Local officials, the Corrup Practices Act and the Governmental Ethics Act
The Corrupt Practices Act and the Governmental Ethics Act embody the assertion that 'to the public good private respects must yield,' but they make it difficult for some officials to avoid a conflict of interest
IF YOU are an elected or appointed public officeholder in Illinois, then there's a chance that you may unknowingly run afoul of the state's Corrupt Practices Act (111. Rev, Stat., ch. 102, par. 1 ft).
Cook County State's Attorney Bernard Carey terms the act "extremely broad," and adds that it encompasses "a wide range of conduct." This is because the law itself apparently reflects "the concept that public officers must not only avoid conflict, but also avoid the appearance of conflict," according to J. Calvin Bostian, chief of the Opinion Division of the Illinois attorney general's office. In part, this is what the law declares:
"No person holding any office, either by election or appointment under the laws or constitution of this state, may be in any manner interested, either directly or indirectly, in his own name or in the name of any other person, association, trust or corporation, in any contract or the performance of any work in the making or letting of which such officer may be called upon to act or vote."
Criminal offense
This law is much stronger than other
Illinois laws against conflict of interest,
such as those in the School Code and
the Municipal Code. Violation of those
laws is a misdemeanor — a petty
offense — although under the
Municipal Code, conviction requires
forfeiture of office. A violation of the
Corrupt Practices Act is a felony — a
criminal offense. Conviction also requires forfeiture of office, but that's not
all.
— It subjects the officeholder to a fine of from $200 to $1,000, imprisonment of from one to five years, or both.
— It voids any contracts made or procured in violation of the 'law.
— It bars the convicted officeholder from any office or post of trust and confidence in the state for two years.
— It exposes the guilty person to public disgrace and his or her family to public humiliation.
— It makes the officeholder personally liable for attorney fees and court costs if the public liability insurance policy covering his or her position exempts criminal actions.
— A person is subject to prosecution for up to three years after an illegal act was committed. This means that people no longer in office could face prosecution for illegal actions that they unknowingly committed.
Appearance of conflict
Clearly, the law embodies the assertion by the poet John Milton "that to the public good, private respect must;yield." Related to the Corrupt Practice;Act is the Illinois Governmental Ethics
Act (111. Rev. Stat., ch. 127, par. 601.
101 ft) that requires elected and appointed officeholders to disclose then
economic interests. This act makes it a
crime to vote or act on a contract or
performance or any work which may
benefit the officeholder, directly or
indirectly. Together, these laws serve
notice that self-dealing by public
officials — or even the appearance of self-
dealing — will not be tolerated.
According to a recent Illinois attorney general's opinion (NP-789, 7/18/74), a conflict of interest contains five elements:
1. The person must be holding an of- fice, either by election or appointment, under the laws or constitution of this state.
2. The public official must "have either a direct or indirect interest of a prohibited nature."
3. The official in question must be
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An officeholder's interest in a contract is prohibited even though he or she does not derive any direct benefits from it and though there was no intention of bad faith
empowered to act or vote.
4. A prohibited interest must exist at the same time that a contract is made or let.
5. A contract must be made or let. The Corrupt Practices Act obviously applies to everyone from the governor to a trustee of a school or library district. Though this seems clear, the meaning of "interest" is vague. An appellate court opinion states that the law prohibits a "pecuniary" interest in most instances (Panozzo v. City of Rockjord, 306 111. App. 443, 452). However, the Illinois Supreme Court's interpretation is much broader: "The interest against which the prohibition is leveled is such an interest as prevents or tends to prevent the public official from giving to the public that impartial and faithful service which he is in duty bound to render and which the public has every right to demand and receive" (People v. Adduci, 412 111. 621, 626, 627).
Unspecified minimum
To clarify this position, some states
have defined what constitutes a substantial interest as any above a specified
minimum. The Corrupt Practices Act,
however, does not contain such a
minimum definition, although the
Illinois Governmental Ethics Act does.
For example, a member of the board
of a unit of local government such as a
school board or a special school district,
whether elected or appointed, must disclose the source of income in excess of
$1,200 in the preceding calendar year
from an entity doing business with the
board. The member also must disclose
ownership of an entity doing business
with the board that is worth more than
$5,000 or that yielded more than $1,200
in dividends during the preceding year.
Any capital asset that yielded a capital
gain of more than $5,000 during the
preceding year must be disclosed.
An association with a professional
organization (not defined) that provided
the board member income of more than
$ 1,200 in the previous year must be disclosed. The source of any fee for
professional services exceeding $5,000
and rendered to an entity other than the
board must be disclosed. The law
defines these as the practice of law, accounting, engineering, medicine,
architecture, dentistry, and clinical psychology. The sources of any gifts and
honoraria worth separately or together
more than $500 must be disclosed. So
must the identity of any unit of government other than the board that employs
the person.
Finally, a board member must disclose ownership in excess of $5,000 or income of more than $1,200 from an entity that during the preceding year sought a license, franchise, permit for annexation, or zoning or rezoning of real estate from the member's unit of government and must describe what governmental action was sought.
Judicial opinions in Illinois are less specific. One opinion (Panozzo v. City of Rock ford} implies, for example, that conflict of interest would not apply to a public official who voted to award a contract to his or her employer if the official's pay is "slight" or the employment "'transient.'" Unfortunately, neither "slight" or "transient" are further defined,
Question of construction
The Illinois Supreme Court opinion
in People v. Adduci asserts that
"whether or not the interest in any given
case comes within the prohibition of the
statute may well become a question of
construction for the court in view of all
the facts and circumstances shown in
the particular case." It isn't necessary
for a statute to "enumerate the various
kinds of interest which may come
within its terms," the opinion continues.
"The objectionable interest could consist of any one of numerous interests which would be inconsistent with and repugnant to the duty of the officer to render to the public faithful and impartial service."
Indirect interests
Furthermore, according to the state's highest court (People ex rel. Pearsall v. Sperry, 364 111. 205), an officeholder's interest in a contract is prohibited even though he or she does not derive any direct benefits from it and though there ;
was no intention of bad faith. Such an
"indirect" interest is any that "would
naturally tend to affect" a public official's judgment in his or her determination of whether to let a contract.
Officeholders "would be more than
human if they could make the same fair
and impartial contract with the contractor, as they could with another party
with whom they had no relation by way
of employment or otherwise," the
opinion states. Apparently the term
"otherwise" is one of those that has to
be defined by the court on a case-by-
case basis. Judging by one opinion of
the attorney general (S-575, 4/13/75),
the term also applies to owning stock or
being a director or officer of a contractor such as a bank that is an official
depository of the public official's agency. But it also applies to one whose
spouse or minor children are
stockholders, and it may even apply to
an officeholder whose emancipated
children are stockholders if these
children are only holding the securities
on behalf of their parent.
The same opinion (S-575) argues that
the phrase "may be in any manner interested" indicates "that it was the intent of the legislature to proscribe the possibility of an officer acting or voting upon a contract in which the officer is directly or indirectly interested."
In one case considered by the
100 /Illinois Issues/April 1975
'We're scaring people out running for office. We are almost to the situation where the only people who can hold public office are those who own nothing, know nothing, and earn nothing'
Supreme Court (Peabody v. Sanitary District, 330 111. 250), the treasurer of a sanitary district owned a third of the stock in a corporation that got a contract from the district. The treasurer did not have a vote on the contract—he wasn't even present when the contract was let—but he could have been called upon by the trustees to advise them as to the financial ability of the corporation to perform under the contract. The court held that the treasurer was disqualified from having any interest in the contract, and the contract was void.
A recent attorney general's opinion (S-787, 7/18/74) contends that a violation of the Corrupt Practices Act can occur even if a public official votes "present," refuses to vote at all, refuses to act, or, as in the sanitary district case, is not even present when a vote is taken.
Rigid enforcement
An Illinois Supreme Court opinion
declares that the law against conflict of
interest "must be rigidly enforced by
the courts, without regard to the moral
or equitable considerations that may
urge a different policy in particular
cases" (School District v. Parks, 85 Ill.
338). This means that even if a school
board member, for example, performed
labor and furnished wood for a school
district while he or she was a director of
it, the person is not entitled to be paid
with district funds, and if the district did
pay the person, it is entitled to recover
its money.
The fact that a prohibited interest must exist at the same time that a contract is made or let is also discussed in several opinions of the attorney general. Opinion S-787 deals with the question of whether the renewal of a school district's group health insurance policy is a violation where a board member is also an employee of the insurance company. Although the employee was not on the school board when the original contract was let, renewal "is a manifestation of mutual consent" and "constitutes the making of a contract," the opinion contends. The making or letting of a contract occurs also when failure to terminate a contract results in its renewal, when premiums or commissions are paid, when a contract is modified, or when requests for bids are withdrawn. The sale of bonds to a bank is another example (NP-789), and another is the deposit of public funds in a designated bank (S-575).
Considering all of these strictures, one might expect that both the Corrupt Practices Act and the Illinois Governmental Ethics Act would have their critics. They do.. John E. Juergensmeyer of Elgin, chairman of the local government section of the Illinois State Bar Association, notes that while some state's attorneys have publicly announced that they would adhere to attorney general's opinions dealing with applications of the Corrupt Practices Act, others have interpreted the law their own way. Juergensmeyer says, "This simply points up the fact that the state's attorney of any county has virtually complete and unchecked discretion as to when to prosecute a suspected violation of the statute."
Discretion of state's attorneys
Kane County State's Attorney Gerry
L. Dondanville counters that state's attorneys have such discretion anyway.
The risk to a public official under such
circumstances is highlighted by a situation in adjoining McHenry County. The
president of a local school board in that
county has been indicted for conflict of
interest involving school purchases
from a hardware store in which he has
an interest. The state's attorney,
William J. Cowlin, is a Republican
leader, and the school board president,
Daniel M alone, ran for county clerk on the Democratic ticket. Whether politics
is involved is an open question, since
neither man will comment on the case.
The discretionary powers of the state's attorney also are evident in Lake County, where members of a school board were late in filing their statements of economic interest. State's Attorney Jack Hoogasian initiated action against them after receiving an inquiry from an irate resident of the school district. The ethics legislation "doesn't make any sense anyhow because it's poorly drafted," Cowlin observes, but it's still up to a state's attorney to enforce it. Cowlin and Dondanville agree that instances such as these and the penalties for conviction are having an undesirable effect. "We're scaring people out of running for office," Dondanville says. "We are almost to the situation where the only people who can hold public office are those who own nothing, know nothing, and earn nothing."
'Almost a directive' to prosecute
Cowiin says that he regards the
stream of attorney general's opinions
about the Corrupt Practices Act as
"almost a directive" to prosecute
offenders. Actually, the attorney
general's office has had more inquiries
about conflict of interest than about any
other topic, according to Bostian.
Despite this fact, Cowlin implied in a
letter sent to all taxing districts in his
county, that strict enforcement of the
Corrupt Practices Act would be an "unfortunate circumstance since many fine
people serve in appointed positions
without pay and are often elected to
public office with little or no pay."
Juergensmeyer believes that "it is the almost unanimous feeling that the strict nature of the requirements" of the Illinois Governmental Ethics Act "will frighten away many otherwise highly qualified candidates for these thankless local offices." ¯
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