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Local News

Saturday, August 23, 2008

Official's dual roles raising questions
By LOU WILIN

STAFF WRITER

An economic development official's new positions with both the Blanchard Valley Port Authority and GreaterFindlayInc. could be a conflict of interest, according to ethics experts.

When a person has a conflict of interest, he is serving two different principles or interests and may be unable to serve at least one satisfactorily, said Buie Seawell, chairman of the Business Ethics and Legal Studies Department at the University of Denver's Daniels College of Business.

Eric Phillips will be a public employee when he becomes vice president of the Blanchard Valley Port Authority on Sept. 4. The port authority was formed recently to offer financing for economic development.

As authority vice president, Phillips will develop economic prospects for financing and will be a liaison to GreaterFindlayInc.

Also on Sept. 4, Phillips will become president of GreaterFindlayInc., a private nonprofit corporation which also advances economic development.

As president, he will be an advocate for parties seeking financing will be $96,000 per year, but all of it will come indirectly from GreaterFindlay.

The port authority will only be able to pay Phillips with money it receives from GreaterFindlay. It has no other revenue source.

GreaterFindlay is not disclosing what it will pay Phillips as its president. The previous president, Doug Peters, was paid $141,206 in salary and $17,255 in benefits in 2006, according to a federal tax return filed by GreaterFindlay. Peters had no other jobs while at GreaterFindlay.

Port Authority and GreaterFindlay officials say there is no conflict of interest in the two positions.

But Seawell called the arrangement with Phillips "peculiar."

"You don't pay public officials with private money to perform public duties," he said. "(Phillips') master in this situation is (GreaterFindlay), but his authority is in the port authority."

Ohio's ethics law requires a public employee to be paid only by his public employer for his public duties, said David Freel, executive director of the state Ethics Commission.

He declined to comment on the specifics of the port authority-GreaterFindlay case. But the law's intent is that only the public should be paying the public employee, he said.

The idea of the law: "If (the job) is going to be done on behalf of the public, then the public has control through their expenditure of money over how the public will is going to be accomplished," Freel said.

"You can't serve dual employers, because your allegiance is conflicted," Freel said.

The ethics commission can advise government officials. It also investigates allegations against public officials. It had 131 cases on its docket last year.

Phillips' GreaterFindlay job could undermine his objectivity in developing prospects for port authority financing, said Jennifer Hardin, chief advisory attorney for the state Ethics Commission.

"Where two entities are closely related or act together, the possibility for conflict may be significant and the officer would have to be careful about it," Hardin said.

In fact, Ohio law prohibits public employees from having a business relationship with a party having a matter before their public employer unless they abstain from that matter.

"He should tread lightly in anything that would affect (GreaterFindlay)," said Michael Rich, assistant law professor at Capital University in Columbus.

Port Authority Board Chairman Robert Beach said if a conflict would arise, Phillips would have to abstain.

But it also is clear port authority and GreaterFindlay leaders want Phillips in the thick of things between them, not abstaining.

"The port authority is expecting things out of (GreaterFindlay) and in return, (GreaterFindlay) is expecting things out of the port authority," authority President Jerry Arkebauer said.

Arkebauer has not been paid yet by the port authority. He will be paid from fees the port authority collects on its financing deals.

GreaterFindlay Board Chairman Randy Lohoff said with Phillips in the dual roles, deals will be completed more swiftly and more often.

All three said they see no conflict.

"I don't see anything that would be remotely a conflict," Beach said.

Lohoff said, "There is no inherent conflict of interest between (GreaterFindlay) and the port authority ... I can't think of an instance where their interests would vary."

Seawell was not convinced.

"Maybe they believe the interest of (GreaterFindlay) is the public's interest," Seawell said.

He laughed. Phillips did not.

Phillips said his dual roles will sharpen communication and cooperation between the agencies.

"When it (economic development) works well, everyone has the same playbook," he said.

"When government and the private sector don't have a strong partnership, it is harder to resolve issues," Phillips said. "The big tie is so important. There has to be a partnership. You have to roll up your sleeves and work together."

But Seawell said it is the very efficiency of the arrangement that will pose conflicts for Phillips.

In private business, efficiency "is everything," but in government and public business, it "is not everything," he said.

"Government is set up so we break up power, so no special interests can take it over," Seawell said.

"Business aggregates power. Government diffuses power because the interests of the public are so diffuse," he said.

"Both (business and government) are legitimate interests, but they have a tension," Seawell said. "The purpose of business is to make money for the shareholders. The purpose of government is to maintain the public trust and serve the public welfare."

Even if Phillips navigates the differing demands well, Seawell said, there could be problems with public confidence.

"He has got to be pure as the driven snow and have the same integrity as the pope," Seawell said.

Phillips will have to be so circumspect that GreaterFindlay members might wonder if he can completely serve them.

"His decisions can be challenged just because of the appearance of a conflict," Seawell said. "This is going to be a constant nuisance to the system."

"It is not illegal, and not necessarily unethical," he said. "It is just not wise."

Wilin: 419-427-8413,

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2 Comments

Latest comments listed first.
Sue Ellen wrote:
Crooked GFI
“ GFI is turning crooked. They spent all their time bringing in someone from out of town. Then the guy just wanted to stay a government worker. He wanted to keep his pension with the Public Employees Retirement. That is why this whole mess happened. They had to get his pay to a public office so he could collect his pension. Crooked crooked. What other things have GFI been doing that should be looked at? ”
Saturday, August 23, 2008 11:07:11 PM
JAMES wrote:
CHANGE
“ This seems to be going on a lot around here
Conflict of interest heres one more example of it
K.C.Collete third ward councilman and also works for the county prosecutors office .
Can this give someone a clear mind on when it comes rulings for the people of this city, the bottom line its just not right ,,,,.and its time to do something about it .. ”
Saturday, August 23, 2008 7:14:15 AM
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