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Members of two special University of Hawaii committees have been advised they must file personal financial disclosures with the State Ethics Commission as the result of amendments to the state ethics code passed by the Legislature earlier this year.
In a separate move, the commission and UH officials have reportedly reached tentative agreement on a policy that will cut the number of administrators and athletic department employees eligible to receive complimentary tickets to athletic events.
Both matters are up for discussion by the commission at its meeting Wednesday morning.
Les Kondo, the commission’s executive director, wrote to members of an accountability task force appointed by the UH Board of Regents in the wake of the Stevie Wonder concert scam, and members of the Manoa chancellor’s athletic director search committee, advising them of the new disclosure requirement.
They are just the first of many temporary advisory groups likely to be hit by the change, Kondo said.
Kondo’s advisory has already drawn complaints from some members of the two committees, and led to further discussions with the UH General Counsel’s office.
The financial disclosures are the the same filed annually by legislators and other elected officials, as well as agency directors, deputies, and other key state personnel, and are relatively intrusive. Information that must be reported includes sources of earned income for the person filing and their spouse and dependent children, creditors and amounts owed, ownership interests in businesses, including stock holdings, officerships in organizations or businesses, as well as real estate owned or recently transferred.
The Ethics Commission is scheduled to review staff recommendations regarding the new disclosure requirements and to address several ambiguities in the new law.
Also on the agenda is a review of disclosure policies for UH officials with access to so-called “protocol funds,” which are essentially slush funds administered by the UH Foundation using money from private donors for expenses that would not be allowed if state funds were used. The review was prompted by published accounts of spending by former athletic director Jim Donovan for travel, meals, and gifts.
Although it started with a question of whether expenditures of “protocol funds” should be treated as gifts, the result appears to be a policy that will severely curtail the practice of distributing free season tickets to hundreds of UH executives, BOR members, and athletic department employees.
Kondo said the disclosure requirements for members of task forces and other temporary advisory committees are spelled out in Act 208, which exempts members from conflict of interest provisions as long as they file financial disclosures and publicly disclose potential conflicts.
The bill was a legislative response to a dispute with the commission over application of the state ethics code to members of the legislatively created mortgage foreclosure task force.
In May 2011, Kondo advised task force members they could not lobby on behalf of private clients “on matters in which the Task Force participated or will participate.”
For example, Kondo said a task force member could not be paid to lobby for or against “legislation that was recommended by the Task Force.”
The ruling took trade associations represented on the task force, and individual task force members, by surprise. They quickly appealed to legislators, saying the broad prohibition would make it impossible for knowledgeable industry professionals to accept positions on advisory panels.
HB 2175, which became Act 208, originally would have created a wholesale exemption from the ethics law for task force members, but was amended several times to incorporate changes recommended by the commission to narrow the scope of the exemption.
Kondo believes the resulting Act 208 “is internally inconsistent with regard to financial disclosure.”
For example, in one place the measure requires task force members to file a “public disclosure” of any interest or transaction which could create a conflict of interest. In another place, task force members are exempted from conflict of interest provisions if they comply with financial disclosure requirements set out by law, but the law specifies state officials whose financial disclosures are open to the public. Task force members are not among them.
As a result, although the law appears to require public disclosure, Kondo said his recommendation is to treat these new disclosures as confidential.
Although Kondo has already advised members of the UH committees of the expanded disclosure requirements, Wednesday’s meeting marks the first time the commission has been asked to officially adopt this interpretation of the law.
The commission is also scheduled to continue a discussion of whether, or under what conditions, UH employees must report as gifts any expenses paid or reimbursed by the UH Foundation.
The question was triggered by press accounts of expenditures by former athletic director Jim Donovan from special funds routed through the foundation. The expenditures, now detailed in an internal athletic department audit, included meals ranging from snacks to very expensive spreads.
In a 2004 opinion, the commission ruled the gift disclosure provision of the state ethics code required then-UH President Evan Dobelle to report discretionary expenditures from so-called “protocol funds” administered by the UH Foundation.
A key part of that decision rested on the UH president’s relationship to the foundation, which contracts with the university to manage its fundraising. Gift disclosure is appropriate, the commission ruled, because the president’s decisions can directly impact the foundation.
UH President M.R.C. Greenwood is currently the only university official required to make similar disclosures, Kondo said. The dean of the College of Engineering also discloses protocol spending, although commission staff do not believe it is required by law, Kondo said.
However, published accounts of Donovan’s free spending while serving as athletic director, and details of some specific expenditures, have prompted a further review.
Kondo said the commission’s concerns have been at least partially confirmed by expenditures flagged as potentially inappropriate by the athletic department audit ordered by the Board of Regents, and expenditures detailed in accompanying attachments.
In one case, the audit flagged an $838 reimbursement claim for a dinner for four at Alan Wong’s. Other expensive meals at places like Ruth’s Chris Steak House averaged $94 per person. The audit also flagged the cost of five athletic department administrators attending the NCAA Final Four basketball tournament as “questionable.”
The ethics law requires reporting of any gifts from any one source with a total value of more than $200 if “the source of the gift or gifts have interests that may be affected by official action or lack of action” by the recipient.
In the case of funds routed through the UH Foundation, the Ethics Commission will have to determine whether the “source” is the foundation or the original donor for purposes of applying the gift disclosure provision.
For example, it may not appear that official actions by the athletic director could impact the foundation, but they certainly could affect individual or corporate donors, many of which may seek other business with the athletic department.
Even if the commission decides that protocol funds handled by UH officials below the president’s level do not have to be reported as gifts, there are other provisions of the law that would still apply.
Kondo pointed to the “fair treatment” provision, which prohibits legislators and employees from using their official positions “to secure or grant unwarranted privileges, exemptions, advantages, contracts, or treatment, for oneself or others.”
“Whether or not a university official has to report on a gift disclosure statement, they are still going to have to be aware of fair treatment,” Kondo said.
“There are also other mechanisms available to the public to scrutinize the spending, such as through public records,” Kondo said.
“And we’re going to come looking if someone raises a question with us,” Kondo said, referring to the commission’s investigative powers. “Not having to file a gift disclosure isn’t the same as a free pass,” he said.
One policy likely to change as a result of the commission’s latest review is the practice of giving out complimentary athletic tickets to UH officials and athletic department employees.
The athletic department doled out 614 season tickets in six sports, including 322 for football, to a total of 195 employees of the department or Ahahui Koa Anuenue, the umbrella booster organization administered by the UH Foundation. Tickets given to employees during the 2012 fiscal year, which ended June 30, were valued at $95,800, according to the audit.
Additional tickets went to members of the Board of Regents and to certain top university executives, but specifics were not reported by the audit.
Kondo said the commission and the university are close to an agreement that will significantly reduce the number of free tickets going to UH officials and staff.
If complimentary tickets come from the athletic department, they will not have to be reported as gifts under the tentative new policy, Kondo said. “But, looking at the ‘fair treatment’ standard, only very specific employees will qualify for tickets.”
Complimentary tickets will be limited to those with legitimate, job-related reasons for attending the games.
“Before, the Board of Regents would get unlimited access to tickets,” Kondo said. “Now it is just two, themselves and their spouse. If another family member wants to attend, they can buy the ticket at fair market value.”
The commission meets Wednesday at 10 a.m., American Savings Bank Tower, 1001 Bishop Street, Suite 1185.
Read Ian Lind’s blog at iLind.net.