Legislature(2005 - 2006)BUTROVICH 205
05/01/2005 04:00 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB125 | |
| SB127 | |
| SB186 | |
| SB187 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 125 | TELECONFERENCED | |
| += | SB 127 | TELECONFERENCED | |
| += | SB 186 | TELECONFERENCED | |
| += | SB 187 | TELECONFERENCED | |
| += | HB 33 | TELECONFERENCED | |
| += | HB 81 | TELECONFERENCED | |
| += | HB 149 | TELECONFERENCED | |
| += | HB 183 | TELECONFERENCED | |
| += | HB 184 | TELECONFERENCED | |
| += | HB 210 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 127-EXEC. BRANCH ETHICS: FINANCIAL INTERESTS
5:18:47 PM
CHAIR RALPH SEEKINS announced SB 127 to be up for consideration.
He asked Senator French to describe the approach he took to
define unethical conduct with regard to the potential violation
of AS 39.52.110(b) of the current statute. He asked him to
compare SB 127 with SB 186.
SENATOR HOLLIS FRENCH said both bills tend to clear up a
loophole that the former Attorney General Renkes case brought to
light. SB 186 takes out the word "substantial" and says there is
no impropriety. Both bills say there is no impropriety if the
action or influence would have an insignificant effect.
5:21:26 PM
SB 127 takes the question of interests that are insignificant or
possessed by the public or large class of persons. SB 186 leaves
it alone in Section 1. Two of the sections are very similar and
of the two approaches SB 186 is right because it includes
financial interest. If a person has stock in a company that is
going to build a gas pipeline and also owned a home in Fairbanks
and that person voted to build the pipeline, the value of every
house in Fairbanks would go up and that would be okay. But the
value of the person's stock would also go up and it's important
to differentiate the two. The person could be charged with two
violations but would be acquitted on the first charge because
everyone has that same interest.
5:25:29 PM
SENATOR FRENCH said he has difficulty interpreting how Section
2, Paragraph 4 of SB 186 would work. He asked Chair Seekins to
explain.
CHAIR SEEKINS said determining the value of a stock of a company
by percentage is difficult. Zero percent of nothing is still
nothing. Most people can determine how many dollars something
is. If a public officer owns 50 percent of a stock and the value
is less than $10,000 than it is no impropriety.
SENATOR FRENCH said if the public officer owns one-half of one
percent of a high value stock it could be worth ten million
dollars. That would be impropriety.
CHAIR SEEKINS added that would be an equity interest in the
business worth less than $10,000. SB 186 is attempting to
establish equity value in dollars.
SENATOR FRENCH asked whether a person would have to meet all the
requirements of Section 2, Paragraph 4 subparagraphs (A)-(H) in
order to be exempt from liability.
CHAIR SEEKINS said yes. He said unless a person "jumps through
all the hoops", s/he must do something about it.
5:27:43 PM
SENATOR FRENCH voiced agreement with the section. He said SB 186
looks to be better drafted than SB 127.
CHAIR SEEKINS voiced the difference between SB 127 and SB 186
was in the dollar value.
SENATOR FRENCH agreed.
It sounds like the only place that would have an
application is not in a stock, it's as if you owned a
slice of Joe's Tire Company in Fairbanks and you
think, with the gas line coming you're going to sell a
bunch of tires. And if you own a little tiny slice
it's not a factor but if you own a big slice it might
get to be one.
5:29:38 PM
CHAIR SEEKINS said that's true.
But what is a slice? It could be a conceptual company.
We have to have some real things to look at. That's
the hard part of trying to set up a bright line. When
we shine the light on it there should be more than a
hallucination. It has to be something real to take a
look at. And that's what I'm trying to boil it down to
is something that has three dimensions. The hard part
in trying to set this is where to put it and how to
define it.
SENATOR FRENCH said it is a good and thorough series of hoops.
Chair Seekins announced a recess at 5:30:51 PM.
Chair Seekins reconvened the meeting at 6:43:03 PM.
CHAIR SEEKINS advised before the break the committee was
discussing the similarities and differences between SB 127 and
SB 186.
6:43:27 PM
SENATOR FRENCH noted another difference is on Page 2, lines 3
and 4. SB 186 has an exception for those interests held in a
blind trust and interests where the public officer does not have
management control over the financial interests.
CHAIR SEEKINS stated in order to set up a blind trust a person
would have to have assets in excess of $1,000,000. There could
be a potential conflict of interest but it would not necessarily
have to preclude the public officer from making decisions if
they did not have their hands on the investment. In the case of
a public officer advising their superior of a conflict of
interest there may be a way to arrange their financial interests
so that the public officer could continue working on the
particular project for the state. He said SB 186 attempts to
find a balance for the public officer to continue making
decisions for the State of Alaska. He asked Barbara Richey to
explain how it is done currently.
6:46:26 PM
MS. BARBARA RICHEY, chief assistant attorney general, Department
of Law (DOL), introduced herself as the head of a section called
Opinions, Appeals, and Ethics.
CHAIR SEEKINS asked the course when a person discloses a
potential violation of ethics or conflict of interest.
MS. RICHEY said often the inquiries come via the designated
ethics supervisors. Ethics are very fact specific so they gather
all of the facts first. They research the situation both
factually and legally and do an advisory opinion.
CHAIR SEEKINS said Section 17 of SB 186 states even the
personnel board may order the same type of divestiture or
establishment as part of their remedy. He said a person could go
to their designated ethics supervisor and the supervisor at that
time could advise them on how to avoid the conflict.
MS. RICHEY noted a good example was Attorney General David
Marquez, when he was being considered for possible appointment
as attorney general, made disclosure of all of his personal
financial interests and asked for a review and an opinion.
6:50:18 PM
SENATOR FRENCH said management control was a rational approach
so long as the asset in question wasn't one that the public
officer put in to the account.
CHAIR SEEKINS asserted once that person puts it into a brokerage
fund it becomes managed by someone else.
6:52:51 PM
SENATOR THERRIAULT said he doesn't believe people should have to
divest themselves of their holdings, especially if they have
owned them long term.
SENATOR FRENCH stated the issue is not whether they own it or
not, the issue is whether they use their public office to
influence the investment.
6:54:44 PM
CHAIR SEEKINS speculated a public officer would be compelled
under the law to seek the advice of their designated supervisor.
MS. RICHEY agreed.
CHAIR SEEKINS continued the designated supervisor has the right
to tell the public officer what to do with their holdings and
that person either accepts the recommendation or doesn't perform
the job.
MS. RICHEY said correct or they could be reassigned. The concept
is to lie out options because situations differ.
6:56:48 PM
MS. RICHEY commented discretionary managed accounts occur where
the broker makes investments without prior knowledge. However,
the investor receives monthly reports and can check accounts via
the Internet.
CHAIR SEEKINS asked whether the process of an ethics advisor is
discoverable.
MS. RICHEY answered notices of potential violation and requests
for advice is currently confidential.
CHAIR SEEKINS asked whether it could be discoverable if a case
was brought.
MS. RICHEY responded it would depend on whether the subject was
willing to waive confidentiality.
CHAIR SEEKINS clarified there would be a traceable history if
charges were brought.
MS. RICHEY agreed.
6:59:52 PM
CHAIR SEEKINS advised Senator French that SB 186 has hurdles but
the bill also requires the subject to get advice.
SENATOR HUGGINS commented the contents of the bill appear
reasonable.
MS. RICHEY added another part of the process is that any
notices, declaration of potential violation, as well as any
actual violations, the designated ethics supervisors on a
quarterly basis report all of those to the attorney general's
office. They are all reviewed and if something is questionable
it is followed up on. There is also a report to the personnel
board, which is made public.
7:02:38 PM
CHAIR SEEKINS asked the number of public employees that fall
under the rule.
MS. RICHEY stated all of them including members of boards or
commissions that are formed by statute.
SENATOR FRENCH explained the last difference between SB 127 and
SB 186 is the definition of official action.
CHAIR SEEKINS asked Senator French to explain how that would be
in effect.
SENATOR FRENCH said the impetus for the re-definition came out
of the (former Attorney General) Renkes affair. He said he wants
to make sure employees know most of the things they do during
the course of the day is official action.
MS. RICHEY commented the current definition of "official action"
is very broad. Senator French's proposal is more articulate.
7:06:26 PM
MS. RICHEY said overall she was comfortable with the current
definition of official action.
SENATOR FRENCH asserted (former Attorney General) Renkes felt
some things he did was not "official action" and so the current
definition seems open to confusion.
CHAIR SEEKINS said he does not have a problem with the effort to
re-define things so that people are clearly informed of the
parameters. A lot of potential ethics violations can result from
someone not having a clear understanding of the parameters.
7:10:27 PM
SENATOR FRENCH concluded the comparison of the two bills.
CHAIR SEEKINS said his intent is to reach an agreement between
the two bills and move one forward.
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