A former head of Chicago's public school system has said she will plead guilty
to a scheme to take hundreds of thousands of dollars, airfare,
meals, and baseball tickets in exchange for steering more than $23
million in no-bid contracts to her former employer, an educational
consulting and training company. The situation provides a valuable
look at the problems that can arise when someone goes through the
revolving door in the manner that is often overlooked by ethics
code: from a company that seeks financial benefits from an
agency (whether or not that company has actual contracts with the
agency) to an official in that agency. This is why "post-employment"
is an insufficient name for revolving door provisions.<br>
<br>
<b>Indirect Benefits</b><br>
One of the heads of the company offered to give jobs to the
official's friends, which involves an indirect benefit to the
official, but should still be considered a gift to the official, a non-financial gift
(it would be a financial but indirect benefit if she had a kickback arrangement with her friends). And
instead of giving the official direct kickbacks, the company set up
trust accounts in the names of two of her relatives, according to <a href="http://www.huffingtonpost.com/entry/barbara-byrd-bennett-indicted_5616c…
<i>Huffington Post</i> article yesterday</a>. It's not clear how
much of the money would truly go to these relatives, but even if it
were all the money, it was still an arrangement intended to benefit
the official, even if not financially and not directly. This is the
way deals are structured to get around limited ethics and criminal
laws. It is not enough to prohibit only direct financial benefits to
officials, or even financial benefits to an official's immediate family.<br>
<br>
According to the indictment (attached; see below), Chicago's Code of
Ethics prohibited the official "from participating in any aspect of
any contract award process in which she had or had reason to know
that she had an economic interest distinguishable from that of the
general public." This "economic interest" would not include jobs for
friends or money given to relatives. It could be stretched,
however, to include a promise to be rehired. And in this case, she was given
direct benefits, as well. But had the company been more careful
and not given any direct benefits to the official and not put its
promise of a job in an e-mail, there would have been no ethics
violation. The indictment, on mail and wire fraud, is due to the
schemers' arrogance or incompetence.<br>
<br>
<b>Cooling-Off Periods</b><br>
It is also worth recognizing that the effect of the revolving door
did not end one or even two years after the official went through
the revolving door, as the use of cooling-off periods assumes. She
took the government job in October 2012 and resigned in June 2015,
nearly three years later. Had she not been caught, she might have
continued to engage in ethical misconduct for years more, including
a return to the company, which promised her a substantial signing
bonus, presumably after the post-employment cooling-off period was
over.<br>
<br>
This shows the limits of short cooling-off periods. Most are only
one year, which makes it easy for companies to reward former
officials for using their office to benefit the company. The
argument is that longer periods will make people not want to enter
public service due to the limits it places on them when they leave.
Two years is a better compromise than one, but it might be useful to
consider allowing an ethics commission to review financial
arrangements with former officials and their family members even after the cooling-off period is over, to prevent
the use of a job (full-time or on contract) to provide kickbacks.<br>
<br />
Robert Wechsler<br />
Director of Research-Retired, City Ethics<br />