State Government Ethics Act (SGEA)

1. State Government Ethics Act(SGEA)

2. Article 1 General Provisions/Definitions [There are 31 terms defined] See especially: • Gift • Public event • Public servant • Other “covered persons”

3. Article 2State Ethics Commission • Advisory opinions • Complaints • Ethics education/newsletter • Added responsibility of Head of State Agencies and Chair of each Board

4. 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)

5. Article 3Disclosure 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

6. Statement of Economic Interest • 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.

7. Article 4Ethical 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)

8. Article 5Violation 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

9. Chapter 138-31, 32SGEA (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.

10. 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).

11. 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

12. 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

13. The 10 Gift Exceptions • 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)

14. The 10 Gift Exceptions • 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

15. The 10 Gift Exceptions • 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

16. 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

17. Awareness • 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.

18. Awareness • Definitions are important: • Public servant • Public event • Gift (with exceptions) • Conflict of interest • Educational event • Lobbying, lobbyist, lobbyist principal

19. Accountability • 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?

20. 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 Covered Recipients: -Public Servants -Legislators -Legislative Employees Public Servants Is the gift given (funded) directly or indirectly by a lobbyist or lobbyist principal? YES. Then you may not accept it UNLESS it falls within a gifts exception. If an exception applies, 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? 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. Then you may not accept it UNLESS it falls within a gifts exception. If an exception applies, NO. Then you may accept it BUT…

21. 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 Covered recipients: -Public Servants -Legislators -Legislative Employees Legislators or Legislative Employees Is the gift given (funded) directly or indirectly by a lobbyist or lobbyist principal? YES. Then you may not accept it UNLESS it falls within a gifts exception. If an exception applies, 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. -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

22. A LEGISLATOR, LEGISLATIVE EMPLOYEE, AND PUBLIC SERVANT:-MAY ACCEPT EXPENDITURES MADE BY LOBBYIST PRINCIPALSONLY AND THAT ARE MADE ”IN CONNECTION WITH” ATTENDING THE FOLLOWING MEETINGS ii. Legislative Organization Meeting? -A legislator or legislative employee iii. Public Servant Organization Meeting? -A public servant i. Educational Meeting? -Is it primarily related to your public duties and responsibilities OR -Are you a speaker or panel member? -Attends a meeting of organization and: a) The GA is a member, of b) The legislator or legislative employee: -is a member of participant by virtue of his/her public position, or - a member of a board, agency, or committee of the organization. -Attends a meeting as a member of a board, agency, or committee and: -The PS’s agency is a member, or - The PS is a member or participant by virtue of their public position. 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. 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

23. 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.

24. 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

25. Educational Meeting Exception IS THE PRIMARY PURPOSE OF THE MEETING EDUCATIONAL?

26. 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.

27. 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.

28. 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)

29. 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?

30. 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?

31. 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?

32. 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.

33. 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?

34. 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.

35. 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?

36. Is it a gift? YES. Is the recipient covered? YES. The recipient is a: Public Servant 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? 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.

37. 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?

38. 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.)

39. 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?

40. 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. Any food, beverages or entertainment must be provided to: -all attendees, OR -a defined group of 10 or more attendees 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 You may attend and NOW may pay.

41. 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?

42. 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.

43. 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?

44. 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.

45. 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?

46. Is it a gift? YES. Is the recipient covered? YES. The recipient is a: 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.