The ethics of experts

HILO — Lobbyists serving on the Mortgage Foreclosure Task Force could be cleared of potential ethics violations with the help of lawmakers.

The state Legislature is considering a bill that would grant task force members exemptions to the state’s ethics code retroactively back to 2010, effectively protecting past actions from scrutiny by the state’s Ethics Commission.

The unusual step, which the state Attorney General’s Office says meets legal muster, was introduced in response to questions raised over the conduct of members of the now-defunct foreclosure task force.

In 2011, Ethics Commission Executive Director Les Kondo warned the task force that some members may have violated ethics laws by lobbying on legislation the group helped create on behalf of their employers.

The task force — made up of attorneys, members of the financial industry, including lobbyists, and representatives of state agencies — was formed in 2010 to come up with solutions to the home foreclosure crisis. That included recommending new laws, but the state’s ethics code prohibits them from then testifying on that legislation as a paid representative of nongovernment entities, Kondo said.

Most complied, but one member, Marvin Dang of trade group Hawaii Financial Services Association continued to lobby the Legislature on the task-force recommended bills on behalf of the association during the 2012 session, he said.

Kondo said he couldn’t comment on whether the Ethics Commission is considering bringing ethics code charges against Dang.

But he said the bill, if adopted, would nonetheless prevent it from considering the issue any further.

It also sets a bad precedent, he said in his written testimony on the legislation.

“In effect, the Legislature would be ‘rewarding’ an individual for repeatedly and intentionally ignoring and defying the commission’s advice,” Kondo said. “A person who was displeased with the advice given by the commission could consciously violate the state ethics code … and then, after the fact, seek a legislative exemption for his conduct.”

There is room for debate over whether the ethics code applied to task force members in the first place.

Members of the task force, including Dang, some lawmakers and former Ethics Commission Executive Director Daniel Mollway have argued that the code never applied to them since they don’t qualify as state employees.

Kondo has come to a different conclusion, noting that the ethics code includes boards, commissions and committees in its definition of employees, which he believes includes state-created task forces.

“At the end of the day, the Ethics Commission is empowered to make the interpretation,” he said.

This isn’t the first time the Legislature has taken up the issue.

Last year, it passed a bill that specifically exempted task force members from the ethics code. But that bill only applied from that point onward, and left questions over past actions unresolved, prompting the legislation now under consideration.

Sen. Clayton Hee, a Democrat from Oahu, introduced the latest bill. Hee, who also chairs the Committee on Judiciary and Labor, which deals with ethics issues, couldn’t be reached for comment.

Dang said he thinks the bill is needed to clarify for the record that the Legislature didn’t intend for the task force to be governed by the ethics code.

He noted that the Legislature selected his association to be represented on the task force, and therefore, he said he was expected to represent his employer’s point of view.

“I represent the views of my client while on the task force,” Dang said. “That’s the whole nature of the task force.”

Mollway also believes the ethics code is being misapplied and noted in his written testimony that the commission’s statute of limitations would allow members of the task force to face an ethics charge within six years of the alleged violation.

“For this reason, the bill should be enacted into law to protect members of the Mortgage Foreclosure Task Force … who all appear to be still in jeopardy as to the misapplication,” he said.

The original version of the legislation, Senate Bill 893, also makes the statement that the Legislature didn’t intend for the foreclosure task force to be governed by the ethics code, though the bill creating the group made no mention of it.

The amended version of SB 893 cut out specific references to the foreclosure task force. It would still be covered by the bill.

Dang, who made a $200 donation to Hee’s campaign last year, said he considers the lawmaker a friend. But he said neither their relationship nor the campaign contribution influenced the writing of the legislation.

“I’ve known the senator, I know a number of senators,” Dang said.

“I don’t think a single contribution is going to affect their decision on this.”

In addition to allowing lobbying, the task force exemptions that went into effect last year also allow members to use knowledge they gained during their service for personal benefit.

State Deputy Attorney General Charlene Aina acknowledged that may come across as “insider trading.”

“It’s a trade off of having interested people’s knowledge and experience” included, she said.

“On one hand it is like insider trading,” Aina added. “On the other hand, the government wants to know what it has to deal with.”

Aina also said the Legislature can pass bills that work retroactively as long as they are not creating a situation where someone could be penalized for an action that was legal at the time.

Kondo said he disagrees with the point of view that such exemptions are needed to encourage experts in a field to participate.

“They have to make a choice,” he said. “Either this person is going to be on the task force or this person is going to be responsible for lobbying on these bills.

“They just can’t be the same person.”