ORANGE COUNTY VOICES : Conflict-of-Interest Cure: Full Disclosure

Citizens throughout the state are increasingly suspicious of the economic interests which motivate, bind and influence their local public officials. During the past few months, revelations that elected and appointed officials are violating the public’s trust in pursuit of personal financial gain have become commonplace in Orange County. It’s time that municipalities throughout the state stiffen their conflict of interest laws in order to guarantee that city officials do not use positions of public trust to feather their own financial nests.

The Political Reform Act of 1974 requires public officials at all levels of government to publicly disclose their private economic interests and to disqualify themselves from participating in decisions in which they have a financial interest. The act mandates that every city adopt its own conflict-of-interest code. However, the codes in most cities, which merely adopt the state’s minimal requirements, are inadequate safeguards against abuse of the public trust.

A conflict-of-interest code is only as good as its disclosure requirements. In order for citizens to know if decisions by elected or appointed officials would be compromised by their economic interests, disclosure must be complete, to include all sources of income. And it must be detailed, revealing the true source of an official’s income, not merely the proximate source. No municipal conflict-of-interest code in Orange County requires complete or detailed disclosure of economic interests.

Under current law, a member of a city council who receives income from a source outside the member’s electoral jurisdiction does not have to disclose that income on his or her statement of economic interest. However, what if that source of income or a subsidiary subsequently has business before that person’s city council? The council member’s ability to render a fair and unbiased decision may be seriously compromised, but under current law, no one would even know about this potential conflict.

Similarly, if a council member does business in the city, say as a consultant or realtor, but then receives income for such services rendered from a source located outside the city, no disclosure is required. Public officials doing business in their city do not have to report income received from such transactions so long as the source of the income is legally located outside of the city. Again, in the absence of full disclosure of all sources of income, citizen oversight is rendered impossible, not merely difficult.

The current code is also inadequate because it fails to require disclosure in sufficient detail to identify the interests which produce income for a public official. Contractors, realtors, attorneys or consultants, for instance, do business with individual clients but receive a salary or commission from their firm, not directly from the client. Officially, the “source” of the income is the firm, not the individual client, although it is the client that has generated the fee.

Under the current conflict-of-interest code, public officials involved in these and similar occupations are not required to list their individual clients as a source of income, even though these individual clients may have business before the city council. As a result, the ties that may bind public officials to their clients with interests before the government body are shielded from public scrutiny. This is a form of “interest laundering” whereby the true source of a public official’s income is hidden from public view because clients pay fees to a central firm or agency and not to the official directly.

In the absence of such information, the public is unable to know of, never mind evaluate, the economic relationships which may compromise decision-making by public officials. Cities in Orange County can and should do better than their current, minimal approach to the conflict-of-interest quandary. Free and open government on behalf of the public interest requires vigilance by an attentive citizenry and occasionally political reform.