Monday, September 10, 2012

Ethics: When Being Right May Be Wrong

I recently posted a blog entitled When Does a Side Job Become a Conflict with a Government Job? about the mounting controversy surrounding Port of Seattle CEO Tay Yoshitani's recent appointment to a side job to the board of directors of Expeditors, a private logistics company.

Port's response to legislative complaints:  A dozen or so Washington State legislators have complained that Yoshitani's new role creates at least the appearance of a conflict of interest with his official duties at the Port.  The Port responded to the legislators by asserting there was no problem because the Port's attorney determined there was no conflict or apparent conflict of interest for Yoshitani to serve in both roles.  The Port's letter went on to state that Yoshitani was permitted to serve on such boards in accordance with his employment contract with the Port.

Appearance of conflict of interest? - No: The Port's code of ethics notes that "Port employees should avoid situations that could appear to be a conflict of interest."  According to the Port's letter back to the legislators, the Port's attorney determined that the "CEO's participation would not create or appear to create a conflict of interest..."  The Port's attorney, Yoshitani, and some members of the Port Commission are all asserting there is no appearance of a conflict of interest.

Appearance of conflict of interest? - Yes:  However, legislators, citizens, and the media have all raised questions about Yoshitani's new role, noting that it appears to be a conflict of interest.  While the Port may be correct that there is no actual conflict of interest, certainly the appearance of a conflict of interest is present.  Perceptions and appearances are often more important than reality. 

CEO's employment contract:  According to the Port's response to legislators, Yoshitani is permitted by his contract with the Port to serve as a member of a board of directors for a private entity if the Port's attorneys determine there is no conflict or appearance of a conflict of interest and such participation is not "contrary to any other provision of the Port's Code of Ethics for Employees."

Who is right?  Yoshitani may be right that his contract enables him to serve as a director for an outside company.  He may be right that such participation does not actually create a conflict of interest.  But the conditions of his service on the outside board all hinges on whether it creates an appearance of a conflict of interest - which is the subject of the controversy.  Appearances of conflicts don't necessarily relate to facts, but to perceptions.  The fact is that many have noted there is, at a minimum, the appearance of a conflict of interest.  

The bottom line:  According to Yoshitani's employment contract and the Port's ethics policy, if there is the appearance of a conflict of interest, Yoshitani should not be permitted to serve on the outside board of directors.

Importance of public confidence:  Government should be transparent, and the Port's response has not sufficiently dealt with the appearance of a conflict of interest.  Public officials have an obligation to monitor their actions so as to increase the public's confidence in government.  As Port Commissioner Gael Tarleton noted: "We have to stop doing things that harm public trust in government."

Additional resources:
  • New York's Moonlighting Lawmakers, September 6, 2012 New York Times Op-Ed that points out prohibition of Members of Congress of earning outside income above 15% of their yearly Congressional salaries and from serving as officers or board members for compensation.

Mike Purdy's Public Contracting Blog 
© 2012 by Michael E. Purdy Associates, LLC

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