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Ethics Feature: Managing Conflicts of Interest
Reprinted with permission from the March 2009 issue of Public Management (PM) magazine published by ICMA, the premier local government leadership and management organization, located in Washington, D.C.

Scenario: After going through an extensive design development phase, the proposal to rehabilitate a historic section of the downtown area went to the planning commission for approval. The development phase was quite lengthy because city leadership was committed to engaging all stakeholders in an effort to reach consensus on a range of design issues.

Despite the city's efforts, the historic preservation groups and the business community still disagreed over a number of issues. A week after the planning commission granted its approval, the media disclosed that a member of the planning commission who actively participated in discussions on the issue and voted to approve the plans had a conflict of interest as a result of his financial dealings with the lead developer for the project.

The member's employment as a senior vice president of a bank was public knowledge. The fact that the bank recently approved a significant loan to that developer was not. The commission member was indignant that anyone would question his integrity, especially because he had sought legal advice from the city attorney before voting on the plan.

The city attorney had advised him that his participation in the commission's deliberation and vote did not violate city or state law because he had no direct financial ownership or investment in or benefit from the development. The historic preservation groups were outraged and thought the deal was rigged. City leadership was embarrassed and troubled by the probability that this could happen again.

Advice: There is a significant gap between what the law defines as a conflict of interest for a public official and what a reasonable person may perceive to be a conflict. Most state ethics laws are simply financial disclosure regulations that require public officials to file annual reports detailing sources of income, real estate investments, debts, and other business interests.

Disclosure certainly helps to promote transparency but is not the only measure that should be considered. The set of circumstances or relationships that constitutes a legal definition of conflict of interest is narrowly drawn. One municipal attorney described the quandary as balancing conflicts of interest versus allegiance: the first is a strict legal definition; the second is a situation where a public official's personal relationships are such that they call into question whose interests the official represents.

The public interest is best served by engaged representatives who are knowledgeable about their community. When their private lives intersect with their public duties, what steps should they take to ensure that they act in the best interests of the public they serve and in a manner that promotes confidence in their actions?

If you find yourself in a similar situation, first discern whether there is any connection between an official action you are about to take and your personal life. Seek counsel to have a clear understanding of your legal obligation. If your participation meets the legal test, consider next whether it will meet the appearance test.

The ICMA Code of Ethics sets a high standard for disclosure that would be appropriate for all public officials, elected and appointed, to adopt: disclose any personal relationship in any instance where there could be the appearance of a conflict of interest. If the conflict is significant enough that a reasonable person would question whether you are acting in the public's best interest, consider disengaging from the process early on. After all, disclosure doesn't cure all conflicts of interest.

Orientations for newly appointed and elected officials are a great opportunity to raise awareness about the complexity of conflicts of interest and their potential to undermine the public's confidence in local government. When faced with a conflict of interest, remember the 3-D strategy: discern, disclose, disengage.
Arizona City/County Management Association
1820 W. Washington Street, Phoenix, AZ 85007   •   Phone: (602) 258-5786   •   Fax: (602) 253-3874   •