Other lawmakers face similar conflicts as Wolf
The tricky issue is what constitutes a contract
A correction has been added in the story below.
A number of lawmakers have a personal and financial interest in the outcome of Sen. Dan Wolf’s dispute with the Ethics Commission.
At least four other lawmakers have potential conflicts of interest similar to what the commission determined exists with Wolf and his company, Cape Air, according to a CommonWealth review of the annual Statements of Financial Interest (SFI) filed by state and county officials.
The statute cited by the commission in its ruling says legislators and their immediate family members together cannot own more than 10 percent of a company that has any sort of contract with the state. Even if the lawmaker and his immediate family own less than 10 percent of a company, they cannot enter into a no-bid contract with the state. Legislators who are in violation of the statute, like Wolf, either must cease doing business with the state, fully divest their interests in their company, or resign from office. Those who don’t comply can be fined as much as $30,000 for each violation, regardless of the amount of the contract.
The tricky issue is what constitutes a contract. Wolf claims his airline’s landing fee arrangement is not a contract, but a lease agreement that is set unilaterally by the Massachusetts Port Authority with no negotiations. The Ethics Commission disagrees. “The Commission, as well as the courts, have given the term ‘contract’ a broad meaning to cover any arrangement in which goods or services are to be provided in exchange for something of value,” the commission wrote in a 1992 opinion that has since become the agency’s accepted definition of a contract.
Using such a definition, Rep. Josh Cutler of Pembroke could run afoul of the ethics law because a newspaper his family owns collects several hundred dollars a year for running legal advertisements purchased by the state. Cutler is listed as president, secretary, and treasurer of Clipper Concepts, which publishes the Duxbury Clipper newspaper. His 2012 ethics statement lists a 75 percent ownership of Clipper Concepts, which he says he has since transferred to his wife.
Cutler, who is also a lawyer, says he thought about the potential for conflict when he first ran for office last year, but determined his agreement to run state legal ads didn’t constitute a contract.
“I wouldn’t in a million years think that that would violate the conflict of interest [laws],” Cutler said. “But I also wouldn’t think in a million years what [Wolf] did was a violation of conflict of interest. That would mean that no one who had a business at all could be in public office. Almost any line of business, you’re going to have an interaction with government.”
State Rep. Steven Howitt, a Seekonk Republican, owns 100 percent of Modern Tractor and Truck Service, a 55-year-old family business that, among other things, performs snow and ice removal for the state Department of Transportation. Contractors for the DOT’s snow and ice removal program do not bid for the jobs – they fill out an application and other documents — and are paid a flat hourly rate. In 2011, Howitt’s first year in office, his company was paid more than $47,300 for snow and ice removal. Howitt did not return calls for comment.
Other legislators have businesses that could also trigger Wolf-like conflicts of interest if they were to receive state business. State Rep. Bruce Ayers of Quincy is the sole owner of a handicapped van conversion company that accepts Medicaid payments. Sen. Richard Ross could be in violation if his funeral home in Wrentham were to collect the $1,200 fee the state pays for the burial of indigent individuals. Neither Ayers nor Ross could be reached for comment.
“This is a whole new standard that everyone has to adhere to,” said Calter. “I want no involvement whatsoever with any business with the commonwealth. It’s the first question I ask before I accept an engagement.”
Calter said ethics reform legislation was approved in 2010 to “raise the bar” and sent the message that the Legislature wanted more enforcement. But he said the Wolf situation is demonstrating that raising the bar created some unintended consequences that may need to be remedied through “clarifying legislation” if the Ethics Commission does not grant the regulatory exemption that Wolf is seeking.
“The Wolf ruling was certainly not the intent of the Legislature, at least not this legislator,” he said. “We put them [Ethics Commission] in this position. We passed the darn law.”
State Rep. Paul Schmid may have also run afoul of the law when his farm in Westport, where he raises and sells organic beef, accepted small state grants from the Department of Agriculture. Under a 1981 ruling that has been cited in a number of subsequent opinions, the Ethics Commission held that a “state grant is a contract.”
Ethics filings also show a handful of other legislators could be in violation of the state’s conflict of interest law if they have a direct or indirect interest in a company run by their spouse and that company has a contract with the state. At least seven lawmakers disclosed that their spouses have controlling interests in businesses that records show contract with the state, in some instances for as much as $3.6 million annually. The ethics statute says a lawmaker faces a conflict “if his direct and indirect interests and those of his immediate family in the corporation or other commercial entity” exceed the 10 percent limit. Even if the legislator has zero interest, the “indirect” benefit could result if the couple comingles their funds and the Ethics Commission finds evidence.
While the state ethics law generally bars lawmakers who own firms from doing business with the state, the law granted a special exemption to lawyers. The exemption allows lawmakers to own law firms that do court-appointed services such as guardian ad litem or public defender work for the state. At least four lawmakers disclose owning between 33 percent and 100 percent interests in law firms that have been paid for their services by the state between 2010 and this year.
“I’m a big fan of that exemption,” quipped state Rep. Dan Winslow, a former judge and now
a partner a senior counsel in a Boston law firm where he makes in excess of $100,000, though none from work for the state. (Correction : The original story incorrectly stated Winslow’s association with his law firm. Winslow gave up being a partner to avoid conflicts of interest.)
Winslow is joining Wolf as a co-petitioner to the Ethics Commission to carve out a regulatory exemption that would allow business owners whose work with state agencies would not reasonably constitute a conflict or be subject to corruption. Winslow said such exemptions are necessary to avoid the type of ruling the Ethics Commission issued in Wolf’s case, which he said was an accurate interpretation of the law. But he said there’s a big difference in conflicts between legitimate businessmen such as Wolf and someone like convicted former Speaker Sal DiMasi, who is serving prison time for corruption.
“The easiest way to ensure compliance is nobody does anything ever,” said Winslow. “I think the purpose of the conflict of interest of law is to prevent the perception as well as the reality of conflict of interest and there are many ways to do that short of abandoning public life.”Winslow also said it is a no-brainer for Republicans like him to make sure the conflict of interest law doesn’t keep business owners out of the State House.
“Democrats have no shortage of people without private sector experience,” said Winslow. “Republicans tend to draw from the business community. This is very much a Republican concern as well.”