The Ethics Report
November 2005
A Publication of the New York State Ethics Commission
Ethics Loophole Closed
Governor George E. Pataki, Senate Majority Leader Joseph L. Bruno and Assembly Speaker Sheldon Silver agreed on a measure to close the notorious “Flynn loophole,” which caused the State Ethics Commission to lose jurisdiction over State officers and employees when they left State service. The Governor signed the bill into law on July 12. Karl J. Sleight, Executive Director of the New York State Ethics Commission, said, “This is the most important and significant improvement to the ethics law in the last 15 years.” The loophole was exposed by a 1995 Court of Appeals ruling in the case of Flynn v. NYS Ethics Commission, which held that, with the exception of the revolving door provisions, the Ethics Commission loses jurisdiction over State officers and employees when they leave State service. As a result, the State Ethics Commission may not investigate and sanction former State officers and employees. The ruling has caused the State Ethics Commission to close approximately 50 active ethics investigations and has resulted in the Ethics Commission taking no action on countless of other matters. The State Ethics Commission – with the Governor’s support -- had proposed legislation every legislative session since 1996 to close the Flynn loophole as it pertains to investigations of the State Ethics Commission. Mr. Sleight said, “Closing the Flynn loophole has been the Commission’s top legislative priority for several years. We applaud the Governor and the Legislature for taking this critical step.”
Department of Taxation and Finance Wins Ethics Award
The New York State Ethics Commission has awarded the 2005 Theodore Roosevelt Ethics Award to the New York State Department of Taxation and Finance. The award is presented annually to a State agency that exemplifies a commitment to ethics by maintaining high ethical standards at the agency and through its cooperation with the State Ethics Commission. Karl J. Sleight, Executive Director of the Ethics Commission, said, “Employees at the Department of Taxation and Finance often have access to personal and confidential information and must be acutely aware of the need for strict adherence to principles of ethics and governmental integrity. The collective efforts of the employees of Tax and Finance in the area of ethics in government is a tribute to their agency and the State.” “Tax Department employees are energetic, skilled and hard working, dedicated to providing superior public service to our customers - the people of the State of New York. Our workers train hard to maintain the highest ethical standards in the services we provide, and take seriously our commitment to insure the safety and security of all personal taxpayer information.” said Andrew S. Eristoff, Commissioner of the New York State Department of Taxation and Finance.
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Deborah Dammer, Director of Human Resources Management for the Department of Taxation and Finance, accepts the 2005 Theodore Roosevelt Ethics Award from Karl J. Sleight, Executive Director of the New York State Ethics Commission
Summary of 2005 Advisory Opinions
Some Commercial Discounts Approved
Advisory Opinion No. 05-1: This advisory opinion was issued in response to two separate questions regarding whether State officers and employees may accept broad-based commercial discounts from private companies. The first question is submitted by an attorney at the Office of Temporary and Disability Assistance (“OTDA”), who asked whether an OTDA employee may accept personal discounts of goods and services offered by a telecommunications company, Sprint PCS, that provides wireless telephone service to her agency. The second question is submitted by an employee of OTDA, who inquired whether he might obtain a hotel room for personal use at ment employees as well. As such, it cannot be considered a prohibited gift (for employees whose agencies do business with Sprint) or an unwarranted privilege of government service. The same holds true for a discount to government employees offered by hotels when an employee is not on State business. Under similar circumstances, the federal Office of Government Ethics (“OGE”) reached the same conclusion, reasoning that because “the discount is to a class as large and diverse as all Government employees, there is little likelihood that the [hotel] is seeking to gain influence or to supplement employees’ salaries.” In approving the practice, the OGE, however, emphasized that “the employee may not misrepresent the purpose of the travel, i.e., say that he or she is on business, in order to get rates that are not available for personal travel.” The Commission believes that New York employees should go one step further. In such situations, a State employee must affirmatively represent to hotel management that he or she is on personal business. Not to do so would create too high a risk that the employee has improperly gained a benefit to which he or she was not otherwise entitled. If, knowing that an employee is traveling on personal business, a hotel chooses to extend an existing discount as part of its standard practice, the State’s ethics law are not violated. Advisory Opinion No. 05-2: A professor at the City College of New York, a college of the City University of New York (“CUNY”) argued that because his actual compensation from CUNY for 2003 was $69,076.23 and less than the filing rate of $70,851, he should not be required to file the 2004 financial disclosure statement although he acknowledged that, but for his being on half-pay sabbatical leave for the Spring 2003 semester, he would have
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earned in excess of the job rate of a Grade-24 and would be a required filer. The Commission determined that pursuant to Public Officers Law §73-a, it is the job rate of the position in which the State officer serves as of April 1st of the year in which the form is due, and not the actual compensation received during the previous calendar year, that determines whether an individual is subject to the financial disclosure requirements. Advisory Opinion No. 05-03: A private company asked if one of its officers, a former employee of the Metropolitan Transportation Authority (“MTA”) and the New York City Department of Transit (“NYCT”) could respond to a solicitation by NYCT concerning next generation smart card technology. The former employee was the architect of Metro Card, currently in use by the MTA. The Ethics Commission concluded that the lifetime bar does not prohibit the former State employee from providing information to NYCT on the adaptability of smart card technology to the transit environment because it is a new transaction. The Commission noted that fourteen years had elapsed since the Metro Card system, based on magnetic technology, was introduced and six years since the former State employee left NYCT, and that technical advancements not available at the time of Metro Card’s implementation were being considered by the NYCT as the next generation of smart cards. There was no reason to believe that the former employee has inside information or will be trading on his prior government service
the government rate where the hotel management is aware that he is not traveling on government business. When the discounts at issue are broadly available to all State employees and there is no indication that the companies involved intend to influence any employee in the performance of his or her public duties, the Commission concludes that the discounts may be accepted. The Commission had no difficulty in concluding that a State employee may participate in the Sprint national discount plan. That plan is sufficiently broad-based to allay concerns that the discount is offered to influence employees in the performance of their public duties. It is available not only to all State employees (which would be sufficient in itself) but to federal and city govern-
Ethics Commission web site www.dos.state.ny.us/ethc/ ethics.html
Summary of 2005 Advisory Opinions (cont. from page 2)
to advantage his private sector employer. Thus, any proposal to replace the existing magnetic card system with next generation smart card technology is a new and separate transaction. Advisory Opinion No. 05-04: The Commission was asked about the application of the two-year bar postemployment restrictions to a retired scientist with the New York State Office of Mental Retardation and Developmental Disabilities (“OMRDD”) who went to work for the Research Foundation for Mental Hygiene (“the Foundation”), the closely affiliated research corporation of OMRDD, and is working on a federal grant for which he is the principal investigator. The Ethics Commission concluded, under the unique circumstances of the case, that the law does not prohibit the former State employee from working on what is, in essence, his grant while at his former agency’s closely affiliated corporation. In early 2003, the former State employee was notified that he was to receive a new five-year grant from the National Institute of Health with a budget of more than $7,000,000. Then eligible for retirement, he concluded that it was time to retire from OMRDD and seek employment outside the State system. According to the former State employee and his former boss, it is common practice for a Principal Investigator to take a grant with him upon relocating to another institution. Rather than lose the former State employee’s services and the grant funds, the former boss proposed an alternative: the former State employee would retire from State service, take a position with the Foundation, and continue his research through the agency and receive a salary commensurate with his former employment at OMRDD. Unlike other closely affiliated corporations, the Foundation does not participate in the State’s retirement system and thus the former OMRDD employee was not subject to a cap on earnings. The arrangement would allow the agency to benefit from the funding and prestige of the former State employee’s grant without disadvantaging him financially. The Commission’s opinion noted that, “[the former State employee] did nothing to garner unfair advantage and it [is] abundantly clear that he would have had no difficulty finding another position most likely with a salary well above that provided by the Foundation.” Put simply, his employment with the Foundation benefits the State, and is not an unwarranted privilege that he obtained by virtue of his former OMRDD position. On these unique facts, the Commission had no difficulty concluding that the former State employee’s employment at the Foundation does not violate the ethics law. In a footnote, the Commission suggested that in the future, the agency head who wishes to employ a retired former employee at the agency’s closely affiliated arm should consider seeking an exemption pursuant to Public Officers Law §73(8-b).
Ethics Award
(cont. from page 1)
THE ETHICS REPORT is published by the New York State Ethics Commission, 39 Columbia Street, Albany, New York 12207. Telephone 518-432-8207 or 800-87-ETHICS. The Commission's e-mail address is ethics@dos.state.ny.us In order to reduce the costs of publication, please notify the Commission if you wish your name to be deleted from our mailing list or if your address has changed.
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The Ethics Award is presented to that State agency that best demonstrates a commitment to ethics in government, as outlined in ten criteria, including: – designating a person to perform the functions of an Ethics Officer, thus ensuring that the agency meets its obligations under the ethics laws, and to act as a liaison with the Ethics Commission; – developing an orientation program which includes informing new officers and employees of their obligations under the ethics laws and how they may make complaints to, or seek advice from, their supervisors, the Ethics Officer, or the Ethics Commission about ethics law matters; – conducting, or allowing the Ethics Commission to conduct, ethics training programs approved by the Ethics Commission, informing the agency’s officers and employees of their obligations under the ethics laws; – taking appropriate measures to foster compliance with the timely filing of financial disclosure statements by its covered employees. The Department received a plaque inscribed with the following quote from the former Governor of New York: “We can afford to differ on the currency, the tariff, and foreign policy; but we cannot afford to differ on the question of honesty if we expect our republic permanently to endure.” Theodore Roosevelt earned a reputation for opposing government corruption while in public office. In particular, he supported civil service reform as a member of both the New York State Assembly and the federal Civil Service Commission, as President of the New York City Police Board and as Governor. Previous winners include the State Insurance Department, the Governor’s Office of Employee Relations, the Office of General Services, and the State Department of Agriculture and Markets.
Gift Rules Apply to Holidays and Parties
With the approach of the holiday season, the Commission reminds State employees that the ethics law covers both the solicitation and receipt of gifts. State employees must be careful not to violate the law at what is otherwise a joyous time of year. Some employees have sought guidance on soliciting gifts such as door prizes at holiday parties, while others ask what they should do if a gift basket is delivered to the office. Most State employees know that Public Officers Law §73(5) prohibits them from soliciting or accepting any gift worth $75 or more, when it could be reasonably inferred that the gift was intended to influence or could reasonably be expected to influence them in the performance of official duties or was intended as a reward for any official action. These gifts cannot be received from a disqualified source, which is a person or entity that is regulated by, does business with, appears before or negotiates with the employee’s agency; lobbies or has litigation adverse to the agency; applies for or receives funds from the agency; or contracts with the agency or another agency when the employee’s agency receives the benefit of the contract. State employees also need to know that Public Officers Law §74 prohibits State employees from soliciting or accepting a gift of any value if it would constitute a substantial conflict with the proper discharge of their State duties. In 1993, the Commission issued a Notice of Reasonable Cause to the chief financial officer of a State authority who had arranged for three banks that did business with her agency to give promotional items, such as clocks and calendars, to the holiday party of a financial executives’ organization of which she was vice-president. Since then, the Commission has responded to many questions about the receipt of gifts. For example, if a gift basket of flowers or edible items is delivered to a State agency on behalf of a disqualified source, the designated r e other employees. The employee who received the gift also should contact the donor and tell them that State law prohibits him or her from accepting such gifts in the future. Gift baskets with non-perishable goods, such as bottles of liquor or electronics, should be returned. In some cases, the sender can be called and told to pick up the basket at the agency. State employees need to be careful about attending holiday parties at vendors’ offices. Some vendors may have door prizes that are given to selected attendees. State employees should not attempt to use such parties as cover for accepting improper gifts. In its 1994 opinion on gifts, the Commission noted that State agency heads have a duty to make sure their employees comply with the requirements of the ethics law. It urged them to communicate the restrictions on gifts to their employees, vendors, prospective vendors, regulated entities and anyone else with an interest in agency actions; establish procedures by which employees either seek prior approval for the receipt of gifts or report them after the fact; and consult with the agency ethics officer or the Ethics Commission to resolve any outstanding issue. See page 5 for a listing of permissible and impermissible gifts.
cipient should endeavor to send it back. If that is not possible, either because the delivery person has left the building or is not authorized to accept a return, the basket and its contents must be placed in an open area where it is accessible to
Words to ponder
You cannot have honesty in public life unless the average citizen demands honesty in public life. If you habitually suffer your public representatives to be dishonest you will gradually lose all power of insisting upon honesty. If you let them continually do little acts that are not quite straight you will gradually induce in their minds the mental attitude which will make it hopeless to get from them anything that is not crooked. We can as little afford to tolerate a dishonest man in the public service as a coward in the army. - Theodore Roosevelt
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Save the Date
The 2006 New York State Leadership & Accountability Conference Wednesday, May 3, 2006
Rules on Gifts
The State Ethics Commission has issued Advisory Opinion No. 94-16, describing (1) those gifts that may not be offered to or accepted by State officers and employees, and (2) those gifts that are acceptable. The following are the most important points. Applicable Rules A gift may be in many forms, including money, loan, travel, meals, refreshment or entertainment. The value of a gift is the retail cost to purchase it; the value of a ticket entitling you to food, refreshments, entertainment, etc. is the face value of the ticket; if no value is indicated, the value is the actual cost to the giver. Multiple gifts from a single source given over a twelve-month period that add up to $75 or more will be deemed to be one gift of the total value of all the gifts. The offer of reciprocity, or even actual reciprocity, does not reduce the value of a gift given to you. You may not designate a friend, family member or entity (for example, a charity) to receive a gift that you cannot receive. What You Cannot Do You are prohibited from soliciting or accepting any gift worth $75 or more, when it could be reasonably inferred that the gift was intended to influence you or could reasonably be expected to influence you in the performance of your official duties or was intended as a reward for any official action. If you knowingly and intentionally do so, you are subject to a civil penalty of up to $10,000 or being criminally charged with a Class A misdemeanor. Gifts of $75 or more cannot be received from a disqualified source, which is a person or entity that is regulated by, does business with, appears before or negotiates with your agency; lobbies or has litigation adverse to your agency; applies for or receives funds from your agency; or contracts with your agency or another agency when your agency receives the benefit of the contract. You are prohibited from soliciting or accepting a gift of any value if it would constitute a substantial conflict with the proper discharge of your State duties. If you knowingly and intentionally do so, you are subject to fines, suspension or removal from your job by your appointing authority. What You Can Do The following can be accepted without violating the law: reasonable and customary presents given on special occasions; gifts given by someone based on a family or personal relationship with you; an invitation to attend personal or private events with no connection to the State; meals received when you serve as a participant or speaker in a job-related professional or educational program and meals are available to all participants; modest items of food and refreshment offered other than as part of a meal; unsolicited advertising or promotional material of little intrinsic value; most awards and plaques presented in recognition of your service; rewards or prizes given to competitors in contests or events, including random drawings open to the public; under some circumstances, meals, entertainment or hospitality, but not travel or lodging, from a disqualified source when your participation at an event is for a State agency purpose and related to your official duties—that is when your participation will further agency programs and the event is widely attended. If you receive the offer of a gift, you should consult with your agency ethics officer or other designated agency official to determine whether it is permissible to accept it.
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Opinion Finding Guide Available
The Commission has created an Opinion Finding Guide located on its website at http://www.dos.state.ny.us/ ethc/ao.html. The Commission has issued more than 300 formal advisory opinions since its inception, so this guide makes it easier for you to find the relevant opinion without having to read through ones that are unrelated to your issue. Clicking on the link takes you to a web page on which advisory opinions are divided into the following categories: post-employment restrictions, gifts, outside activities, code of ethics, financial disclosure, and honoraria & travel reimbursement. Then, by clicking on the appropriate link, you are connected with a list of opinions on that topic.
The Commission issues advisory opinions interpreting the application of Public Officers Law sections 73, 73-a and 74, often referred to as the “ethics law.” The opinions, which are issued upon approval of a majority of the Commission members, are binding on both the Commission and the individual requesting the opinion in any subsequent proceeding, providing that the requesting individual acted in good faith and neither omitted nor misstated any material facts in the case. Each formal opinion discusses the application of the law to the particular facts presented in the request and serves as precedent for the determination of future cases. Pursuant to the law, the Commission is required to remove information identifying the person who requested the opinion before making it public.
Have You Been "Certified Ethical"?
Maybe you have not been “certified ethical,” but there is a place where you can receive a certificate showing that you passed the Ethics Commission’s on-line training program. Available at www.goer.state.ny.us/ train/onlinelearning, the program explains New York’s ethics laws in easyto-understand language, with laws followed by a series of “real life” examples to test individuals’ understanding. However, while the examples illustrate pertinent sections of the law, they are not meant to serve as legal advice. Rather, they are designed to supplement other training provided by the Commission. State employees can take the course in one sitting or during several visits to the site. The program is divided into sections on conflicts of interest, outside activities, gifts, honoraria/travel, postemployment restrictions, and investigations and penalties. A final review affords employees ics Commission. Agencies that wish to incorporate the program into their own training programs should contact the Commission. At least two agencies already are in the process of using the course in just such a manner. GOER and the Ethics Commission previously teamed up to produce a 14minute ethics video, which can be ordered from the Commission by calling 518-432-8210. The video uses narrators and specific examples to illustrate what is expected of State officers and employees. Subjects covered include outside activities, honoraria and gifts. Designed for viewing by all State employees, it may be used either as a stand-alone piece or as part of an indepth discussion of ethics and the law. A facilitator’s guide is available to assist managers with discussions.
an opportunity to test their knowledge of the law. Individuals who complete the review can print out a certificate of completion. The program was created by the Governor’s Office of Employee Relations, in conjunction with the State Eth-
New York State Ethics Commission 39 Columbia Street Albany, NY 12207