
(2) Lobbyists' Expenditure Reports 29
IV. Funding 30
V. Future Goals 31
VI. Appendices
Appendix A - State Contracts and the Code of Conduct A-1
Appendix B - Opinions on Waivers Granted B-1
Appendix C - Letter to New Castle County on Ethics Commission C-1
Appendix D - Legislation Monitored by Commission D-1
I. Laws Administered by the Public Integrity Commission
The State Public Integrity Commission, an independent agency, administers the "Laws Regulating the Conduct of Officers and Employees of the State."(1) Those laws govern the: ethical conduct of Executive Branch officials and employees; disclosure of personal financial interests of public officers in the Executive, Legislative and Judicial Branches; compensation policy for State employees holding dual government positions; and registration and expenditure reporting of lobbyists.
The largest part of the Commission's work is issuing advisory opinions based on the particular facts of each situation. 29 Del. C. § 5807(c). If the conduct would violate the Code, the Commission may grant a waiver if: (1) the literal application of the law is not necessary to serve the public purpose; or (2) there is an undue hardship on the agency or the employee. 29 Del. C. § 5807(a). If the agency or individual who seeks an opinion fully discloses the facts and, in good faith, relies on the Commission's opinion or waiver, the law protects them from disciplinary action. 29 Del. C. § 5807(a) and (c).
The Commission also acts on sworn complaints and may act on its own. If a complaint alleges a violation, the Commission, after deciding if it has jurisdiction, may conduct a hearing. 29 Del. C. § 5810(a). Violations must be proven by clear and convincing evidence. If a violation is found, the Commission may impose administrative disciplinary action. 29 Del. C. § 5810(d). Further, it may refer substantial evidence of any criminal law to the appropriate federal or State authorities. 29 Del. C. § 5810(h)(2).
Beyond giving specific guidance in advisory opinions, and acting on complaints, the Commission aids those who must comply with the law by providing training classes; publishing opinion synopses opinions; and issuing Ethics Bulletins. It established and maintains a web site with information for those subject to the law and for the public. The web site is: http://www.state.de.us/pic .
More details of the laws and the purposes of the legislation, are discussed below.
A. Code of Conduct
The Code of Conduct establishes the ethical limits of conduct of State employees, officers and honorary officials in the Executive Branch and local government officials, unless the local government adopts a code at least as stringent as the State law.(2) The Code is meant to insure conduct by these employees and officials that will instill the public's respect and confidence. 29 Del. C. § 5802(1). When the conduct exceeds the limits of the ethical rules, the Code sets forth disciplinary measures to insure uniform compliance standards. 29 Del. C. § 5802(2).
(1) Conduct That May Be Prosecuted as a Criminal Violation
The rules restrict employees and officials from: (1) participating in State matters if a personal or private interest would tend to impair judgment in performing official duties; (2) representing or assisting a private enterprise before the State; (3) contracting with the State; and (4) representing or assisting a private enterprise before the State on certain matters for two years after leaving State employment. 29 Del. C. § 5805. Violating those rules may result in administrative disciplinary action or criminal prosecution. 29 Del. C. § 5805(f) and § 5810. The criminal penalty is up to a year in prison and/or a $10,000 fine. 29 Del. C. § 5805(f)
(2) Conduct That May Result In Administrative Discipline
The Code places limits on accepting gifts, other employment, compensation, or anything of monetary value. 29 Del. C. § 5806(b). It specifically bans the use of public office for private gain or unwarranted privileges, and improper use or improper disclosure of confidential information. 29 Del. C. § 5806(e) thru § 5806(g).
Administrative discipline for violating those provisions may be: (1) a letter of reprimand or censure; (2) removal, suspension, demotion, or other appropriate disciplinary action for persons other than elected officials; or (3) a recommendation of removal from office of an honorary State official. 29 Del. C. § 5810(h).
B. Financial Disclosure
(1) Annual Requirements for Senior Level Officials
Legislation passed in 1994, and effective in 1995, made the Commission responsible for administering the Financial Disclosure Subchapter beginning with the 1995 filings of disclosure reports. More than 300 State officers file disclosure forms each year.
Reports must be filed by public officers in the Executive, Legislative, and Judicial branches within 14 days of becoming a public officer and on February 15 each year thereafter. Those who must file include: candidates for State office; State elected officials; cabinet secretaries, division directors, and members of the judiciary. 29 Del. C. § 5812.
Personal financial information to be reported consists of assets, debts, income, capital gains, reimbursements, honoraria and gifts. 29 Del. C. § 5813. Aside from the public officer's own financial interests, they must disclose assets held with another person if they receive a direct benefit, and assets held by spouses and minor children, even if there is no direct benefit. Id.
Such disclosure is to guard against public officials acting in their official capacity on matters where they have a direct or indirect financial interest. 29 Del. C. § 5811. Whether the financial interests they report raise any ethical issues is decided under the ethics laws applicable to the particular officer.(3)
(2) Criminal Penalties for Non-Compliance
Willful failure to file a report is a Class B misdemeanor. Knowingly filing false information is a Class A misdemeanor. 29 Del. C. § 5815. The Commission may refer suspected violations to the Commission Counsel for investigation and Attorney General for investigation and prosecution. Id. The penalties are: up to six months incarceration and a fine of up to $1,150 for a Class B misdemeanor, 11 Del. C. § 4206(b); and up to one year and a fine of up to $2,300 for a Class A misdemeanor, 11 Del. C. § 4206(a). The Court may also require restitution or set other conditions as it deems appropriate. 11 Del. C. § 4206(a) and (b).
(3) Other Disclosure Requirements
(a) Executive Order Disclosure Requirements
Executive Branch officers who must comply with the Financial Disclosure Law, also must notify the Governor's office of any gift received valued at more than $250. E. O. No. 8. Pursuant to the Executive Order, those gifts will be posted on the Governor's web site.
(b) Code of Conduct Disclosure Requirements
In the executive branch, all State employees and officers must, as a condition of commencing and continuing employment with the State, file a "full disclosure" if they have a financial interest in a private enterprise that does business with, or is regulated by, the State. 29 Del. C. § 5805(d). "Honorary State officials," appointees to certain State Boards and Commissions must file a "full disclosure" if they have a financial interest in a private enterprise that does business with, or is regulated by, the agency to which they are appointed. 29 Del. C. § 5805(d).
In the context of these filings, "financial interest" includes: (1) ownership or investment interests; (2) receiving $5,000 or more as an employee, officer, director, trustee or independent contractor; or (3) creditor of a private enterprise. 29 Del. C. § 5804(5). "Full disclosure" requires more details than the annual reports filed pursuant to the Financial Disclosure law by Senior Level officials. "Full disclosure" means sufficient information for the Commission to decide if there is any conflict of interest. Commission Op. No. 98-23.
C. Compensation Policy - Dual Government Jobs
Some elected State officials and other paid appointed officials are concurrently employed by State agencies or other jurisdictions of government. 29 Del. C. § 5821(a). The General Assembly believed taxpayers should not pay an individual more than once for coinciding hours of the workday. 29 Del. C. § 5821(b). To ensure taxpayers do not pay such employees and officials from more than one tax-funded source during overlapping hours, those holding dual government positions must keep certain time records to verify the hours worked at the full-time job on any day they miss work due to the elected or paid appointed position. 29 Del. C. § 5821(c) and § 5822(a). The supervisor must verify the time records and, where appropriate, the full-time salary will be prorated. Id.
The State Auditor audits the time records for compliance. 29 Del. C. § 5823. Discrepancies are reported to the Commission for investigation under its complaint procedures, and/or to the Attorney General for possible prosecution under any appropriate criminal provision. 29 Del. C. § 5823.
D. Registration of Lobbyists
The Commission began administering the Lobbying Law in 1996. Individuals who act on behalf of another must register with the Commission if they will be acting to promote, advocate, influence or oppose any matter pending before the General Assembly or a State agency by direct communication. 29 Del. C. § 5831. Approximately 234 lobbyists, representing 327 organizations, are registered with the Commission. Lobbyists file a registration form and their employer submits an authorization (561 filings). Each lobbyist must also file a quarterly reports disclosing any direct expenditures on General Assembly members and employees and/or members of any State agency. 29 Del. C. § 5835. This results in 936 each year.
Lobbyist registration informs the public and government officials of the identity of persons seeking access to officials and the interests the lobbyist represents. Commission Op. No. 96-14 (citing United States v. Harriss, 347 U.S. 612 (1954). The expense reports identify what, if any, funds were spent on food, refreshments, entertainment, travel, lodging and gifts given to members of the General Assembly and/or employees or officials of State agencies in the process of their lobbying efforts. 29 Del. C. § 5835.
Penalties for Non-Compliance
Any person who knowingly fails to register or knowingly furnishes false information may be found guilty of a misdemeanor. 29 Del. C. § 5837. An unclassified misdemeanor carries a penalty of up to 30 days incarceration and a fine up to $575, restitution or other conditions as the Court deems appropriate. 11 Del. C. § 4206(c). Failure to file an authorization or report serves as a cancellation of the lobbyist's registration. Id. They may not re-register or act as a lobbyist until all delinquent authorizations and/or reports are filed. Id.
II. State Public Integrity Commission - Structure
The Governor appoints the seven members of the State Public Integrity Commission. The Senate must then confirm their nomination. 29 Del. C. § 5808. When their term expires, they may continue to serve until their successor has been appointed and qualified. Id. During 2001, the terms of John E. Burris and Zenaida Otero Gephardt expired after the General Assembly had adjourned. They continued to serve until their successors were nominated and confirmed when the General Assembly reconvened in 2002. Their successors were Barbara A. Remus and Foster (Terry) J. Massie.
Members may not hold any elected or appointed office, or be a candidate for federal or State office. Id. They also cannot hold any political party office or be an officer in any political campaign. Id. As Ms. Remus held a political party office, she resigned from that office after her nomination to the Commission. No more than four members of the Commission may be registered with the same political party. Id.
The Commission members elect the Chair. Id. Upon the departure of Mr. Burris, who chaired the Commission since its original inception as the State Ethics Commission in 1991, the members elected Arthur G. Connolly, Jr., as the new Chair.
While the statute does not require that each county be represented on the Commission, the appointments made to the Commission have resulted in appointees from each of the three counties. Commission members are authorized compensation of $100 for each day devoted to performing official duties and may be reimbursed for reasonable and necessary expenses incurred in performing official duties. 29 Del. C. § 5808.
During 2002, the Commission met nine times to consider requests for advisory opinions, waivers, and complaints. The meetings were held at the Margaret O'Neill Building, Dover, Delaware, which is where the Commission's office is located. Notice of meetings was posted as required by the Freedom of Information Act.
During 2002, the following nine (9) citizens served on the Commission:
Since the Commission's inception in 1991, John E. Burris was continuously selected by the other Commission members to serve as Chair. He was initially appointed to the Commission on April 2, 1991, for a three-year term, which expired on April 2, 1994. In 1994, when the law was re-written, as a serving member he was eligible to be reappointed for a seven-year term. That term expired on July 5, 2001. He was not eligible for reappointment. Although his term expired, the statute permits Commissioners to continue to serve until their successor is appointed and confirmed. He continued to serve as the Commission Chair until July 2002.
In private life, Mr. Burris is the Chairman of Burris Logistics, Inc. The corporation, located in Milford, Delaware, warehouses and distributes frozen foods and ice cream for supermarkets and warehouses. He also has been active as a trustee of the University of Delaware.
Among many other awards, he received the Edward P. Miller Community Fellowship Award by Dover's Colonial Rotary Club, which recognizes non-Rotarians for outstanding service to their community. In recognition of his eleven (11) years of service, he received a letter of recognition from United States Senator Thomas Carper, and a letter of recognition signed by all Senators of the Delaware General Assembly.
Commissioner Arthur G. Connolly, Jr., was elected as the Commission's Chair on July 22, 2002, after the departure of John Burris. Mr. Connolly had served as the Vice-Chair since 1998. His initial appointment to the Commission was made on April 2, 1991, and his five-year term expired on April 2, 1996. The 1994 legislation permitted him to be reappointed for a seven-year term. He was reappointed on June 11, 1996. His seven-year term expires on June 11, 2003.
Mr. Connolly is a partner in the law firm of Connolly, Bove, Lodge and Hutz, in Wilmington, Delaware. He has actively participated in the legal community, serving in such positions as President of the Delaware State Bar Association, Chairman of the Board of Bar Examiners, and as an Adjunct Professor of Trial Practice at Delaware Law School, now known as Widener University School of Law. He also has served as a member of the Delaware Code of Judicial Conduct Committee of the Delaware Supreme Court and was a member of the Board of Professional Responsibility of the Delaware Supreme Court. His activities in non-legal areas include having served on the Board of Trustees for Friends' School and Archmere Academy. In the past, he was active as a basketball coach for the Catholic Youth Organization, the American Junior League, and summer high school teams. He currently is a Fellow of the American College of Trial Lawyers.
Zenaida Otero Gephardt
Commissioner Zenaida Otero Gephardt was appointed to the Commission on September 19, 1994. Her seven-year term expired on September 19, 2001. She was not eligible for reappointment, but served until July 2002, when her successor was confirmed.
Dr. Gephardt, who is a Wilmington resident and a registered engineer in Delaware, earned her Ph.D and Master of Science Degrees in Chemical Engineering from the University of Delaware. She is an active member in many technical societies. She is a Professor of Engineering at Rowan University of New Jersey. She was selected to the 1993 Hispanic Women Leadership Institute at Rutgers University and received the 1992 Excellence in Scholarship Award from the Hispanic Association for Higher Education in New Jersey. She is active in community service, serving on the Advisory Board of the Partners with Students Program and Camden County Community College, and is on the Board of Directors of the YWCA of New Castle County. She also has served on the Board of Girls, Inc. of Delaware (formerly Girls Club). She received the 1989 Girls, Inc. of Delaware award honoring Delaware women of achievement and has worked with the Forum for the Advancement of Minorities in Engineering.
Commissioner Mary Jane Willis was elected by her fellow Commissioners as Vice Chair on July 22, 2002. Ms. Willis was initially appointed to the Commission on June 30, 1996 to complete the term of C. Ann Nellius, which expired on April 2, 1997. Ms. Willis then began to serve her own term, which expires on April 2, 2004.
At present, Ms. Willis holds a number of other public service positions, including: United Way, Board of Directors; Delaware State Chair, United States Olympic Committee; Trustee, University of Delaware, Children's Beach House; and the Delaware Children's Fire Safety Foundation; Director, Schwartz Center for the Arts and KidsPeace National Council for Kids; Board Member, Washington College Parents' Council; and member of Delaware Court on the Judiciary's Preliminary Investigatory Committee, West Virginia Wesleyan College National President's Advisory Council, and Smyrna High School Wellness Advisory Board.
She recently attended a National Security Seminar at the U.S. Army War College, Carlisle Barracks, PA, which is designed to give attendees a "civilian viewpoint" on defense matters. Other community and public service activities included: Delaware Community Foundation Board; University of Delaware Parent's Association Board; Dartmouth College Parent Board; Delaware Environmental Appeals Board; Kent General Hospital Board; Kent General Hospital Foundation Board; American Cancer Society-Delaware Division Board; Kent County Unit Board; the Mayor's Blue Ribbon Panel for Strategic Library Planning; and many others.
She obtained her Bachelor of Science Degree from West Virginia Wesleyan College, and her Master's Degree in counseling and guidance from West Virginia University. She has more than 60 post-graduate hours toward her doctorate. As an educator, she has 14 years experience in public education, serving as a guidance counselor for 11 years, a Diversified Cooperative Coordinator for two years, and a teacher of the gifted and talented for one year.
In 1998, Commissioner Paul E. Ellis was appointed to serve a seven-year term which expires on July 8, 2005. Before his appointment to the Commission, he had already dedicated many years of service to the public sector by serving as Attorney for the State Senate, Assistant Solicitor of Sussex County, Deputy Attorney General, and in 1973 was appointed as a Judge in the Sussex County Court of Common Pleas until his retirement in 1996.
Mr. Ellis, a resident of Seaford, Delaware, has been actively involved in the community, where he has served as President of the Seaford Lions Club, the Seaford Democratic Club, and the Seaford District Library. He also has been an active member of the English-Speaking Union (Delaware Branch); St. Luke's Episcopal Church (Senior Warden of Vestry); and various Masonic organizations. His interest in the Masons resulted in his service as a Grand Master of Masons in Delaware and First Vice President of the George Washington Masonic National Memorial in Alexandria, Virginia. He also has served as a member, Past Master and Secretary of Gethsemane Lodge No. 28 A.F. & A.M. For 20 years, he has been a trustee of the Episcopal Diocese of Delaware.
Commissioner Arthur V. Episcopo was appointed, in 1998, to a seven-year term which expires on July 8, 2005. He previously served as an appointee to the Industrial Accident Board.
Mr. Episcopo has had dual careers in the private sector and the military. For 32 years, he worked for E.I. Du Pont De NeMours and Company, Inc., with varied assignments, principally in line management and subsequently in staff positions. His responsibilities included supervisory positions in Personnel, Employee Relations, Site Safety Occupational Health and Fire Protection, Site Engineering Maintenance, Laboratory Maintenance, Site Electrical, and Planning and Scheduling. While pursuing a career at Du Pont, he also pursued a career in the Army National Guard. He served in the Army National Guard for more than 42 years, rising through the enlisted ranks to become the Adjutant General of the State of Delaware. He served in that Cabinet position from February 1989 to April 1993.
He recently completed an accredited course of three hours on Research Protection for Human Services through the University of Medicine and Dentistry of New Jersey.
Commissioner Hubbard was appointed to complete the term of Christopher E. Bullock, who resigned from the Commission after accepting the pastorate of a church in Chicago, Illinois. Commissioner Hubbard's appointment to complete Reverend Bullock's term expired on August 29, 2002. He continued to serve until he was reappointed in January 2003 to serve his own seven-year term.
Mr. Hubbard lives in Dover, Delaware, and previously chaired the Environmental Appeals Board (EAP). The EAP hears appeals of decisions of the Secretary of the Department of Natural Resources and Environmental Control (DNREC) pertaining to enforcement of pollution standards. He served on that Board for approximately 20 years. He also served, for six years, on the Metropolitan Planning Organization (MPO), which approves certain Department of Transportation projects.
After receiving his Bachelor of Science in both Chemistry and Biology, he was a Chemistry Instructor at his Alma Mater, Claflin College, Orangeburg, South Carolina, before accepting a position as a chemical analyst at Rohm-Haas Chemical Company. Subsequently, he accepted employment with International Playtex, Inc., as a chemical analyst. That position resulted in his move to Delaware, where he also attended the University of Delaware for advanced chemistry studies. In 1971, he had a patent approved on the "Method of Making Foraminous Forming Conveyors." He was Manager of the Elastomers Department when he retired from Playtex.
Mr. Hubbard is a member of Gideons' International, Alpha Phi Alpha Fraternity, Kent-Sussex Afro-American Committee on Education, and is a trustee for Mt. Zion African Methodist Episcopal Church in Dover. Other interests include computer programming, numismatics, model railroading, and karaoke.
Foster J. (Terry) Massie was appointed for a seven-year term on June 25, 2002. He lives with his family in Hockessin, Delaware. He works in Pennsylvania at Wells Fargo as a credit analyst. Mr. Massie has worked in management positions dealing with such things as customer complaints, credit information, training and counseling associates in performance or conduct problems, etc., in Delaware. He also worked as Operations Manager for Eastern Waste Industries in Maryland, where he dealt with such issues as dealing with government, commercial and residential clients regarding service.
Mr. Massie graduated from Henry C. Conrad High School and completed his Associates Degree in Accounting at Goldey Beacom College, Wilmington, Delaware. He has attended Neumann College, Aston, Pennsylvania and a Management Training Institute course. His community service includes such positions as President, Mendenhall Village Homeowners Association; Board Member, and First Vice President, Greater Hockessin Area Development Association; and Chair, Upper Limestone Road Focus Group.
Barbara Remus is a resident of Camden, Delaware in Kent County. She was appointed to the Commission on June 25, 2002 for a seven-year term.
She is a Senior Consultant in the Dover office of Brokerage Concepts, Inc. (BCI) of Delaware. BCI is part of the largest privately held group and individual insurance brokerage company in the United States. Her employment requires continuing education and ethics classes to maintain insurance licenses. Her professional associations are in the Delaware and National Association of Insurance and Financial Advisors, and the International Foundation of Certified Employee Benefit Specialists.
A graduate of Dover High School, she obtained her Bachelor of Science Degree in Business Administration from Wilmington College.
Her community service includes: Board member and Vice President, Camden Wyoming Sewer and Water Authority; former appointee to the State Small Employers Reinsurance Board; and member, Delaware State and Central Delaware Chambers of Commerce. She served as Secretary, Dover Century Club; Vice President, Kent County Democrat Committee; and member, 34th District Democrat Committee. She is a member of the Dover Art League and the Dover Century Club.
As an independent agency, the Commission appoints its own legal counsel. 29 Del. C. § 5809(12). The Commission appointed Janet A. Wright in 1995. A 1989 graduate of Widener University School of Law (cum laude), she was admitted to practice in Delaware that same year. After graduation, Ms. Wright was a judicial clerk for the Honorable Richard S. Gebelein, Delaware Superior Court. She also is admitted to practice in the U.S. District Court in Delaware, and the U.S. Third Circuit Court of Appeals. After her clerkship, she was an Assistant City Solicitor for the City of Wilmington. Initially, she prosecuted violators of the Building, Housing and Fire Codes, animal protection laws, and periodically prosecuted criminal matters in Municipal Court. She later was a civil litigator, defending the City and its employees in civil rights and personal injury actions. She holds an American Jurisprudence Award in Professional Responsibility, and completed the National Institute for Trial Advocacy's skills course. She was the Chair, and is still a member of, the Northeastern Regional Conference on Lobbying (NORCOL). Its members are government representatives who regulate lobbying from Washington, D.C. to New England. She is a member of the Council on Government Ethics Laws (COGEL). Members are government employees and appointees in ethics, lobbying, financial disclosure, and campaign finance offices from all fifty (50) states, the U.S. government and the Canadian government. Ms. Wright has served on COGEL's Site Selection Committee. Her review of Alan Rosenthal's Drawing the Line: Legislative Ethics in the States, was published in the "COGEL Guardian." She has presented several Government Ethics sessions as part of the Delaware Bar Association's Continuing Legal Education Classes.
Aimee Baysinger has been the Commission's Administrative Assistant since October 15, 2001. Prior to working for the Commission, she worked for CorpAmerica, Inc., as a Specialist, preparing and filing incorporation documents with the office of the Secretary of State. Ms. Baysinger moved to Delaware from Dallas, Texas in 2000. While in Texas, she worked for Rockwell International as an Administrative Assistant and as a Meeting Planner and Customer Service representative. Following her Rockwell employment, she was a paralegal for Locke Liddell & Sapp, LLP and Martin, Farr, Miller & Grau, LLP, in the areas of civil and commercial litigation. She received her paralegal certificate from the Professional Development Institute at North Texas University, Denton, Texas.
III. Commission Accomplishments in 2002
The Commission's goals for 2002 were to continue to emphasize its training program, and to increase access to services to lobbyists and public officers through its Internet site. Beyond those goals, the Commission worked to continue meeting the performance measures identified in its budget request, which was to increase the participants in training and resolved requests for advisory opinions in 45 days or less. The details of the accomplishment in these areas and others are given below. A. Training Sessions
Seminars and workshops to educate individuals covered by the laws administered by the Commission are part of the Commission's statutory mandate. 29 Del. C. § 5808A(a)(1).
In 2002, the Commission held twenty-two (22) training sessions in 2002. While this was the same number of sessions as in 2001, the number of attendees increased from 368 in 2001 to 463 in 2002; a 25.8% increase. Eighteen classes were on the State Code of Conduct; three were on Financial Disclosure Reporting; and one was on the Lobbying Law.
(1) Coordination with State Personnel
The Commission, as in the past, offered both the Code of Conduct training and Financial Disclosure Training through the State Personnel Office's (SPO) Training Unit. The Code of Conduct training was part of its Career Enrichment Program (CEP), for rank and file State employees. Both the Code of Conduct and Financial Disclosure were offered through its Management Development Institute (MDI), for senior-level Executive Branch officials.
Aside from the normal training activity coordinated through the SPO, the Director of State Personnel, Lisa Blunt-Bradley invited Commission Counsel to a quarterly meeting with the Director and most of the Human Resources representatives from all State agencies. The purpose was to not only educate on Code of Conduct issues, but exchange information and decide ways to increase coordination in overlapping areas on personnel issues and the Code of Conduct. The overlap in both Code of Conduct and Merit rules on outside employment, dual government employment, gift acceptance, etc., was discussed. The outcome was that both agencies had a better understanding of the overlapping rules. Additionally, to increase exposure of more State employees and officers to the Code and the overlapping Merit Rules, it was decided that the Commission would publish a brochure identifying those rules. The SPO, as its part in increasing exposure to the Code and Merit rules, provided its list of Human Resources Representatives from each agency so the Commission could use those representatives as contacts and as distribution points for the brochures.
The State Personnel Director also asked the Commission Counsel to provide an "Ethics in Government" breakout session at the annual State Personnel conference. Attendees, who were largely in management positions, showed a favorable response to the program.
(2) Quarterly Training for DHSS Employees Continued
Since 1995, the Commission has given training to the Department of Health and Social Services (DHSS) employees on at least a quarterly basis. The training occurs at various DHSS locations for the convenience of as many DHSS employees as possible. This continuous DHSS training was re-emphasized by the recommendation in the State Legislative and Citizens Investigative Panel of Nursing Homes in the 1998 "Marshall Report." to give ethics training to DHSS employees that worked in areas related to long-term care. In 2002, seven (7) classes were given to DHSS employees, not only those in long-term care programs, but in other DHSS programs, such as in the Division of Services for Aging and Adults with Physical Disabilities. Sessions were held in Middletown, Milford, Dover, and New Castle County.
(3) Training for Professional Regulations Boards and Commissions
Another standard annual presentation is for new appointees to Title 24 Boards and Commissions, which administer the laws and regulations associated with various occupations and professions. Valerie Watson, Division Director of Professional Regulations, invited the Commission Counsel to the annual orientation for new board and commission members. In 2002, sixty (60) people attended.
(4) Training for New Legislators
After each election, the General Assembly holds an orientation day for all new members to acquaint them with various aspects of their new duties. This includes a presentation on their responsibility to annually file a financial disclosure report with the Public Integrity Commission. In addition to the new General Assembly members who attended, members of the General Assembly who were serving as escorts for the new public officers, and employees of Legislative Council attended the training.
(5) Training at Other State Agencies
Training was also provided to employees in the office of Probation and Parole, the Department of Transportation, Colonial School district, and the employees and appointees of the Development Disabilities Council.
(6) Other Training Efforts
Commission Counsel also prepared and provided to DHSS's Procurement officers, Sandra Skelly and Robert James, a handout entitled: "State Contracts and the State Code of Conduct." Ms. Skelly and Mr. James distributed the handout during their scheduled training for DHSS employees involved in the procurement process. The handout is attached as Appendix A.
(7) Lobbyist Training
The AARP, formerly know as the American Association of Retired Persons, requested training on the lobbying laws for its staff and lobbyists. Seventeen (17) people attended. The Government Law Section of the Delaware Bar Association requested training for the thirteen (13) lawyers who attended the Current Issues In Government Law session. In addition to a 45 minute presentation to these attorneys, a publication entitled "Code of Conduct and Ethics for Government Employees and Attorneys" with more detailed information on the overlapping aspects of the State Code of Conduct and the Delaware Lawyers' Rules of Professional Responsibilities, was presented to attendees.
At all classes, attendees were given copies of the pertinent statute, synopses of opinions interpreting the particular law, pertinent forms (e.g., financial disclosure form; lobbyist forms, etc.).
B. Requests for Advisory Opinions, Actions on Complaints, and Referrals
The Commission issues advisory opinions and waivers, and investigates and rules on complaints alleging violations of the Code. 29 Del. C. § § 5807 and 5810. Almost all Commission rulings are rendered after a hearing, even though hearings are not required for advisory opinions and waivers.
In 2002, sixty-four (64) requests for advisory opinions, waivers and complaints requiring interpretation of the Code of Conduct and Financial Disclosure Laws were submitted to the Commission. That was an increase of twelve (12) matters or just over 23% over 2001. Additionally, three matters were carried over from 2001, resulting in sixty-seven (67) matters to resolve.
The 67 matters break down as follows: (a) forty-three (42) requests for advisory opinions; (b) four (4) requests for waivers; (c) six (6) complaints; (d) twelve (12) referrals to the Attorney General; and (d) three (3) referrals from the Office of the State Auditor.
(1) Advisory Opinions
Any State employee, officer, honorary official or State agency may, in writing, seek an advisory opinion on any particular fact situation. 29 Del. C. § 5807(c). In 2002, most requests, eighteen (18), were for an interpretation of the post-employment law--a two-year restriction after terminating State employment. Seven (7) people sought decisions on whether a second job created a conflict. Of those requests, six (6) State employees sought a second job in the private sector, and the private company did business with or was regulated by the State. In those situations, the law requires that as a condition of commencing and continuing employment with the State, they must file a full disclosure with the Commission so it can decide if there is a conflict. The other individual asked if he could accept dual employment with the State, without a conflict. Beyond ruling on whether there was a conflict, the Commission advised the individual that the compensation subchapter requires persons holding dual employment with the State to insure they comply with the recording keeping requirements so that they are not paid from two agencies for overlapping hours.
Another six (6) people asked for opinions on whether their personal or private interests created a conflict that would require them to recuse themselves from participating in State decisions. The "personal or private interests" included familial relationships, financial investments, and serving as Board members of private organizations. Five (5) people asked for an interpretation regarding the restrictions on accepting gifts.
In situations, where the Commission found that the conduct would violate the Code, the conflict was generally avoided recusal. However, in two instances where gifts or things of monetary value were improperly accepted, the individual was instructed to repay the value. In a third instance, where an individual improperly contracted with his own agency in violation of the Code and in violation of the terms of the contract, the Commission referred the matter to the State agency, because under the Code, the agency has the authority to void any contract entered into in violation of the Code. 29 Del. C. § 5805(g).
(2) Waivers
Waivers are given if the literal application of the law is not necessary to serve the public purpose, or there is an undue hardship on the State employee or State agency. 29 Del. C. § 5807(a). Five (5) requests for waivers were heard by the Commission in 2002. Two requests sought a waiver of the post-employment law, which restricts former employees from working on certain "State" matters. In one instance, a waiver was not required as the former State employee was not going to be involved with matters related to the "State." In the other post-employment request, no waiver was needed as the agency was able to re-hire the former employee as a casual/seasonal/part-time employee. As the individual would be a current State employee in that status, he would not be a "former" employee and the post-employment rule would not apply.
In the other three situations, limited waivers were granted. As the proceedings of waivers are a matter of public record, the decisions granting the waivers are attached. Appendix B.
(3) Complaints
Five (5) complaints were filed, but dismissed because the Commission had no jurisdiction. In two instances, complaints were filed against local government officials. However, the local government had adopted its own Code of Conduct so the Commission no longer had jurisdiction over those individuals. In another situation, the Commission held that it had no personal jurisdiction over a member of the General Assembly, and even if it did, it would not have jurisdiction over the subject matter alleged in the complaint as the law specifically provided that the particular matter was to be handled by another State agency.
Two prisoners filed complaints about the criminal justice system. The Commission previously ruled it did not have jurisdiction over the types of issues raised (e.g., Constitutional claims of due process and discrimination; claims of unjust imprisonment, etc.).
Another complaint appeared to allege that the individual's statutory or Constitutional rights to a speedy trial and rights to a jury trial, rights to due process, or other such rights were violated in Court proceedings. This Commission has held that it only has authority to interpret Title 29, Chapter 58; has no authority to interpret any other statutes or the Constitution; and no jurisdiction over alleged denials of the right to a speedy trial. Moreover, to the extent the complaint alleged that the Court Rules regarding the right to a jury trial were not followed, the Commission held that it has no jurisdiction to interpret Criminal Court rules, nor does it have jurisdiction over the Courts.
The Commission Counsel also is investigating three (3) complaints before making a recommendation to the Commission.
(4) Referrals to the Attorney General
Under the Financial Disclosure Law, any public officer who willfully fails to file a disclosure report shall be guilty of a class B misdemeanor. 29 Del. C. § 5815(a). "Public officer" includes any candidate who files for any state office. 29 Del. C. § 5812(a)(3). In 2002, there were sixty (60) candidates who filed for State office, other than incumbent officer holders. Ten (10) of those candidates did not file a Financial Disclosure report after being sent notice of the requirement by both regular and certified mail.
It is a class A misdemeanor if the public officer files information that is false. 29 Del. C. § 5815(b). In one instance, a candidate stated that his spouse held certain assets which the law lists as reportable. The candidate did not believe he should be required to file information about his spouse's financial holdings. After being advised that the law required the information and failure to provide the information may result in criminal action against him, he still refused to provide the information. He was asked to sign an acknowledgment that he was advised that the information was required and that he refused to provide it. He signed the acknowledgment.
The Commission referred these eleven (11) suspected violations to the Attorney General, pursuant to 29 Del. C. § 5815(c).
(4) Referrals from the State Auditor's Office
The State Auditor, in conducting agency audits, found several situations where he believed the Commission needed to determine if the State Code of Conduct had been violated.
The State Auditor noted, during routine agency audits, some situations where State employees may have a financial interest in a private enterprise that may be doing business with the State. If a State employee has such interest, they must file a full disclosure with the Commission as a condition of commencing and continuing State employment. 29 Del. C. § 5805(d). The records of the transactions were submitted to the Commission. They are under review for potential violations. In another audit, the State Auditor concluded that the acceptance of gifts by two State employees might violate their agency's gift policy. The agency consulted with its attorney and asked for an opinion on: (a) whether the agency policy was more stringent than the State Code; and (b) whether accepting the gifts would violate the Code of Conduct restriction on accepting gifts. The Commission advised that relative to the particular fact situation, the policy was more stringent than the Code restriction.(4) It further advised the agency that it could take action under provisions it had for policy violations, or file a sworn complaint with the Commission.
C. Publications
The Commission is to publish synopses of its advisory opinions without disclosing the identity of the applicant, and is to prescribe forms, and publish manuals and guides explaining the duties of individuals covered by the laws the Commission administers. See, 29 Del. C. § 5807(d)(4); § 5809(8) and (9).
The Commission has had its publications on its web site since 2000. The documents published to the Internet are: the statutes the Commission administers; synopses of opinions; forms for financial disclosure and lobbying registration; a list of all registered lobbyists and who they represent; the Commission's annual reports; and the Commission's Rules of Procedures. In 2002, the Commission added to its site the pamphlet resulting from the coordination with the State Personnel Office, previously discussed in Section A --Training Sessions. It also added a downloadable form for persons required to file a full disclosure with the Commission if they have a financial interest in a private enterprise that does business with the State.
For better service to public officers who file annual disclosure reports and registered lobbyists, the Commission obtained a grant from the State's e-government office for a computer program that: allows lobbyists to complete their registration, employer authorization and quarterly expenditure reports on-line; permits them to add or delete employers, edit registration information, etc.; permits public officers to download the instructions and the financial disclosure report; sends e-mail reminders to public officers and lobbyists regarding filing dates; creates lists of any gifts reported by lobbyists to public officers; generates e-mail information to the public officers of those gifts so they can report the gifts when required by law; generates the lobbyists' registration list by either the lobbyist's name or the name of the organization they represent, etc. In a single month, there were 12,243 hits on the new system.
Besides the more than 12,000 hits on the new system for lobbyists and public officers, the other part of the Commission's web site averaged close to 6,000 hits per month, with a total of more than 67,000 visits to the site during the year. This was an increase of more than 7,000 (11.7%) over the hits in 2001. The most frequently downloaded publication was the list of registered lobbyists. As the publication is approximately 38 pages, the download capability is an effective means for the staff to save the time and costs associated with producing and mailing more than 150 copies per month. As one reason for lobbyists' registration is so the public knows the identity of persons acting to influence State government, the web site is a significant means of making that information public.
The Commission continued to work with the Department of Elections to identify candidates for State office who must file a financial disclosure report. A link between the Elections web site and the Commission's web site allows "one-stop shopping" for all forms candidates must file as part of their campaign activities.
Besides the information on its Internet site, the Commission also distributed hard copies of its synopses of opinions and Ethics Bulletins at its 22 classes, which more than 400 people attended. As in the past, the attendees' evaluations continue to show that the publications are one of the greatest values of the training program. Additionally, as State employees contacted the Commission's office seeking information on the Code, copies of the Commission's opinions were provided to those individuals.
The new brochure created in 2002 which covers not only Code of Conduct rules, but Merit Rules was distributed to the Human Resources representatives of the various State agencies. Of the 10,000 copies printed, 9,100 were distributed in 2002.
D. Local Government Codes of Conduct
Local governments are subject to the State Code of Conduct unless they adopt their own Code which must be approved by the Commission as being as stringent as the State Code. 68 Del. Laws, c. 433 § 1. The Commission has approved Codes of Conduct for six local governments-Dover, Lewes, Millsboro, New Castle County, Newark, and Wilmington.
The Commission must also approve any amendments to local Codes. During 2002, New Castle County submitted one amendment for the Commission to evaluate. The proposed amendment would have eliminated the application of some Code provisions to appointees to County Boards and Commissions. The Commission identified those portions that were less stringent than State law and advised the County that such changes would not be consistent with the requirements for local government Codes. The amendment was not enacted with the less stringent provisions.
Subsequently, the entire New Castle County Ethics Commission resigned, as did its attorney after some apparent disagreements, such as budget, etc., which were covered in the media. The County then asked if all of its employees and officials, or only Senior level officials, could come back under the State Code of Conduct. The Public Integrity Commission concluded that, among other things, it did not have the budget, staff, legal authority, or time to undertake administering the Code of Conduct for New Castle County, which had worked with its own Code of Conduct for more than eleven (11) years. It noted that the County could resolve its problems by appointing new Commissioners. It also noted that if only the Senior level officials came under the State Code of Conduct, then the Senior level officials of New Castle County would have a less stringent Code than the employees who worked for them. The letter to New Castle is at Appendix C.
E. Legislative Matters
A number of pieces of legislation of interest to the Commission were introduced during the first session of the 141th General Assembly, which ended on June 30, 2001. A chart showing the status of the legislation introduced and followed by the Commission in 2002, is at Appendix D.
Legislation introduced in 2001, which was carried over into the 2nd session of the 141th General Assembly, is included on the chart. Key legislation affecting the Commission is discussed in more detail below.
The Commission continued to work with the Department of Technology and Information (DTI) regarding whether the legislation passed in 2001 that eliminated application of the post-employment law for employees of the Office of Information Services (OIS), and the Department of Technology and Information (DTI) should be revised. S.B. 215. The reason for eliminating the post-employment law for those State employees was because the restructure of OIS could result in those employees taking jobs in the private sector if the State cannot place them in State jobs with either DTI or another State agency. The legislation was apparently intended to cover those employees during the transition period from OIS to DTI. However, as written, it eliminates application of the post-employment law for all time for all OIS and DIT employees. The Commission is working with the drafters of the legislation to see if a time limit to cover the transition period would be feasible. After that point, the post-employment law would then apply to DTI employees, just as it applies to all other State employees.
Additionally, legislation was introduced to amend the City of Harrington's Charter to provide that the Mayor and Council may not participate in measures pending before the City if they have a "personal or private interest." H.B. 561. The language is nearly identical to the State Code of Conduct restriction on participating in matters where there is a "personal or private interest. 29 Del. C. § 5805(a). Local governments are subject to the State Code of Conduct unless they adopt a Code approved by the Commission to be at least as stringent as the State Code. Sponsors of the bill, Harrington officials, and their attorney were provided with the legislation making local governments subject to the State Code of Conduct. No further action was taking on the proposed Charter amendment.
F. Administrative Issues
(1) Financial Disclosure Reports
Public officers are to file annual Financial Disclosure reports by February 15 of each year. Annually, the Commission sends its Financial Disclosure synopses, the disclosure form and instructions to more than 300 public officers notifying them of the annual requirement. Thirty-two (32) public officers did not file a report by the February 15th filing date. A second notice was sent on March 3, 2002, advising that the report should be filed within 10 business days. In response, all but 9 of the public officers filed a report. After a final notice, by certified mail, the remaining public officers responded.
As part of the disclosure requirements, public officers must report gifts valued at more than $250. As lobbyists must report by name and amount any expenditure on a public officer which exceeds $50 per day, the Commission's staff compared, by hand, more than 900 lobbying expenditure reports to the more than 300 financial disclosure reports to insure that any gift of more than $250 to a public officer from a lobbyist was reported. If there was an inconsistency in the reports, the public officer and the lobbyist were notified of the discrepancies. Where necessary, the public officers amended their financial disclosure reports for accuracy. With the new computerized system, the staff will not have to compare all of these documents by hand and send out letters. Rather, the new system will make the comparison and an automated e-mail will be sent to public officers, except for those who do not have an e-mail account that the Commission can access. For those public officers, letters will continue to be sent.
(2) Lobbyists' Expenditure Reports
Registered lobbyists are required to file expenditure reports on a quarterly basis, identifying the total amount of expenditures made on members of the General Assembly or State employees for such items as food, entertainment, travel, gifts, etc. There are approximately 300 lobbyists registered with the Commission.
The filing for the last quarter of 2001 was due on January 20, 2002. Forty-six (46) lobbyists did not submit their report by the deadline. Letters notifying them that failure to file serves as a voluntary cancellation of their registration were sent. Thirteen (13) did not respond. A second notice, by certified mail, was sent to them before their registration was canceled. Only one lobbyist, Keith H. Ellis, failed to respond. Pursuant to 29 Del. C. § 5837(c), his failure to file served as a cancellation. He subsequently filed all required reports and was reinstated.
Eighty-four (84) lobbyists did not file their report for the first quarter of 2002 which was due on April 20, 2002. A first notice was sent and all but eight (8) filed the report. After a second certified notice was sent, five (5) still did not file. One had been hospitalized, and subsequently filed his report. A third and final certified notice was sent to the other lobbyists with a copy to the organization they represented.
The filing date for the second quarter was July 20, 2002. Seventy-four (74) failed to file their quarterly expense report by that date. Forty-three (43) filed after the first notice. After second notice were sent, all but five (5) filed reports. After notice by certified mail, all but four responded. Two never claimed their certified mail from the post office; two signed for the certified mail but never filed a report. A final notice was sent to the organizations they represented, advising them that their lobbyists had not file, and their registration would be canceled. Also, they could not engage in lobbying until they submitted the required reports.
On October 20, 2002, reports for the third quarter were due. A first notice of failure to file was sent to forty-one (41) lobbyists. All but 18 responded. They were sent a second, certified mail, notice. A third notice was sent to the lobbyists and the organizations they represent.
The filing for the last quarter of 2001 was due on January 20, 2002. Fifty-seven (57) lobbyists did not file by the due date. Only twelve (12) responded to the first notice. The remaining forty-five (45) were sent a second notice. The annual report went to press shortly after the filing date, so the final data is available from the Commission's office, and will be in next year's annual report.
IV. Funding
For Fiscal Year 2003, the General Assembly appropriated a total of $164,400 for the Commission's budget. This was the same as for FY 2002. Like all State agencies, the Commission was asked to cut 2.5% from its operating budget for FY 2003. A 2.5% cut of the Commission's operating costs was calculated at approximately $1002.50 leaving the Commission with approximately $39,097.50 for operating costs. For FY 2004, the Commission requested the same appropriations as in FY 2003. As of early January 2003, Governor Ruth Ann Minner's proposed budget to the General Assembly, included a proposal of $164, 400 for the Commission.
V. Future Goals
In the coming year, the Commission intends to continue emphasizing its responsibility to educate State employees, officers, officials and local officials covered by the State Code of Conduct and Financial Disclosure Laws. It has already scheduled training with a number of agencies.
To provide additional services to the public officers and lobbyists who must file reports with the Commission, it will look into the feasibility of making electronic filing available. This will require a cost analysis, and possibly a change in legislation to provide for electronic signatures, rather than original signatures.
The Procurement law states: "in addition to any other procedures" the remedies and penalties in the procurement law are not exclusive and shall be in addition to, among other things, "the provisions and penalties defined in Chapter 58 of this title [Title 29]." 29 Del. C. § 6903(g). Title 29, Chapter 58, is the State Code of Conduct. The following overview of some Code of Conduct provisions, as they relate to State contracts, is to help those involved with State contracts to familiarize themselves with the Code of Conduct.
I. To Whom does the Code of Conduct Apply?
(A) State employees (includes all rank & file employees, including temporary, casual, seasonal, part-time, etc.), and appointees to Boards and Commissions who make more than $5,000 per year;
(B) State officers (elected Executive Branch officials, Cabinet Secretaries, Division Directors and their equivalents); and
(C) Honorary State officials (appointees to Boards and Commissions who make less than $5,000 per year). 29 Del. C. § 5804(11), (12) and (13).
II. Restrictions on Conduct when Acting in an Official Capacity
State employees, officers, and honorary officials may not review or dispose of matters involving the State if they have a personal or private interest. 29 Del. C. § 5805(a)(1). For State contracts, a public servant could not, for example, write, review, draft, award, etc., an RFP if they have a "personal or private interest" in the contract. A personal or private interest would be, among other things, if the public servant, a relative or friend, or a private business which the public servant, a relative, or friend owns, operates, or is an employee of, seeks the contract.
Examples:
(1) A State honorary official was on a State Board that gave a Division Director advice on whether private companies would receive certain certificates. One company seeking a certificate was in the process of entering a business alliance with the company that the honorary official worked for in his private capacity. The official said at the beginning that he "might" have a conflict, but participated in the discussions. When it was time to vote, he recused himself. After the Board issued the certificate, another company which was denied a certificate took the matter to court saying that the State official's business relationship with the other applicant violated the Code of Conduct, and he should not have participated. The Court noted that the official's comments were "neutral and unbiased," and the official recused himself just before the vote. However, it said that because of the conflict, he should have recused himself "from the outset." Beebe Medical Center v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, Terry, J .(June 30, 1995), aff'd, Del. Supr., No. 304 (January 29, 1996). In Beebe, the applicant sought a certificate. However, the same law applies to a contract situation.
(2) Administrative Services asked a Department of Corrections (DOC) employee to give a list of DOC's employees to a contract selection Committee so it could select a DOC employee to serve on the Committee to award the contract. He provided the list. Later, the Committee met and the State employee participated. He was not on the Committee, so he could not, and did not vote on who would get the contract. The Committee awarded ARA the contract. When Prison Health Services did not get the contract, it asked for a court injunction against the contract on the basis that the State employee violated the Code of Conduct because his wife worked for ARA. The Court said that while the State employee's participation was "indirect" and "unsubstantial" and his wife was a "low-level employee" at ARA, his participation was "undoubtedly improper." Prison Health Services, Inc. v. State, Del. Ch., C.A. No. 13,010, Hartnett III, V.C. (July 2, 1993).
(3) A Department of Public Instruction (now Department of Education) employee issued agency contracts. She issued some contracts to her boyfriend, whom she later married. As a result of the conflict of interest, she lost her job after 18 years. The State could have prosecuted her under the Code of Conduct, but it prosecuted her under the "Misconduct in Office" criminal law. She received a seven-year sentence. Ford v. Dep't. of Public Instruction, Del. Super., C.A.# 96A-01-009-RSG, Gebelein, J. (November 24, 1997); Ford v. Dep't. of Pub. Instruction, 720 A.2d 559 (S. Ct. 1998).
(4) Where local government officials participated in a decision, it was alleged they had a conflict because their relatives had an interest in their decision. The Court found no actual conflict, but said it would "be prudent" to recuse themselves. Harvey v. Zoning Board of Adjustment of Odessa, Del. Super., C. A. No. 00A-04-007 CG, Goldstein, J. (Nov. 27, 2000).(5)
Lessons from these situations:
(1) public servants need to stay as far away from any official participation (even neutral, unbiased, indirect and insubstantial) as they can when they, their employer, a close relative, friend, etc., have an interest in the contract; and
(2) generally, public servants need to recuse themselves from the outset if they think they have a conflict because if they think it themselves, it is likely their conduct will, at a minimum, appear improper, even if there is no actual violation; and
(3) public servants need not be the final decision makers. As seen in Beebe and Prison Health, if they "review" the matter when they have a conflict it can be improper; and
(4) if there is any question on whether they should be involved, the individual or the State agency can asked the Public Integrity Commission for an advisory opinion. If they follow the Commission's advice, they are protected against disciplinary action. 29 Del. C. § 5807(a) and (c). If an issue arises at the last minute, with no time to come to the Commission, the public servant should consider following the general rule in (2).
III. Restrictions on Conduct when acting in a Private Capacity
State employees, officers and honorary officials may not represent or otherwise assist a private enterprise before the agency with which they are associated by employment or appointment. 29 Del. C. § 5805(b)(1). State officers are not only prohibited from representing or otherwise assisting a private enterprise before their own agency, they may not represent or otherwise assist a private enterprise before any State agency. 29 Del. C. § 5805(b)(2).
Example:
A State employee was reprimanded because his private enterprise contracted with the agency that employed him. He could have been prosecuted for violating that provision, but the Commission recommended a reprimand because, among other things, it was his first offense, and the agency also contributed to the problem. Commission Op. No. 00-40. Besides the reprimand, he was precluded from being paid from his agency, so he did not profit from violating the provision against business dealings with his own agency. The opinion addresses a number of mistakes by the State employee and the agency. First, the agency's policy on contracting with its own employees was not as stringent as the Code of Conduct. A State policy cannot be less stringent than State Law. Second, the procurement procedure required a purchase order; but none was issued. Third, there was a mandatory State contract for the particular services he offered, but the agency apparently did not even consider using the mandatory State contract. Fourth, under the Code of Conduct if a State employee or officer has a financial interest in a private enterprise that does business with, or is regulated by the State, they must file a full disclosure with the Public Integrity Commission. 29 Del. C. § 5806(d). That is a condition of commencing and continuing employment or appointment with the State. Id. He did not file. Fifth, his company did business with other State agencies. Again, he did not file a full disclosure. Sixth, if a State employee or officer, or a private enterprise in which they have a financial interest, seeks to contract with the State, under the Code of Conduct if the contract is for more than $2,000 it must be publicly noticed and bid. 29 Del. C. § 5805(c). His company had some State contracts for more than $2,000. They were not publicly noticed and bid. If the contract is for less than $2,000, the contract must reflect "arms' length negotiations." Id. Public notice and bidding and/or arms' length negotiations are to insure contracts are not awarded out of favoritism, undue influence, preferential treatment, and the like. To help prevent such favoritism, etc., the Code of Conduct, among other things, prevent: (1) self-dealing (e.g., cannot award the contract to yourself or your own business); (2) using public office to obtain the contract for yourself, relatives, friends, etc., (3) representing or assisting before one's own agency (co-workers, colleagues, etc., who make decisions will not be unduly influenced); and (4) State officers from representing or assisting before any State agency as there is a legal presumption that they have influence throughout all State agencies. There must also be a fair market price either through public notice and bidding or arms' length negotiations. Agencies can help insure fair market prices by getting quotes from sources other than the public servant's business, when the contract is for less than $2,000.
If public servants seek contracts with a public school district and/or the State Board of Education for transporting school children, they must comply with the Procurement law in 29 Del. C. § 6923, except transportation supervisors may not seek such contracts. 29 Del. C. § 5805(c).
Lessons from this situation:
(1) Multiple Code of Conduct provisions restrict public servants in seeking State contracts. Because many provisions may apply, there must be "full disclosure" to the Commission when the State employee, officer or honorary official has a financial interest in doing business with the State. That enables the Commission to decide if the conduct violates any Code of Conduct provisions, including any appearance of impropriety. By filing the full disclosure, required by law, the public servant receives advice on how to proceed without violating the Code of Conduct. Again, if the advice is followed, they are protected against disciplinary action.
(2) As compared to the Code of Conduct, the procurement laws and rules have a different dollar amount for when contracts must, by law, be publicly noticed and bid. For example, my understanding is that if a professional contract is bid for more than $50,000, it must be publicly noticed and bid. Bob James and Sandra Skelly can direct you to the best information on the procurement law and procedures, so agencies should seek advice from them on that issue. However, assuming that amount is correct, the point is that the agency is not required to bid the contract until it reaches that amount. The result when combining the procurement law with the Code of Conduct is: for example, if an agency wants to contract for professional services for less than $50,000, under the procurement law it would not be legally required to publicly notice and bid the contract. If the agency chooses not to publicly notice and bid the contract and it is for less than $50,000, but more than $2,000, then under the Code of Conduct, no public servant nor their private enterprise can seek the contract. Even if the contract is publicly noticed and bid, if the public servant seeking the contract is employed by or appointed to the agency offering the contract, then they cannot represent or otherwise assist the private enterprise in obtaining the contract with their own agency. (Again, for State officers, they can not represent or otherwise assist on a contract with any agency). Even if the contract is publicly noticed and bid, and if the public servant is not employed or appointed to the agency offering the contract (e.g., DHSS publicly notices a contract for $49,000 and the State employee or honorary official works for DNREC, then the State employee or honorary official could represent or otherwise assist the private enterprise (e.g., write the response to the RFP, etc.)). But they still must, by law, file a "full disclosure" with the Commission as a condition of commencing and continuing State employment or appointment, so the Commission can decide if any Code of Conduct provisions would be violated by the transaction. As far as State officers, if they have a financial interest in the private enterprise that wants to seek that same DHSS contract, and they work for DNREC, they still cannot in any manner represent or otherwise assist the private enterprise in obtaining that contract (e.g., cannot help write the company's response to the RFP; cannot review the RFP before it goes to the agency; cannot work on the contract for the private enterprise if it is awarded to their company, etc.). If their private business is awarded the contract, they, too, must still must file a "full disclosure" with the Commission because the private enterprise, in which they have a financial interest, would be doing business with the State.
IV. Restrictions after Terminating State Employment
Under the post-employment law, for two years after public servants leave State employment they cannot represent or otherwise assist a private enterprise on State matters where they: (1) gave an opinion; (2) conducted an investigation; or (3) were otherwise directly and materially responsible for while employed by the State. 29 Del. C. § 5805(d). In the context of contracts, the Commission looks at the contract process to see if while employed by the State the public servant was in any manner responsible for drafting the contract; reviewing the contract; administering the contract; assessing if the contractor is complying with the contract terms; etc. If the former employee was involved in the contract process, they could be prohibited from working on that contract for the private enterprise. Beyond looking at the contract process, the Commission looks to the substance of the contract to see if there is a "substantial overlap" between the work done for the State and the work the former employee will perform on the contract for the private company. Commission Op. No. 96-75. Some agencies include the post-employment restriction as boiler plate language in their contracts.
Lessons:
The post-employment law does not apply if the former employee: (1) works for a government agency, not a private enterprise; (2) works for a private enterprise, that is not involved in any State matters; (3) works for a private enterprise that is involved in State matters, but do not work on State matters in the three discrete areas listed in the statute - areas where they: (1) gave an opinion; (2) conducted an investigation; or (3) were otherwise directly and materially responsible for while employed by the State. If it is unclear if their work falls within those three areas, the former employee or the State agency can seek an advisory opinion.
V. Restrictions on Improper Use and/or Disclosure of Confidential Information
The Code prohibits State employees, officers and honorary State officials from improperly using or disclosing confidential information gained from their public employment while employed by the State, and after leaving State employment. 29 Del. C. § 5806(f) and (g) applies to public servants who are working for the State and 29 Del. C. § 5805(d) applies to public servants after terminating State employment. Note: Improper use or disclosure of confidential information after terminating State employment does not have a 2-year limit. That is because confidential information may remain confidential for more than 2 years. So the first question is whether the information is confidential. For example, if the procurement law provides that the amount bid for a contract is not "public information" until negotiations are completed, then a State employee could be prohibited from improperly disclosing to the public and/or any contract competitors the amounts being bid. If you are not sure if information related to the contract is "non-public," talk to Bob James, Sandra Skelly, or the assigned Deputy Attorney General to learn if the information is "non-public" under the procurement law. Also, if it is non-public under the Freedom of Information Act, it generally cannot be disclosed. The Attorney General's office administers the Freedom of Information Act.
VI. Penalties for Violating the Code of Conduct
The public servant who violates the Code of Conduct may be subject to the following penalties:
(A) Administrative Penalties:
State employees, officers and honorary officials may be given a written reprimand or censure of conduct;
State employees and State officers, other than elected officials, may be subject to: removal, suspension, demotion, or other appropriate disciplinary action, without regard to any limits imposed by the State Personnel Law;
Honorary State Officials are subject to a recommendation that they be removed from office. 29 Del. C. § 5810(d).
(B) Criminal Penalties:
Any person who knowingly and willfully violates 29 Del. C. § 5805(a) (reviewing or disposing of matters when they have a personal or private interest); 29 Del. C. § 5805 (b) (representing or otherwise assisting a private enterprise); 29 Del. C. § 5805(c) (contracting for more than $2,000 when the State contract was not publicly notice and bid, or contracting for less than $2,000 when there was no arms' length negotiations; 29 Del. C. § 5805 (d) (post-employment law); and/or 29 Del. C. § 5805 (e) (improperly using or disclosing confidential information), is guilty of a misdemeanor punishable for each violation by imprisonment of not more than one (1) year and by a fine not to exceed $10,000. 29 Del. C. § 5805(f).
(C) Voiding Contracts
In addition to any other penalty provided by law, any contract entered into by the State agency in violation of Title 29, Subchapter I (Code of Conduct), shall be voidable by the agency; provided that in deciding if court action will be taken to void the contract, the agency considers the interests of innocent 3rd parties who may be damaged thereby. Court action to void the contract must be initiated within 30 days after the agency has, or should have, knowledge of the violation. 29 Del. C. § 5805(g).
For more information on the Code of Conduct, see our web site at www.state.de.us/pic . It has the statute, the Commission's opinions, etc. If you need additional assistance, or want to schedule an Ethics Training class for your agency, contact:
Janet A. Wright, Esq.
Public Integrity Commission, Legal Counsel
410 Federal St., Suite 3
Margaret O'Neill Bldg.
Dover, DE 19904
Phone: 302-739-2399
The Honorable Saundra R. Johnson Limited Waiver Granted
Delaware State Housing Authority
18 The Green
Dover, DE 19901 D460
Hearing and Decision by: Arthur G. Connolly, Jr., Chairman; Mary Jane Willis, Vice Chair; Commissioners Paul E. Ellis; Arthur V. Episcopo; Clifton H. Hubbard, Foster Massie and Barbara Remus
Dear Ms. Johnson:
The Public Integrity Commission, for the reasons below, found that your dual positions as Director, Delaware State Housing Authority (DSHA), a Cabinet position, and Chair of East Side Charter School (ESCS), which leases property from the Wilmington Housing Authority (WHA), create conflicts that recusal cannot resolve. However, we grant a waiver for the remaining school year to allow ESCS to find a substitute to accomplish your ESCS duties as Chair/Board member.
(A) Applicable Law
We are to be consistent in our opinions. 29 Del. C. § 5809(5). We have twice found conflicts, or the appearance thereof, when a Cabinet level official also holds a Board position on a Charter School. Commission Op. Nos. 01-47 & 02-23. (Tab 1). We refer to the applicable law in those opinions. Just as in those cases, we see conflicts, or the appearance thereof.
(B) Facts
(1) DSHA Duties
You are DSHA's Director. Among other duties, DSHA is to harmonize its activities with similar activities of other agencies or instrumentalities of the federal, state, county or municipal governments, and with nonprofit and limited profit housing sponsors. 29 Del. C. § 8602. Accordingly, you are to "harmonize" DSHA's activities with WHA. You are also the State Housing Director and the Chair and issuing officer of DSHA. 29 Del. C. § 8603.
Delaware Courts have said that WHA has a broad grant of power, but "[d]espite this broad grant of power to local Authorities, however, they remain under the supervision of the State Board of Housing to a certain extent by reason of 31 Del. C. § 4314, 4315 and 4316." Wilmington Hous. Auth. v. Williamson, 228 A.2d 782 (Del. Super., 1967). Thus, you have supervisory authority over WHA, when it also leases and maintains ESCS's property.
With that supervisory power you can: order them to undertake or operate a project to make such repairs and improvements as will preserve or promote the health and safety of the occupants of buildings and structures owned or operated by the agency; order them to comply with the law, rules and regulations as approved by you as the Housing Director; examine the agencies and keep informed as to their general condition, their capitalization and the manner in which the property is constructed, leased, operated or managed; send your authorized agents to inspect the property, equipment, buildings, plants, offices, etc., at your discretion; prescribe uniform methods and forms of keeping accounts, records and books to be observed by such agencies; etc. 31 Del. C. § 4315. You also have the duty to administer the "Housing Development Fund." 31 Del. C. § 4030.
(2) ESCS Duties
As an ESCS Board member, you have a fiduciary duty to act in the best interest of ESCS. Further, as Chair you are ESCS's Chief officer and consult with the Executive Director in achieving ESCS's mission; provide leadership to the Board in policy-making matters; guide and mediate Board actions on governance and organization; monitor financial planning and financial reports; communicate with and review with the Executive Director any issues of concern to the Board; play a leading role in fund raising activities; evaluate the Executive Director's performance and informally evaluate the effectiveness of Board members; etc. ESCS By-laws Section 5.6. Further, the acts by a corporate body are attributable to a corporate director. Florida Ethics Commission CEO 97-7 (Tab 3).
(C) Is the Charter School a "State Agency" or a "Private Enterprise"?
Charter Schools are corporations. 14 Del. C. § 504(a). Generally, corporations are "private enterprises" under the Code of Conduct. However, Charter Board members are "public agents" with the same standing and authority as a School District Board of Education. 14 Del. C. § 504(b) and § 503. If we decided CCS is a "State agency," it could raise other issues. One example is that CCS's by-laws provide Board members will decide if other Board members have a conflict. (By-laws, p. 15 &16). However, if CCS is the same as a School District Board of Education, CCS's Board would be subject to the State Code of Conduct, as are local School Board members. 29 Del. C. § 5804(11)(a)(3). That means this Commission would decide if Board members had a conflict. See, e.g., Florida Ethics Commission Op. No. CEO 99-2 (Tab 3)(Charter School Advisory Board members were Public officers and therefore subject to State ethics law). Conversely, if CCS is a "private enterprise" under the Code of Conduct, that could conflict with the law that says treat Charters the same as a "public school." The complexity of these issues is seen in Florida Ethics Commission Ops. No. CEO 99-10; 99-2; and 97-7 (Tab 3). Rather than rule on the issue, we address the conflicts that arise whether CCS is a "private enterprise" or a "State agency."
(D) Application of the Law and Facts Assuming ESCS is a "Private Enterprise"
(1) "Personal or Private Interest"
Your request for an opinion said you do not have a "personal or private interest" in ESCS. However, being a board member of a "private enterprise" creates a "personal or private interest." Commission Op. Nos. 95-24; 96-64 and 02-23. That interest is the Board members' fiduciary duty to act in the best interest of the private enterprise, which can conflict with their duty to their State job. Id. Delaware Courts have held that the State office must command precedence over personal and private interests. In re: Ridgely, 106 A.2d 527 (Del., 1954).
Whether the interest is enough to tend to impair your judgment in performing official duties is an issue of fact. 29 Del. C. § 5805(a)(1)(actual impaired judgment is not required); Prison Health Services, Inc. v. State, Del. Ch., C.A. No. 13,010, Hartnett III, V.C. (July 2, 1993)(Tab 2).
You said that as head of DSHA, you do not make decisions about ESCS. However, there is an indirect, but strong connection between your DSHA decisions and ESCS. Under the Code of Conduct, an official need not make a direct decision about a private enterprise with which he is connected; an indirect connection can be sufficient to violate 29 Del. C. § 5805(a)(1). Beebe Medical Center v. Certificate of Need Appeals Board, C.A. No. 94A-01-004, Terry, J. (Del. Super., June 30, 1995), aff'd, Del. Supr., No. 304 (January 29, 1996)(Tab 2)(improper for State official to discuss State decision about NanticokeHospital when it had a business arrangement with Milford Hospital where he was the administrative head).
Your situation is similar. In your DSHA capacity, you recently issued a $2 million loan from the Housing Development Fund to WHA for its Eastlake properties, which is the location of ESCS. WHA has a business arrangement (landlord-tenant) with ESCS to lease and maintain the School's property. The Charter renewal application reflects that: WHA is responsible for the major maintenance of the property; ESCS negotiated a lease renewal with WHA; ESCS discussed buying the property with WHA; and ESCS engaged an architect "with the blessing of WHA" in hopes of starting renovations. Thus, ESCS routinely deals with WHA on issues such as maintenance, leasing/purchasing the property, etc. In your DSHA capacity, you have supervisory authority for WHA matters dealing with maintenance, leasing/purchasing, etc.
Thus, in your DSHA capacity, if ESCS has a problem with the maintenance, lease, etc., since it rents from WHA, you could be investigating ESCS's landlord. The maintenance issues or lease/purchase negotiations could result in your participation as an ESCS Board member. That could leave you in a dilemma. For example, in trying to serve the "best interest" of ESCS, you would want to obtain the lowest price on the property, but as DSHA Director you have a duty to insure WHA properly capitalizes on the property its leases, operates or manages. 31 Del. C. § 4315. As head of DSHA, to insure proper capitalization on the property, etc., you could have a duty to see that WHA's property goes at a higher price whether through lease or purchase, which would directly conflict with your ESCS obligation. Morever, in effect, you would be negotiating with yourself.
Also, as part of your DSHA duties, you are obligated to tenants of low-income housing. Again, that includes oversight of how the property is constructed, leased, operated or managed. More than 50% of ESCS's students live in low-income housing. As a consequence, tenants of such property who attend ESCS could approach you if they have difficulties with WHA's management, maintenance, etc. That could place you in the position where your Board obligations to ESCS's students and parents could drive your decisions on how to deal with the complaints. For example, in signing ESCS's Charter Renewal on behalf of ESCS's Board, you obligated ESCS to having: (1) at least the number of students allowed by the charter; (2) a waiting list of students seeking admission; (3) at least 85% of parents indicate overall satisfaction with ESCS's administration and education program. ESCS First Five-Year Renewal, Charter School Performance Agreement.
As you are committed to keeping ESCS students enrolled and to obtain a significant satisfaction rate with their parents, if they have problems with their low-income housing and come to you, your ESCS duty to keep the students and parents satisfied may drive your DSHA decisions on how to deal with their complaints about housing.
We refer you to the discussion on why delegating Cabinet level duties to agency subordinates is not the solution in Commission Op. No. 02-23, p. 4, ¶ (2) (Tab 1).
(2) "Representing or Otherwise Assisting"
You also may not represent or otherwise assist that private enterprise before your own or any other State agency. 29 Del. C. § 5805(b)(1) and (2). You signed ESCS's charter renewal application submitted to the Department of Education (DOE). That application reflects significant interaction between ESCS and various State agencies. The application says the "Board of Directors of this charter school assures that the school will do the following:" have the application approved by the Secretary of Education and the State Board of Education; obtain DOE's consent before the Board implements additional modifications to the Charter School program or operation; participate in the State Assessment Program, which involves DOE; comply with the provisions for a Performance Agreement as required by the Secretary of Education. The renewal also gives the Board's assurances on other matters involving the Secretary of Education, including making reports to DOE, etc. ESCS also sent a formal request to the State Budget Office to initiate a Memorandum of Understanding regarding ESCS's administrative and financial system; and ESCS's finances are audited by the State auditor's. By signing the assurances, you represented ESCS, and it is hard to see how you can perform Board duties without "otherwise assisting" ESCS before State agencies.
"Otherwise assist," in the context of Ethics laws is broadly defined to include"passive action" as "mere presence can possibly influence government colleagues." See, Commission Op. No. 02-23, p. 5-6, ¶(3)(Tab 1).
(E) Assuming the Charter School is a "State agency"
No State officer may incur any obligation of any nature that substantially conflicts with properly performing his duties in the public interest. 29 Del. C. § 5806(b). Holding two public offices can create conflicts in performing the duties of the dual offices. Commission Op. Nos. 99-35 and 02-23; Office of the Attorney General of the State of Delaware, No. 93-I007, 1993 Del. AG LEXIS 51, February 24, 1993 (Tab 2)(Cabinet Secretary could not serve on State Board).
Whether an entity is a "private enterprise" or a "State agency" the purpose is to insure the public is not deprived of your "independence of judgment" in performing your duties, and to insure you do not use your influence on others or create the appearance thereof. United States v. Schaltebrand, 11th Cir., 922 F.2d 1565 (1991); United States v. Coleman, 3rd Cir., 805 F.2d 474 (1986))(purpose for restricting officials from representing or otherwise assisting a private enterprise); Belleville v. Fornarotto, 549 A.2d 1267, 1273 (N.J. Super., 1988); O'Connor v.Calandrillo, 285 A.2d 275 (N.J. Super., Law Div., 1971), aff'd., 296 A.2d 326 (N.J. Super., App. Div., 1972) ( purpose of restricting dual government positions).
Just as indirect decisions about a private enterprise may tend to impair judgment, subordination of one office to another is "clear evidence of incompatibility" and the subordination need not be direct to create a conflict. Belleville, 549 A.2d at 1272.
As the public purpose is the same, the concerns identified in discussing ESCS as a private enterprise are the same concerns that create a conflict if ESCS is considered a State agency.
(E) Other Issues
Aside from the above conflicts, other concerns apply.
(1) Overlap of duty hours. See, Op. No. 02-23, pp. 7-8, ¶ 4 et. seq. During normal work hours in one job, the official can be asked to perform functions of the other job. Belleville v. Fornarotto, 549 A.2d 1267 (N.J. Super., 1988). The Court said: "This duality of roles could cause confusion and concern within the public eye." Id. at 1274.
(2) Controversial Nature of Education Issues. See Op. No. 02-23, p. 9, ¶ 4 (Tab 1).
(3) Influence of a Cabinet Secretary. See Op. Nos. 02-23, p. 7, ¶ 1, and 01-47 (Tab 1).
(4) WHA employees mentoring ESCS students. AS your DSHA duties give you supervisory powers over WHA, that could mean DSHA could be looking at the work of WHA's employees in areas such as maintenance, and those same employees could be mentoring at ESCS. Courts have noted that where the official has supervisory control in one government position over the employees in another government position, it can raise concerns that if the employees do not properly perform their work there may be retaliation or conversely, there may be preferential treatment with respect to working conditions, hours of employment or otherwise relaxed enforcement of the rules. Belleville v. Fornarotto, 549 A.2d 1267, 1274 (N.J. Super., 1988).
(5) Governor's Knowledge of the Dual Jobs. Your request and the one in Op. No. 02-23 pointed out that the Governor knew of your Charter School positions when making the Cabinet appointments. Courts have noted that:
"Although the appointment may suggest that the governor believes the offices to be compatible, it does not follow that this belief must necessarily be correct in the absence of an independent legal basis." State of Illinois v. Claar, 687 N.E. 2d 557, 562 (Ill. App., 1997).
(6) Desire to Serve. We know your service is driven by your interest in education and ESCS. The willingness to provide services in dual capacities has been held commendable. Reilly v. New Jersey, 166 A.2d 360 (N.J., 1960); Your [Judge's] April 20, 1999 Request for an Opinion from the Judicial Ethics Advisroy [sic] Committee, JEAC 1999-1, Super. Ct., 1999 Del. Super. LEXIS 449, April 22, 1999(Tab 2);