Management & Operations

A question of ethics

Posted on July 1, 2004 by Dan Reichard

From the outset, I want to point out that I am not an attorney providing opinions regarding ethics laws. But as a retired member of the supplier community and a current board member of a transit authority, I have seen both sides of the industry deal with uncertainties about business ethics. With my experience, I'm in the proverbial catbird seat to witness an oft-overlooked type of conduct that I understand to be an ethical conflict of interest.

The 'public-private' dilemma
Public and private interactions in the transit industry can foster beneficial relationships that give public agencies access to expertise, resources and private-sector innovation, enabling them to further their contributions to the community. Accordingly, influential relationships between the public and private sectors have traditionally been the norm for how business is done in the transit industry.

But this unique relationship between public transit operators and private suppliers can take on the appearance of a borderline ethical violation. With taxpayer money at stake, a close public-private relationship may seem to violate conflict-of-interest safeguards. After all, ethical rules are taken more seriously, and questions arise more frequently, anytime a public entity is involved.

It only takes an antithetical citizen or an investigative reporter looking to make news to expose an overlooked but frequently practiced act as an ethical violation. When this happens, the issue is usually blown out of proportion by the media, regardless of the extent of the violation. Resulting publicity is unpleasant for the board and transit authority, often leading to criminal sanctions.

Participants in public-private relationships must be aware of possible ethics violations in their interactions and at the same time preserve the integrity of the public organization. Unfortunately, not all ethics problems are easy to recognize.

A fuzzy line of legality
Board members are most vulnerable. Their specialized expertise and experience contribute to the deliberative process in public decisions, but board members, with their diverse backgrounds, likely have outside interests and relationships that can conflict with matters before the board.

Regardless of how remote a relationship is, an ugly situation develops when a board member withdraws from discussing a matter or abstains from a vote. While this might seem like safe behavior, the problem lies in the failure of the board member to recognize the seriousness of remote relationships.

Depending on a state's ethics commission, even a violation that seems unreasonable can still result in legal punishment. Ethics commissions can be harshly unforgiving in proportion to the significance of an issue or the amount of money involved.

Public-private interaction within an industry association further gives rise to a specter of conflict of interest. The time-honored practice of suppliers taking influential members of a public authority to dinner can be construed as a bribe to sway a potential contract. This practice, which is widespread in the transit industry, can be a violation of ethical conduct, wherein either party can be charged.

This should serve as a reminder that ethics laws exist, and transit industry members should be mindful of their business interactions. Many will ignore this reminder and continue to conduct themselves as they have in the past. Still, my intent is not to throw cold water on a practice that has existed over so many years; instead, it is to provide a heads-up before you have to plead ignorance, which is not an acceptable excuse to any ethics commission or court of law.

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