On ethics

EthicsEvery year, as a requirement for maintaining my CPA license, I have to take an ethics course. Perhaps it is time for something similar for our elected officials.

The annual ethics requirement didn’t always exist. It used to be a one-shot deal: after passing the exam, I had to complete a comprehensive professional ethics exam before being eligible for my license. A subsequent series of scandals rocked the accounting profession. Among the most well-known is the Enron case, which became public in 2001 and resulted in the CPA firm Arthur Andersen LLP surrendering its license to practice. Arthur Andersen, once among the largest five CPA firms in the world, was convicted of obstruction of justice after it shredded documents related to its audit of Enron.

In the wake of scandals, Congress passed the Sarbanes-Oxley Act in 2002. Across the country, states implemented reforms, including annual ethics requirements. Accounting textbooks embraced the concept of teaching ethics along with debits and credits.

The number of accounting scandals has slowed to a trickle:  more than 20 such scandals were revealed in 2002 but only four in the last five years. The increased emphasis on ethics has had the desired effect.

Meanwhile, in political land, ethics violations seem to pop up every day. The Office of Congressional Ethics, an independent, non-partisan entity responsible for reviewing allegations of misconduct against Congressional members and their staffs, reported investigating 36 cases so far in the 113th Congress.  Over the years, high profile ethics cases have included Democrat Charlie Rangel and Republican Michelle Bachmann.

Closer to home, we find former Newport News delegate Phil Hamilton in prison for trying to arrange a job for himself in exchange for a state budget amendment that funded the position. Former governor Bob McDonnell and his wife are awaiting sentencing after being convicted of corruption charges. And, of course, the latest to be ensnared in an ethics scandal is Virginia Beach mayor Will Sessoms.

Ethics is, at its core, an understanding of the difference between right and wrong.  At issue is not whether Sessoms did something wrong but rather whether what he did gave the appearance of being wrong. The McDonnell conviction was a case study in this: the claims that he and his wife did nothing wrong fell on deaf ears. I’m convinced the jury convicted him because they could not see past his gross unethical behavior. Just because something is legal doesn’t make it ethical.

In the wake of the Sessoms disclosures, the mayors from Norfolk and Suffolk resigned bank board positions. While I applaud them for doing so, it shouldn’t have taken the Sessoms investigation to make them realize the potential for conflicts of interest.

Among the required handouts for the CPA annual ethics course in Virginia is a list of the 10 myths of ethics. The first item: just because something is legal doesn’t mean it is right.

The annual ethics training that is required of CPAs serves as a reminder for us to be vigilant in identifying and resolving ethical dilemmas. Our elected officials need a reminder like that as well.

Perhaps then they wouldn’t wind up on the front pages of the newspapers – or, even worse, in jail.


12 thoughts on “On ethics

  1. We already have that requirement for an ethics course for state agencies. And the Commonwealth’s Attorney is supposed to create polices and procedures for enforcement and provide a copy of the law to the elected officials. The problem is no one enforces the law. I have Greg Underwood’s spokesperson on tape saying they have no written policies for enforcement or disclosure. Fraim has violated the law numerous times, most recently with the Financing on The Main. Yet no one seems to care. 2 people on council have said they won’t do anything about Fraim breaking the law because they think he will soon be indicted on Federal charges. Laws don’t mean anything if there isn’t anyone willing to hold people accountable.

    § 2.2-3126. Enforcement

    Each attorney for the Commonwealth shall establish an appropriate written procedure for implementing the disclosure requirements of local officers and employees of his county, city or town, and for other political subdivisions, whose principal offices are located within the jurisdiction served by such attorney for the Commonwealth. The attorney for the Commonwealth shall provide a copy of this act to all local officers and employees in the jurisdiction served by such attorney who are required to file a disclosure statement pursuant to Article 5 (§ 2.2-3113 et seq.) of this chapter. Failure to receive a copy of the act shall not be a defense to such officers and employees if they are prosecuted for violations of the act.

    Each attorney for the Commonwealth shall render advisory opinions as to whether the facts in a particular case would constitute a violation of the provisions of this chapter to the governing body and any local officer or employee in his jurisdiction and to political subdivisions other than a county, city or town, including regional political subdivisions whose principal offices are located within the jurisdiction served by such attorney for the Commonwealth.

    § 2.2-3128. Semiannual orientation course.

    Each state agency shall offer at least semiannually to each of its state filers an orientation course on this chapter, on ethics in public contracting pursuant to Article 6 (§ 2.2-4367 et seq.) of Chapter 43 of this title, if applicable to the filer, and on any other applicable regulations that govern the official conduct of state officers and employees.

      1. Sorry should have put the next section, with some exemptions there is a requirement. If you read the entire act, it provides for most of the problems you point out. The real issue that no one cares about enforcing it. The law requires you to disclose personal interests in a transaction and abstain from both voting and any discussions at any time. For local electeds on a governing body, that de-facto means disclosure when the agenda item is read by the clerk. Fraim and Sessoms disclose after partaking in the discussions and then abstain from voting. That under the law constitutes a knowing violation, which constitutes malfeasance in office, which is enough to have you removed. But when the Commonwealth’s Atty completely refuses to enforce the law, it doesn’t matter what you do or don’t do.

        2.2-3130. Attendance requirements.

        Except as set forth in § 2.2-3131, each state filer shall attend the orientation course required in § 2.2-3128, as follows:

        1. For a state filer who holds a position with the agency on January 1, 2004, not later than December 31, 2004 and, thereafter, at least once during each consecutive period of two calendar years commencing on January 1, 2006.

        2. For a person who becomes a state filer with the agency after January 1, 2004, within two months after he or she becomes a state filer and at least once during each consecutive period of two calendar years commencing on the first odd-numbered year thereafter.

        2.2-3131. Exemptions.

        A. The requirements of § 2.2-3130 shall not apply to state filers with a state agency who have taken an equivalent ethics orientation course through another state agency within the time periods set forth in subdivision 1 or 2 of § 2.2-3130, as applicable.

        B. State agencies may jointly conduct and state filers from more than one state agency may jointly attend an orientation course required by § 2.2-3128, as long as the course content is relevant to the official duties of the attending state filers.

        C. Before conducting each orientation course required by § 2.2-3128, state agencies shall consult with the Attorney General and the Virginia Conflict of Interest and Ethics Advisory Council regarding appropriate course content.

        1. Wait – the content is only in public contracting? So, once every two years, they are required to attend a course that only covers that?

          That’s not the full measure of ethics training by any means. No wonder there is no enforcement.

          Many of the charges in the Sessoms case weren’t about public contracting. You’d be hard pressed to consider a zoning change “public contracting.”

          1. Well the training course is only for state employees and you are right, that by no means is enough.

            That being said, if the Commonwealth’s Attys cared about the law, training wouldn’t be necessary. They are supposed to make sure your statement of economic interests is filled out and create procedures to force elected officials to disclose interests in a transaction before discussing and voting on them. If that’s done right, there should be no need to spell out exactly what the law means anymore than we need forced training on the PPEA or PPPT laws.

            But as for Sessoms, if the Special Prosecutor isn’t a complete sham, he will be convicted and removed from office. His issues deal with being involved in discussions and voting on transactions where he as a personal interest. I’ve got all his conflict of interest legal opinions going back to the 1990s and he knew full well that he shouldn’t discuss anything that he was going to abstain on.

            Fraim should be under investigation too, but like I said before, no one cares about this law in Norfolk. Apparently the possibility he could be indicted by the Federal Grand Jury is enough for some people to feel like they don’t need do anything about him repeatedly making a mockery of the law. You don’t get to lead discussions on an issue you have a personal interest in and then abstain from voting. That defeats the purpose of the law.

            2.2-3112. Prohibited conduct concerning personal interest in a transaction; exceptions.

            A. Each officer and employee of any state or local governmental or advisory agency who has a personal interest in a transaction:

            1. Shall disqualify himself from participating in the transaction if (i) the transaction has application solely to property or a business or governmental agency in which he has a personal interest or a business that has a parent-subsidiary or affiliated business entity relationship with the business in which he has a personal interest or (ii) he is unable to participate pursuant to subdivision 2, 3 or 4. Any disqualification under the provisions of this subdivision shall be recorded in the public records of the officer’s or employee’s governmental or advisory agency. The officer or employee shall disclose his personal interest as required by subsection E of § 2.2-3114 or subsection F of § 2.2-3115 and shall not vote or in any manner act on behalf of his agency in the transaction. The officer or employee shall be prohibited from (i) attending any portion of a closed meeting authorized by the Virginia Freedom of Information Act (§ 2.2-3700 et seq.) when the matter in which he has a personal interest is discussed and (ii) discussing the matter in which he has a personal interest with other governmental officers or employees at any time;

            2.2-3101. Definitions.

            “Personal interest” means a financial benefit or liability accruing to an officer or employee or to a member of his immediate family. Such interest shall exist by reason of (i) ownership in a business if the ownership interest exceeds three percent of the total equity of the business; (ii) annual income that exceeds, or may reasonably be anticipated to exceed, $5,000 from ownership in real or personal property or a business; (iii) salary, other compensation, fringe benefits, or benefits from the use of property, or any combination thereof, paid or provided by a business or governmental agency that exceeds, or may reasonably be anticipated to exceed, $5,000 annually; (iv) ownership of real or personal property if the interest exceeds $5,000 in value and excluding ownership in a business, income, or salary, other compensation, fringe benefits or benefits from the use of property; (v) personal liability incurred or assumed on behalf of a business if the liability exceeds three percent of the asset value of the business; or (vi) an option for ownership of a business or real or personal property if the ownership interest will consist of clause (i) or (iv) above.

            “Personal interest in a contract” means a personal interest that an officer or employee has in a contract with a governmental agency, whether due to his being a party to the contract or due to a personal interest in a business that is a party to the contract.

            “Personal interest in a transaction” means a personal interest of an officer or employee in any matter considered by his agency. Such personal interest exists when an officer or employee or a member of his immediate family has a personal interest in property or a business or governmental agency, or represents or provides services to any individual or business and such property, business or represented or served individual or business (i) is the subject of the transaction or (ii) may realize a reasonably foreseeable direct or indirect benefit or detriment as a result of the action of the agency considering the transaction. Notwithstanding the above, such personal interest in a transaction shall not be deemed to exist where (a) an elected member of a local governing body serves without remuneration as a member of the board of trustees of a not-for-profit entity and such elected member or member of his immediate family has no personal interest related to the not-for-profit entity or (b) an officer, employee, or elected member of a local governing body is appointed by such local governing body to serve on a governmental agency, or an officer, employee, or elected member of a separate local governmental agency formed by a local governing body is appointed to serve on a governmental agency, and the personal interest in the transaction of the governmental agency is the result of the salary, other compensation, fringe benefits, or benefits provided by the local governing body or the separate governmental agency to the officer, employee, elected member, or member of his immediate family.

  2. Unbelievable! First and foremost ethical behavior cannot be legislated; nor, can it be imparted by a seminar or course of instruction. Laws solely ascertain the legality of an action. Ethics is the determining the right and wrong of an action is the absence of a law or the ensuing penalty. The maxim, “Treat others how you wish to be treated” expresses the fundamental moral rule found in the tenets of most religions and creeds through the ages.

  3. Perhaps if the government weren’t doing so many things that it should not be doing, then the potential for corruption would be a whole lot less. When the government gives handouts like halloween candy, corruption is the natural result.

  4. What a crock. If we reduced the scope of the legislature’s authority down to the point where their sole and exclusive power was establishing post roads (which is expressly in the Constitution, Art. I Sec. 8), some jerk would try bribing his Congressman for the contract to supply the asphalt.

    1. Agreed. I only said that the potential would be a whole lot less, not that it would be eliminated altogether. Power corrupts, and absolute power corrupts absolutely. So let’s keep their power to a minimum.

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