Legislature(2005 - 2006)CAPITOL 106
02/16/2006 08:00 AM STATE AFFAIRS
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* first hearing in first committee of referral
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SB 186-EXECUTIVE BRANCH ETHICS CHAIR SEATON announced that the next order of business was CS FOR SENATE BILL NO. 186(JUD), "An Act relating to the Alaska Executive Branch Ethics Act; and providing for an effective date." [Before the committee was HCS CSSB 186, Version 24-LS0874\X, Wayne, 1/30/06, as amended.] 8:19:49 AM REPRESENTATIVE GARDNER moved to adopt Amendment , as follows: Page 1, line 11, following ";": Insert "or" Page 1, lines 12 - 14: Delete "financial interest in a matter is held in a blind trust or the public officer does not have management control over the financial interest; or (4)" Page 3, line 18, through page 4, line 1: Delete all material. Renumber the following bill sections accordingly. Page 9, line 31, through page 10, line 3: Delete "establishment of a blind trust for a period of time or under conditions determined appropriate, placement of the financial interest into an investment where the employee does not have management control over the financial interest," Insert " [ESTABLISHMENT OF A BLIND TRUST,]" REPRESENTATIVE GARDNER directed attention to an article [included in the committee packet], entitled, "Frist Was Updated On Blind Trust," from CBS News, [dated 9/26/05]. She indicated that the article speaks to the heart of her concern about blind trusts that "they are not necessarily blind." She explained, "I think that people understand that if somebody puts their assets in a blind trust, they might have reason to believe that they will still benefit from decisions made while those assets are in a blind trust." She continued: I think, for example, ... [Vice President Dick] Cheney has assets related to his service with Halliburton [Company] and stock. And they're in a blind trust, but I think that everybody understands that when he's out of office, he'll probably be a very much wealthier man than when he entered, in part because of his relationship with Halliburton. And there's nothing illegal about that, but it does raise - rightly - a public concern. I personally believe that if you want to serve in government office and you have personal interest in particular companies or businesses, putting them in a blind trust does not remove that interest, even though you may not, on a day-to-day basis know what is in the trust. You know what you put in [and] there's an expectation of what comes out. And I think that even if the decisions you make as a public official are not considering your personal benefit, the perception that it does is there. And in this life, perception is sometimes even more important than reality. If we want public trust in government, we must remove any perception of conflict of interest in every way we can. REPRESENTATIVE GARDNER revealed that she had tried to get an attorney, accountant, or someone who deals with blind trusts to address this issue on the record. She related that one man laughed and said, "Oh, you mean leaky, peaky trusts." She said she thinks that's very telling. She explained that, given the importance of the issue of confidence in government, she is offering Amendment . 8:23:07 AM REPRESENTATIVE RAMRAS objected to Amendment . 8:23:22 AM CHAIR SEATON noted that also included in the committee packet is an article from the New Jersey Department of Law & Public Safety, entitled, "Executive Commission on Ethical Standards." He said, "... You'll notice that at least in this case, nothing that's required to be recorded in a public office can be put in a blind trust. That's because anything that's recorded in a public office is then, of course, known." He noted that Alaska uses the Alaska Public Offices Commission's (APOC's) rule for financial disclosures for elected officials. He said, "For this case it doesn't seem like we have the ability on elected officials." He referred to a portion of the handout showing the New Jersey department's standards, which read: The trust shall not contain investments or assets in which the holder's ownership right or interest is required to the [sic] recorded in a public office or those assets whose permanency makes transfer by the trustee improbable or impractical; these investments or assets would include, but not be limited to, businesses, real estate, security interests in personal property and mortgages; CHAIR SEATON remarked, "The probability that those will remain in the trust is extremely high, and therefore a person that puts something in that trust would have the knowledge that those basically nonliquid assets would remain in the trusts." He reminded the committee, "This does not remove blind trusts from the government. All this does is remove blind trusts as an absolute, nonconflict of interest; so, if you put something into a blind trust under this bill, you absolutely don't have any conflict of interest - even if you just put it in and you know it's there." He said he believes that's the thrust of the two articles. 8:26:10 AM A roll call vote was taken. Representatives Gardner, Gruenberg, Gatto, and Seaton voted in favor of Amendment 9. Representatives Elkins and Ramras voted against it. Therefore, Amendment 9 passed by a vote of 4-2. 8:26:56 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 10, which read as follows [original punctuation provided]: Page 2, lines 3-4: Delete all material and insert: "(B) does not own stock or options to boy stock that, when combined, (i) equal more than one percent of the stock in the business; or (ii) have a total value of more than $10,000;" 8:27:04 AM CHAIR SEATON objected for discussion purposes. 8:27:52 AM REPRESENTATIVE GRUENBERG noted that there is a typographical error in the amendment: "boy" should read, "buy". [The committee treated Representative Gruenberg's notice of the error as sufficient to change the error - no amendment necessary.] Representative Gruenberg reminded the committee of its discussion [during the 2/14/06 hearing on SB 186] regarding whether stock options should be included in addition to the actual shares of stock, at which time the sponsor, Senator Ralph Seekins, said he did not object. 8:28:25 AM CHAIR SEATON removed his objection. He asked if there was any further objection to Amendment 10. There being none, Amendment 10 was adopted. 8:28:40 AM REPRESENTATIVE GRUENBERG noted that there were [three other amendments] stapled to the back of the adopted Amendment 10. 8:29:11 AM REPRESENTATIVE GRUENBERG moved to [rescind the committee's action in adopting] Amendment 10. There being no objection, it was so ordered. 8:29:40 AM REPRESENTATIVE GRUENBERG moved to adopt Conceptual Amendment 11, which includes the rescinded Amendment 10 [text provided previously], plus the following amendments combined, which read as follows [original punctuation provided with some formatting changed]: Page 2, lines 5-6: Delete all material and insert: "(C) owns (i) less than one percent of the equity interest in the business; or (ii) an equity interest in the business worth less than $10,000;" Page 2, line 10: Insert: after "provide" insert "or have an option to provide" Page 2, line 12: Insert: after "contract" insert "or have an option for a contract" 8:31:14 AM CHAIR SEATON, regarding the part of the amendment addressing page 2, lines 5-6, explained that "equity interest" means a partnership without a stock. 8:32:04 AM REPRESENTATIVE GRUENBERG moved Conceptual Amendment 1 to [the portion of] Conceptual Amendment 11 [which addresses page 2, lines 5-6], to insert "or has an option to buy" after "(C) owns". CHAIR SEATON asked if there was any objection to Conceptual Amendment 1 to Conceptual Amendment 11. There being none, it was so ordered. 8:32:45 AM REPRESENTATIVE GATTO [referred to the portion of Amendment 11 that read: "(i) less than one percent of the equity interest in the business; or"], and questioned the use of the word "or". In response to Chair Seaton and Representative Gruenberg, he explained that he thinks the intent of the amendment is to have a person to satisfy both of these requirements, not one or the other. 8:33:45 AM REPRESENTATIVE GRUENBERG said he thinks Representative Gatto may be right. He said he thinks there should be an "and" there. He said he would accept Representative Gatto's suggestion as a "friendly amendment." [The committee treated Representative Gatto's suggestion as an adopted Conceptual Amendment 2 to Amendment 11.] 8:35:59 AM REPRESENTATIVE GRUENBERG spoke to the remainder of Conceptual Amendment 11 - the portions of which address page 2, line 10, and page 2, line 12. Regarding the former, Representative Gruenberg said, "We do not want somebody to have an arrangement where they have a sweetheart deal that they're going to be providing personal services, and this just says, 'or have an option to provide'." Regarding the latter, he said the same goes for contracts; "we don't want them to either have a contract or an option for a contract." 8:36:08 AM CHAIR SEATON removed his objection to Conceptual Amendment 11, [as amended]. He asked if there was any further objection to Amendment 11, as amended. There being none, it was so ordered. 8:36:41 AM REPRESENTATIVE RAMRAS expressed concern with the recent series of conceptual amendments. He stated, "It just seems like that's the whole nature of everything we're doing here is just suggesting that somebody [who] applies for a job in the executive branch must be dishonest to even make [an] application ...." He offered language to that effect. 8:37:25 AM CHAIR SEATON responded that laying out a good groundwork for saying what a member of the executive branch should not do is not an accusation; it gives clarity to what is not acceptable. 8:38:57 AM REPRESENTATIVE GRUENBERG moved to report HCS CSSB 186, Version 24-LS0874\X, Wayne, 1/30/06, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HCS CSSB 186(STA) was reported out of the House State Affairs Standing Committee.