2009-12-09 Board of Ethics Minutes

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be exercising any control or authority over the contract, and whether the contract was awarded through the procurement process. The Board questioned what "controlling interest" meant, as it was not clear. Ms. Schoen said the Code defined it as "an interest in a business or other undertaking which is sufficient in fact to control, whether the interest be greater or less than fifty percent." Ms. Schoen pointed out that another term used but not defined is "substantial financial interest." Ms. Gentry asked how it would be defined in Court, and Ms. Schoen said the Court would look at how the Code defines controlling interest, and would probably look at the State statutes and opinions to determine what it meant. Ms. Nicholson said the Contracts section is missing the relationship between a County officer /employee and the nature of the contract. Ms. Gentry asked how the State defines "substantial controlling interest," and Ms. Schoen said she believed it was not defined in the Hawaii Revised Statutes. However, she had found an Ethics Commission opinion which says that an employment interest, an officership, and membership on the board of directors of a private organization by an employee, spouse, or dependent child are substantial financial interests. Ms. Gentry asked if there was language about enforcement, as the Code says what is prohibited but not how it is enforced. Ms. Schoen said if a contract were entered into in violation of the Contracts provisions, it would be voidable on behalf of the County under Section 2 -85.1 (Contracts Voidable). Ms. Gentry noted that a contract could be performed before it was discovered that a violation had occurred. Somebody would need to make a complaint or bring it forth. Ms. Schoen said the Corporation Counsel has the authority to enforce the Contracts Voidable provision. Ms. Schoen reported that in terms of beefing up contracts provisions, the State now has a procedure in which certifications are attached to contracts. On the certification form, the provider essentially makes certifications which track the ethics provisions. The certification needs to be signed before the contract is entered into. She passed out the "Provider's Standards of Conduct Declaration" (the certification form) to the Board and explained that using the form is proactive insurance that the contractor has looked at the ethics provisions and certified compliance with them. The Chair said he had reservations about deleting the majority of the Contracts section, as proposed by the Mayor. Ms. Nicholson said the Mayor's suggestions are too restrictive, but that there are problems with the current system. A balance needs to be found between making the Code not