Municipal Codes of Ethics in Kentucky:
Do You Have a Conflict of Interest?
Denton Law Firm
Kristi Street
What are conflicts of interest? When do conflicts of interest arise? At what stage should a city officer or employee recuse themself to avoid a conflict of interest? These questions are key to understanding the code of ethics that people in positions of municipal responsibility should understand. In this series of articles, we will examine various facets of municipal codes of ethics, starting with one major obstacle: conflicts of interest.
Let’s begin with the basics. By definition (as provided by Oxford’s English Dictionary), a conflict of interest, as we are concerned with it, is “a situation in which a person is in a position to derive personal benefit from actions or decisions made in their official capacity.” This refers to situations where one person has multiple interests: the one that benefits themself, and the one that benefits their community, department, or other entity for which they are responsible. People in these situations are wearing two hats, which we define as their “personal capacity” and their “official capacity,” and it is often complicated to keep the two entirely separate. When a person stands to benefit in their personal capacity from a decision or action that they are able to make in their official capacity, a conflict of interest arises. The question becomes: Did the person make this decision or take this action to benefit the group for which they have taken responsibility, or because it benefits themself? Furthermore, it is not only when a benefit actually comes to the person in their personal capacity that a conflict may arise; any time a person’s interest may appear to influence their decisions or actions in their official capacity, it comprises a conflict of interest.
Kentucky Revised Statute 61.252 concerns some of these conflicts of interest. It describes the prohibition against city officers and employees contracting with a city or city agency for property or services, and penalizes such contracts with a Class A misdemeanor, potential voiding of the contract, and potential removal of the officer or employee. It also provides several exceptions where such contracts are allowed. These exceptions apply, firstly, when an officer or employee entered into a contract before filing as a candidate for city office, being appointed to the office, or being hired by the city or city agency. Secondly, an exception is granted if a contract is awarded after public notice and competitive bidding. Thirdly, an exception is granted if (1) the contract and the officer’s or employee’s interest are publicly disclosed; (2) the disclosure is made a part of the governing body’s official record before the contract is executed; (3) the governing body finds that the contract is in the best interests of the public; and (4) the finding is made a part of the official record before the contract is executed. There are some exceptions to the exceptions, but if you meet all four of these requirements, you are solid. Please see the full text of the statute for more specifics.
These are not the only instances where a conflict of interest may arise. Generally, it is up to each person to decide whether such a conflict exists, as there are far too many examples to cover each individual conflict of interest that could become evident. However, a general rule of thumb is simply to ask yourself: Would I benefit from this action or decision in my personal capacity? If so, there may be a conflict of interest.
But what should you do if you believe there is a conflict of interest? The most direct way to avoid a conflict is to recuse yourself, and abstain from participating in whatever decision or action is currently at issue. Generally, you should recuse yourself as soon as a reasonable chance of a conflict becomes apparent; otherwise, it may appear that you are biased or otherwise influenced by it. If anything makes you pause to think about whether there is a conflict of interest, it is probably best to recuse yourself. Unfortunately, any action less than recusal is generally not enough to avoid the appearance of a conflict of interest.
Ultimately, a conflict of interest becomes a problem as soon as it becomes apparent, and it should be addressed as soon as is feasible, preferably via recusal. To decline recusal is to accept an appearance of impropriety at the very least, and possibly a criminal misdemeanor at the worst. However, conflicts of interest are not where the burden of municipal responsibility end. In upcoming articles, we will address other aspects of municipal codes of ethics. Stay tuned for more information!