Executive Summary
In January 2020, the U.S. Department of Justice began to bring criminal corruption charges against multiple City officials, employees, and contractors. These charges allege numerous instances in which individuals seeking favorable outcomes from City government provided meals, travel, luxury goods, and other gifts in an attempt to influence the actions of City officials and employees. In response, the Ethics Commission embarked on a comprehensive review of the City’s ethics laws to ensure that the types of conduct alleged in the criminal complaints are appropriately prohibited and deterred by City law and that any other relevant weaknesses identified in the laws could be addressed.
The current phase of the project analyzes state and local laws pertaining to gifts. This report discusses gifts made directly to individual officials and employees by non-City persons. The next report will discuss gifts made to officials and employees through payments to City departments.
Key Findings and Recommendations
In light of the recent allegations of corrupt activities involving the receipt of gifts by City officials and employees, Staff reviewed state and local laws governing such gifts. Staff sought to identify loopholes and oversights in the local laws that cause them to be unnecessarily narrow, permissive, or complex. Such shortcomings impede the overall effectiveness of gift laws and, over time, can lead to an organizational culture that does not value or seek to comply with gift rules.
Instead, gift rules should be robust and clear so as to effectively address ethical risks and to plainly communicate to officials, employees, and the public that certain kinds of gifts are strictly off limits. Such strong, simple gift rules are more likely to prevent ethical issues and, where they are not followed, more likely to generate whistleblower or other complaints that result in penalties. This approach to gift rules will help ensure that a culture of casual corruption does not exist around gifts.
The City’s gift laws contain multiple weaknesses that should be addressed. Resolving these issues would make the laws stronger, clearer, and more effective and would limit opportunities for skirting the rules. The key policy findings and recommendations contained in this report are:
- The application of many state law gift exceptions to the restricted source rule weakens the impact of that rule. “Gift” should be defined in local law with these exceptions omitted. Doing so will make the rule more effective and better achieve its intended purposes.
- The local exceptions to the restricted source rule are overly broad and should be narrowed in several ways. Currently, several of the exceptions undermine the purposes of the rule and impede its effectiveness.
- The restricted source rule fails to clearly prohibit the giving of a prohibited gift, the use of an intermediary to give or receive a prohibited gift, or restricted source gifts made to immediate family members of an official or employee. The rule should be clarified to explicitly prohibit these aspects of a prohibited gift transaction to strengthen the effectiveness of the restricted source rule.
- The language of the restricted source rule needs to be clarified to more clearly apply to City contractors, permitees, and other individuals or entities who pursue or enter into agreements with the City, and to persons affiliated with a business entity that is a restricted source. Doing so will make the rule clearer and will better serve the policy goals of deterring pay-to-play behavior.
- The impact of the local subordinate gift rule is undermined by several overly broad exceptions that currently exist in local law. These exceptions should be narrowed to strengthen the purpose and effectiveness of this rule.
- Gifts currently allowed from permit expediters to certain officials and employees are problematic and should be prohibited. The law should be changed to treat permit expediters similarly to how lobbyists are treated under existing gift rules.