Transcript State Government Ethics Act (SGEA) Article 1 General Provisions/Definitions [There are 31 terms defined] See especially: - Gift - Public event - Public servant - Other “covered persons”

State Government Ethics Act
(SGEA)
Article 1
General Provisions/Definitions
[There are 31 terms defined]
See especially:
- Gift
- Public event
- Public servant
- Other “covered persons”
Article 2
State Ethics Commission
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

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Advisory opinions
Complaints
Ethics education/newsletter
Added responsibility of Head of State
Agencies and Chair of each Board
Example of ethics awareness and
conflict of interest reminder:
In accordance with the State Government Ethics Act,
it is the duty of every [board] member to avoid
both conflicts of interest and appearances of
conflict.
Does any board member have any known conflict of
interest or appearance of conflict with respect to
any matters coming before the [board] today?
If so, please identify the conflict or appearance of
conflict and refrain from undue participation in the
particular matter involved. N.C.G.S. §138A-15(e);
138A-36(c)
Article 3
Disclosure of Economic Interests
Statement of Economic Interest (SEI) for “covered
persons”
those holding covered positions on 1/1/07
 must file SEI by 3/15/07
* A prospective covered person required to file SEI (proposed for
appointment, employment, or candidate for election after 1/1/07)
“shall not be appointed, employed, or receive a certificate of
election” prior to the receipt and evaluation of their SEI from the
Ethics Commission. (Exception: provisional appointment)

PENALTIES:
•
•
•
Fail to file: $250 fine
Fail to disclose: Class I misdemeanor
False information (knowing it to be false): Class H Felony
Statement of Economic Interest
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Filing an SEI is required by law for “covered
persons” and is public record.
There is not a manner by which SEI’s can be
submitted confidentially.
Although it does not happen frequently, the
law allows anyone requesting an SEI at
anytime to review it in its entirety.
Article 4
Ethical Standards for Covered Persons


Cannot knowingly use public position in a manner
that will result in financial benefit to the person, a
member of the person’s family, or a business with
which he/she is associated
Gifts are banned, with 10 exceptions
– See NCGS Chapter 138A-32(e)
– Most are intuitive/common sensical, e.g. food/drink for
immediate consumption at public event; informational
materials; gifts accepted on behalf of the State; gifts from
extended family; and those received as part of a business,
civic, religious, etc. relationship (more on this later)
Article 5
Violation Consequences
(In addition to 138A)
Is compliance “ethics”?
– SGEA does raise ethical awareness
– Provides meaningful ethical guidelines
– Ensures systems/programs/policies are in place,
especially regarding education, to heighten
accountability
Therefore, Article 5 addresses:
– Disciplinary action
– Misfeasance, malfeasance, nonfeasance
– Termination from employment
Chapter 138-31, 32
SGEA (Article 4)
STOP: Self-dealing (NO QUID PRO QUO) (gifts,
lobbying restrictions)
CAUTION:
Public Interest vs Self-Interest
Public Interest- The public good: what you are expected to do
and how you are expected to do it, in your official capacity under
this (and related) laws
Self-Interest- Not necessarily a negative: earning a living,
having friends, being a deacon/elder in your church
SERVE: Your job requires interaction with the public, being
attentive to “interested persons”, and making decisions that
promote the public good by way of honest services, without
promoting self-interest to the point of self-dealing.
Gifts
 What is a gift?
– Anything of monetary value given or received
without valuable consideration by or from a
lobbyist, lobbyist principal, or a person described
under G.S. 138A-32(d)(1), (2), or (3).
[See N.C.G.S. 14-234; 133-32]

What is not a gift?
– Campaign cost
– Personal payment
– See G.S. 138A-3(15)(a-e).
No Self-Dealing
138A-32(a) applies to everyone – entire universe of
people covered by law and other provisions
*Covered persons or legislative employees knowingly
shall not seek/receive, directly or indirectly, a gift
for being influenced
*Public servant, legislator or legislative employee
knowingly shall not seek/receive, directly or
indirectly, a gift from a lobbyist/lobbyist principal
No Self-Dealing
PS knowingly shall not seek/receive,
directly or indirectly, a gift from a person:
• seeking/doing business with public servant’s
employing entity
• engaged in acts regulated/controlled by public
servant’s employing entity
• having financial interests substantially/materially
affected by doing/not doing public servant’s
official duty
The 10 Gift Exceptions
1.
2.
3.
Food and beverages for immediate
consumption in connection with public events
Informational materials relevant to the duties
of the covered person or legislative employee
Reasonable actual expenditures (RAE): travel,
lodging, registration, etc. incurred in
connection with-Attendance at educational meetings and conferences
-Legislative organization meeting
-Public service membership meeting
(if they meet the statutory requirements)
The 10 Gift Exceptions
4.
5.
6.
7.
A plaque or similar nonmonetary
memento recognizing service or charity
Gifts accepted on behalf of the State
Anything made available to the general
public or all other State employees
Gifts from the covered person’s or
legislative employee’s extended family,
or a member of the same household
The 10 Gift Exceptions
8.
9.
10.
Commerce Exception – gifts given to a
public servant while the public servant is
responsible for conducting the business on
behalf of the State
International Exception – gifts valued at
less than $100 given as a personal gift in
another country as cultural protocol
Gifts given or received as part of a
business, civic, religious, fraternal,
personal, etc. relationship not related to
the person’s public service and not given
for the purpose of lobbying

Honorarium (covered persons & legislative
employees)

Cannot accept if:
– Employing entity reimburses for travel, subsistence,
registration, or
– Employing entity’s work time or resources are used, or
– The activity would be considered official duty or
reasonably close.
But, outside source may reimburse employing
entity for actual expenses or pay a fee to
the employing entity
Awareness
1.
2.
3.
4.
5.
Be aware of who you are vis-à-vis the law (the
SGEA): Legislator, Legislative Employee, Public
Servant, Designated Individual, Judicial Officer,
Judicial Employee, etc.
Be aware of who you’re dealing with (lobbyist,
designated individual, interested person, ‘person’,
etc.)
Be aware of what is at issue: Is it a gift according
to the law? Is there a conflict of interest, or even
the appearance of one?
Be aware of the exceptions.
Be aware of the event, the where.
Awareness

Definitions are important:
–
–
–
–
–
–
Public servant
Public event
Gift (with exceptions)
Conflict of interest
Educational event
Lobbying, lobbyist, lobbyist principal
Accountability

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
The Golden Thread throughout this law is
“honest services”
Understanding and abiding by what this
means is essential:
IT’S THE LAW!!
– NO



Use of public position for private gain
Conflict of interest (138A-36, a-d)
Appearance of conflict of interest (138A-36, a-d)
– YES

Recusal: when, based on what?
Is it a gift? 138A-3(15) excludes:
-Things you paid market or face value for,
-Loans and scholarships available to everyone and on the same terms, and
-Campaign contributions under Chapter 163
Public Servants
Covered Recipients:
-Public Servants
Is the gift given (funded) directly
or indirectly by a lobbyist or
lobbyist principal?
-Legislators
-Legislative Employees
YES.
Then you may not
accept it UNLESS it falls within a
gifts exception. If an exception
applies,
If you receive a $200+ gift
per donor Quarter:
-for the purposes on lobbying,
or
-in the form of a scholarship,
-from a non-lobbyist or a
person exempt from 120C
-THEY must report it, unless
they are outside NC, in which
case YOU must report it.
-It must be reported by the lobbyist principal
if it is:
worth more than $10 (except gifts given as
the result of a personal, business, etc.
relationship, which are reported at $1) OR a
contract or obligation
YES.
NO.
Then, is the gift funded
directly or indirectly by an
“interested person”:
-person doing or seeking to do
business with public servant’s
agency, or
-who is regulated by public
servant’s agency, or
-has financial interests that
may be affected by public
servant?
Then you may not accept it
UNLESS it falls within a gifts
exception. If an exception applies,
NO. Then
you may
accept it
BUT…
Is it a gift? 138A-3(15) excludes:
-Things you paid market or face value for,
-Loans and scholarships available to everyone and on the same terms, and
-Campaign contributions under Chapter 163
Legislators or Legislative Employees
Is the gift given (funded)
directly or indirectly by a
lobbyist or lobbyist
principal?
NO. Then a legislator
or legislative employee
may accept it. BUT, it
may have to be reported.
If you receive a $200+ gift per donor Quarter:
-for the purposes on lobbying, or
-in the form of a scholarship,
-from a non-lobbyist or a person exempt from
120C
-THEY must report it, unless they are outside NC,
in which case YOU must report it.
Covered recipients:
-Public Servants
-Legislators
-Legislative Employees
YES. Then you may not
accept it UNLESS it falls
within a gifts exception. If
an exception applies,
-It must be reported by the
lobbyist principal if it is:
worth more than $10 (except gifts
given as the result of a personal,
business, etc. relationship, which
are reported at $1) OR a contract
or obligation
A LEGISLATOR, LEGISLATIVE EMPLOYEE, AND PUBLIC SERVANT:
-MAY ACCEPT EXPENDITURES MADE BY LOBBYIST PRINCIPALS ONLY
AND THAT ARE MADE ”IN CONNECTION WITH” ATTENDING THE
FOLLOWING MEETINGS
i. Educational Meeting?
-Is it primarily related to your public
duties and responsibilities OR
-Are you a speaker or panel member?
If YES, then meeting must meet
three criteria in order for any of your
expenses to be paid for by a lobbyist
principal:
Entertainment must be
“incidental” to the principal
agenda of the meeting.
ii. Legislative Organization Meeting?
iii. Public Servant Organization Meeting?
-A legislator or legislative employee
-A public servant
-Attends a meeting of organization and:
a) The GA is a member, of
b) The legislator or legislative
employee:
-Attends a meeting as a
member of a board, agency, or
committee and:
-is a member of participant by virtue of
his/her public position, or
-The PS’s agency is a
member, or
- a member of a board, agency, or
committee of the organization.
- The PS is a member or
participant by virtue of their
public position.
The meeting must be:
-attended by at least 10 people
Any food, beverages or entertainment
must be provided to:
-have a formal agenda, and
-all attendees, OR
-notice must be given at least 10
days in advance
-a defined group of 10 or more
attendees
Educational Meeting Exception
Remember that an “educational meeting” must
be for the purposes primarily related to the
public duties and responsibilities of the Covered
Person.
In applying these factors, the focus of the
Commission will be on the intent of the donor
and the recipient’s knowledge of that intent.
The determination as to whether a meeting is
“educational” will vary according to the facts
and circumstances of each meeting.
Educational Meeting Exception

Is the educational content of the
meeting related to a specific public
duty or responsibility of the Covered
Person?
– If so, what specific duty or responsibility?
 For legislators, this will be interpreted very
broadly
 For other public servants, less so because of
the scope of their public duties
Educational Meeting Exception
IS THE PRIMARY PURPOSE
OF THE MEETING
EDUCATIONAL?
Educational Meeting Exception

If the meeting’s primary purpose is to influence a
public servant with respect to executive or
legislative action (rather than educate them on a
legitimate subject), the meeting is not
“educational”.
– Meetings intended to influence rather than educate may
include meetings that are directly related to an upcoming
official vote, recommendation, or other action that the
public servant may take.
Educational Meeting Exception
In determining the purpose of the meeting,
the Commission will consider whether the
entity holding the meeting:
– has legislation pending before the General Assembly or
intends to request legislative action;
– is seeking NC legislative or executive action at the time of
the meeting;
– can be impacted by the actions or decisions of the public
servant; or
– if the facts demonstrate that the entity’s purpose in
holding the meeting is to advocate on behalf of legislative
or executive action.
Educational Meeting Exception
What is the nature of the entity holding the
meeting?
– Is the entity a State agency or governmental entity?
– Is the entity an educational institution?
– Is the entity an organization that routinely sponsors meetings
with educational content?
– Is the entity holding the meeting a Lobbyist Principal?
Is the Lobbyist Principal paying for the meeting
also sponsoring the meeting?
– Is the source of the funding (gift) the same as the source of
the education? (As opposed to a Lobbyist Principal paying to
send a public servant to another entity’s meeting)
Educational Meeting Exception
What is the complete agenda of the meeting?
– What proportion of the individual events scheduled at the meeting
have a speaker, roundtable discussion, or other educational content
that is directly related to the public duties of the public servant?
– What proportion of those sessions are held in the absence of a meal
or entertainment?
– What proportion of the meeting agenda includes meals or
entertainment with formal educational content?
– Does the agenda cover a wide range of topics or have a very limited,
industry-specific focus?
– Would the meeting take place regardless of whether the invited
public servant(s) attends?
– Who are the speakers?
– Are they associated with the Lobbyist Principal or its Lobbyist?
– Are they outside experts in their field?
Educational Meeting Exception
Is the location of the meeting directly related to
the meeting’s educational content?
– Is there a reason for holding the meeting in a location
other than where the attendees live or work?
– Is it necessary to the meeting’s educational purpose
that an individual travel in connection with the meeting?
– Is the meeting sponsored by a state, national, or
international organization for the benefit of its state,
national, or international membership?
– Is the location of the meeting otherwise integral to the
educational content of the meeting/
– Would an individual be capable of obtaining a
comparable degree of educational information through
other means that would not require travel?
Educational Meeting Exception
Is the length of the educational meeting
reasonably necessary to fulfilling the educational
purpose of the trip?
What degree of personal benefit does the
individual gain from attendance at the meeting?
– Does the personal benefit outweigh the public benefit
gained by the educational value of the meeting?
Are there other factors that would support the
conclusion that the meeting is educational?
The 3 A’s
Any ethics law, or ethics initiative,
should address “The 3 A’s”:
– Awareness
– Accountability
– Authenticity
Awareness and Accountability can be
legislated and enforced!
Authenticity cannot be legislated.
Practicum #1
I am on the Board of Trustees.
My adult daughter owns several tracts of real estate
adjacent to the college. Prior to my appointment to
the Board, the college had expressed interest in
acquiring the property to expand the campus.
Do I have to disclose this property on my SEI?
If the college attempts to acquire the property, can I
participate?
If I recuse myself, can I provide information about the
property to the college President?
If your daughter is “emancipated” (i.e. adult, living on
her own, etc.), then the answer is NO. You do not have
to disclose this property on your SEI.
You may not participate in the college’s attempt to
acquire this property, as there is, at least, the
appearance of a conflict of interest. participate
You may offer strictly informational responses to the
college President if she/he asks. You may not try to
“sell” the property to her/him.
Practicum #2
As a covered board member, I will be called on to
review, assess, and possibly vote on a contract
for technical support brought before the board by
a high school friend of mine, the co-owner of the
company.
I have not seen him for 15 years, and, upon his
arrival for his presentation, he offers me tickets
to the ACC Championship game, between Wake
Forest and Georgia Tech.
May I accept the tickets; may I sit in on his
proposal; and must I recuse myself from any vote
regarding the contract and his interest in
obtaining it?
Is it a gift?
YES.
Is the gift given (funded) directly or
indirectly by a lobbyist principal?
NO.
Then, is the gift funded directly or
indirectly by a:
-person doing or seeking to do business
with public servant’s agency?, or
-who is regulated by public servant’s
agency?, or
-has financial interests that may be
affected by public servant?
Is the recipient covered?
The recipient is a:
YES.
Public Servant
YES.
The gift is from someone seeking
to do business with your agency,
regulated by your agency and has
financial interests that may be
affected by your vote.
Then, you may not accept it
UNLESS it falls within a gifts
exception. If an exception applies,
If you receive a $200+ gift per donor Q.:
-for the purposes on lobbying, or
-in the form of a scholarship,
-from a non-lobbyist or a person exempt from 120C,
THEY must report it, unless they are outside NC, in which case YOU
must report it.
Practicum #3
While deliberating a contract proposal
on behalf of my board, I learn that the
presenter/contractor is a competitor of
a business owned by my wife’s
brother. Should I - must I - recuse
myself from the presentation,
deliberation, and/or vote?
By definition, your wife’s brother is “extended family”
under the new SGEA.
Therefore, there is at least an
appearance of a conflict of interest.
The best option is to recuse yourself from
the meeting for this
presentation/deliberation/vote.
(Note: If your recusal will create the absence of a quorum,
then you may stay and be counted present while refraining
from participating in deliberations or voting.)
Practicum #4
I am a trustee at a community college.
My expertise includes the history of the feminist
movement.
The National Organization of Women (NOW) has
invited me to speak at the NOW Conference in
Miami, Florida.
The audience of some 1,000 is interested in a brief
overview of this history, as well as current issues
concerning women in politics and education.
The entire trip is being paid for by NOW, including
travel, meals, and lodging. May I attend, may
NOW pay, and may I participate in any provided
entertainment?
Educational Meeting
138A-32(e)(3)
Is it primarily related to your public
duties and responsibilities?
OR
Are you a speaker or panel member?
YES. You are a speaker.
The meeting then must meet three
sets of criteria in order for any of
your expenses to be paid for by a LP:
Entertainment must be
“incidental” to the principal
agenda of the meeting.
The meeting must be:
-attended by at least 10 people
-have a formal agenda, and
-notice must be given at least 10
days in advance
Any food, beverages or entertainment
must be provided to:
-all attendees, OR
-a defined group of 10 or more
attendees
You may attend and NOW may pay.
Practicum #5
I am a voting member on a University Board
of Trustees. My uncle remembered my
birthday and sent me tickets to the ACC
football tournament in Jacksonville, Florida.
My uncle is a licensed contractor and is
renovating two buildings on campus. My
board approves building and renovation
contracts. Should I return the tickets to my
uncle?
Again, we are dealing with what appears
to be a conflict of interest.
Does your uncle give you a similar
gift every year for your birthday,
or is this the first time?
Are you prepared to report
this transaction and have
your name attached to it in
the event of an
investigation?
To err on the side of caution, you should probably not accept the tickets.
Practicum #6
As a Commissioner, I am to participate in a
Commission hearing regarding a grant proposal and
request from the Association of Blind Veterans of
North Carolina (ABVNC). My U.S. Marine Corps son
has recently returned from Iraq, and is a lobbyist
for the National Veteran’s Association. Must I recuse
myself from the ABVNC grant request hearing? If
not, may I vote on their proposal? What if I learn
before the hearing that, as an ophthalmologist,
several of my patients are among the 400 members
of the ABVNC. Must I recuse myself from the vote?
You do not have to excuse yourself from the
grant hearing deliberation just because your son
is a lobbyist for another organization.
Voting on this proposal could create the
appearance of a conflict of interest. In order to
avoid this, a recusal would be the best option, if
a quorum will still remain after your recusal.
Practicum #7
As a board member, may I take my
State Legislator to dinner?
What if my board reimburses me for the
dinner?
What if I do not submit to the board the
cost for reimbursement?
Is it a gift?
YES.
The recipient is a:
Is the recipient covered?
Legislator
Is the gift given (funded) directly or
indirectly by a lobbyist principal?
NO.
As a member of a board, you are not
considered a lobbyist principal. You are
defined as a public servant.
Therefore, you may take your State Senator
to dinner BUT it may have to be reported…
If you receive a $200+ gift per donor Q.:
-for the purposes on lobbying, or
-in the form of a scholarship,
-from a non-lobbyist or a person exempt from 120C,
THEY must report it, unless they are outside NC, in which case YOU must report it.
YES.