Straddling the ethics boundary

October 6, 2017

 

Where everyone is related to everyone else, conflict of interest abounds but cultural factors often allow violators to go unpunished

 

 

Senator James Espaldon is facing censure and other disciplinary actions based on the legislative ethics committee findings that he breached the Code of Ethics and Standards. The case stemmed from a complaint filed by CNMI Rep. Ed Propst, who took Espaldon to task for negotiating an $11-milion power plant deal with the Commonwealth Commission on Utilities on behalf of General Pacific Services Marianas Inc., a company co-owned by his former chief-of-staff, Phil Roberto. The controversy surrounding this transaction prompted CNMI Gov. Ralph Torres to shut the deal down. 

 

 

 

   In Washington, D.C., Guam’s delegate to Congress Madeleine Bordallo is similarly in hot water, facing ethics scrutiny for, among other charges, accepting freebies from a luxury resort owned and run by her relatives. Preliminary investigation by the House ethics committee found that Bordallo may have violated rules, standards of conduct and federal law when she availed herself of free meals, lodging and other luxury amenities that ran up to $362,077.56 for a total of 663 nights’ stay at Outrigger Hotel since 2008. The Tumon hotel, founded by her late brother-in-law Alfred Ysrael and her sister Dianne, is currently controlled by Bordallo’s nephew, Michael Ysrael.

 

 

 

Additional charges involve Bordallo’s rental business, which is estimated to have netted a profit of $800,000 from the Japanese consulate, a tenant at the delegate’s private home in Tamuning since 1993. “Since 2003, Delegate Bordallo has disclosed her income from this rental property on her annual financial disclosure statements with the House of Representatives,” states the ethics board’s report. “Although the financial disclosure rules require a (House) member to report the amount of rental income generated from real property, there is no requirement to disclose the source of the rental payments, and thus no requirement to report the name of the tenant.”

 

    How she managed to keep these transactions out of the feds’ radar may be explained by the cultural idiosyncrasy of every small island community where squealing is almost an aberration. The Chamorro culture places high value on harmony and order, thus one often chooses to turn a blind eye on actions that may have a semblance of malfeasance.

 

    Everyone is familiar with the ethical rule that a person in a public position should avoid conflict of interest. But in small communities such as Guam where everyone is interlaced into family and social structures, straddling the ethical boundary can be a delicate matter.

 

   Sometimes the act of giving or accepting gifts or the reflex to extend assistance to one’s mali or pali is innocently taken as an exercise of inafa’ maolek — a Chamorro concept which local scholars define in the context of giving, sharing and reciprocation.

 

   In recommending further scrutiny of Bordallo’s case, the House ethics board, said it “carefully considered the family relationships, the relevant corporate ownership structure, and applicable gift rule exceptions in this review.”

 

   The board has determined that anything of corporate value falls in the purview of ethical rules and federal laws. Ethics rules are absolute, leaving no gray areas and indifferent to cultural nuances.

 

   “Ethical standards exist to express accepted expectations of conduct, and they are established not only to bring clarity and adherence to these expectations, but to ensure that shared principles are honored as well,” said Sen. Fernando Estevez, chairman of Guam’s legislative ethics committee.

 

   The panel has made the recommendations that would require Espaldon to take a 16-hour refresher course in ethics. “It is imperative, however, to also understand that the realm of ethics, unlike that of law, is inherently subjective and that these findings and recommendations alone do not reflect on Senator Espaldon’s person or character,” Estevez added.

 

    Multi-level relationships in a tight-knit community take several forms. Family and social ties tend to overlap with business or professional relationships. Courts and statutes have established the minimum standard which creates a conflict of interest.

 

  Local statutes, however, are almost useless due to lack of an official venue, where ethical questions can be officially raised. The Ethics Commission, while created by law, does not exist.

 

   In federal court, Mark Smith, former legal counsel for the Guam Housing and Urban Renewal Authority, is facing serious charges including money laundering, wire fraud and other offenses for renting out his properties under the federal Section 8 program while employed by the housing agency between 2011 and 2013. Smith, brother-in-law of Gov. Eddie Calvo, was prohibited under federal law from receiving payments from the Section 8 program.

 

   Another recent case involved OPA’s audit on the Department of Public Works, which found that the “ethical breaches may have occurred when the DPW director accepted free heavy equipment rental services from a DPW employee’s company because DPW periodically did not have adequate heavy equipment.”

 

   “The director expressed his gratitude for the employee’s “benevolence.” This action may be perceived by others to favor the employee especially because the director took specific action to clear allegations against the DPW employee by requesting the governor to accept the contribution,” the OPA report said.

 

  

 

  In a recent letter to Public Auditor Doris Flores Brooks, Attorney General Elizabeth Barret Anderson said her office is unable to pursue the ethical questions raised by the OPA related to the DPW case because the Ethics Commission has to be empanelled.

 

   Some boundary issues in Guam are truly difficult to tread. “Conflict of interest is inevitable,” Brooks said. “The real issue is how to avoid the appearance of conflict and what you have to do to mitigate it. “

 

   Transparency is paramount, Brooks said. “You disclose the conflict and let people decide if there is a true conflict of interest,” she said.

 

     In obvious cases, Brooks said, recusing one’s self from any proceedings or activity where conflicts arise is imperative. She said the Office of Public Auditor itself has run into familiar situations in which she or a member of her staff is directly related to a person in an organization that is being audited. “Most of the situations we get into do not border on fraudulent activity,” Brooks said. 

 

   Just the same, she said the person in conflict is immediately removed from the proceedings, and in certain cases, the audit is being passed on to independent auditors at Deloitte.

 

   Brooks acknowledged that managing ethical issues and blowing the whistle on a criminal activity in a small community can be a challenge. But OPA’s hotline, she said, provides a platform for anonymous reporting of any wrongdoing without any fear of retribution.

 

   Guam also has a Whistleblower Protection law, though it has not yet been tested in court. There are no active cases in which a whistleblower sought refuge under this law.

 

   Public Law 28-76 requires elected officials to attend an ethics in government program within 90 days of taking office, while appointed officials are required to undergo the same training within the first six months from the date of appointment. Elected and appointed officials are also mandated to return to class for a refresher ethics course at least once every four years.

 

   “It’s a good starting point for people to do,” Brooks said. “What we have recommended though is for all government employees—not just the elected and appointed officials — to take up ethics training.”

Related stories
Initial probe finds possible ethics violations by Bordallo

Ethics panel: Censure Espaldon

  The government’s ethics guidelines identify two types of ethical dilemmas a local elected official is likely to face. The first involves situations in which doing the right thing will entail a significant personal cost to the official or the agency. “In these situations,” the guidelines say, “the answer is relatively simple. The bottom line is that being ethical means doing the right thing for the entire community regardless of personal costs.”

 

   The second involves those situations in which there are two conflicting sets of “right” values—the type where drawing the ethical bottom line is more difficult. The “right versus right” dilemma, according to the guidelines, may be resolved identifying the ethical values that may be in conflict, such as trustworthiness, compassion, loyalty, responsibility fairness or respect; weighing the “good” vs. the “harm”; and finding a course of action that would be consistent with both sets of values.

 

  In the end, the officeholders are expected to make a decision that best reflects their responsibility “to serve the interests of the community as a whole” and “best promote public confidence in the agency and leadership.”

 

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