When is a conflict of interest not a conflict of interest?

According to Carlos Valdes, whenever a councilman decides or, “It depends on what the meaning of the word ‘is’ is.”
Analysis

When Mark Scott voted on the water contract for Las Brisas, two separate people during public comment stated they believed that he had a conflict of interest because his wife Carol and her company Kailo Communications represented Las Brisas. One councilman who asked not to be identified stated he understood she received $30,000 from the company for public relations work. Another City Hall insider stated he understood the number was $80,000. Regardless it certainly was over the $5,000 limit on income a spouse or close relative can receive from a company doing business with the City, something totally ignored by the City Attorney.

How important was Scott’s vote? The measure, a resolution to let the City Manager negotiate and sign the contract passed 5-2. According to the City Charter a majority of the Council, five votes are necessary to pass a resolution.

Scott however stated confidently that he had checked with Carlos Valdez and gotten an opinion that said he could participate. He said the opinion was available to anyone who requested it. So WtP did exactly that. What we found was disconcerting to say the least.

Valdez responded to Scotts request for an opinion the on April 29th the very next day, April 30th. In it he quoted the Texas Local Government Code stating that the official must receive more than 10% of his gross income for the previous year in order to have a substantial interest that would require abstaining from participation due to a conflict.

Valdez evidently didn’t think the City code of ethics requiring in (Sec. 2-319. Preamble. “If a council member believes that he/she should abstain from voting on an item to avoid the appearance of impropriety, as encouraged by this Code of Ethics Ordinance or who in discussing or voting on an issue is unable to take an unbiased positions, that council member shall be disqualified from discussions about and subsequent voting for that item under this city ordinance.” In other words it’s like asking Bill Clinton about having sex with interns, in this case it hinges on the word “believes.” This is one of the changes made by the Council that you could drive a line of cattle manure trucks through.

The question is however, does Valdez believe this supercedes the letter or intent of other parts of the local code which in the very paragraph before states, “It is recognized that situations with ethical implications will arise outside the prohibitions of the rules; in such situations, council members, board members and employees are encouraged to keep in mind the ideal of the public trust and to conduct themselves in a manner to avoid the appearance of impropriety even where not compelled by the rules.”

But isn’t it compelled by the rules? “Sec. 2.311. Standards. Conflicts of interest (7) In the event you or one of your relatives have a potential conflict of interest which could influence the councils member’s ability to make an impartial decision, an interest, a reasonable expectation of economic benefit, or any substantial interest in a contract or transaction involving the city which comes before you in the performance of your official duties, you shall make a written disclosure of your interest in the matter and abstain from any vote or decision and not participate in any discussion on the matter.”

The code under DIVISION 3. FINANCIAL DISCLOSURE states that office holders must file financial disclosures. Under Sec. 2-342. Content of reports, it states, “In this section, the report of the reporting official shall include all such information for the reporting official’s spouse…” and goes on to clarify the requirement to include “(d) The names and addresses of all sources of income which exceed ten (10) percent of the reporting official’s gross income, or five thousand dollars ($5,000.00) in salary, bonuses, commissions or professional fees...” and further states, “If the reporting official is self-employed or owns or controls at least a twenty percent interest in a partnership; corporation or other entity through which the reporting official does business the reporting official shall also report the names and addresses of the clients or customers who do business with the city with from whom the reporting official, partnership, corporation or other entity received at least ten (10) percent of its gross income.”

Scott’s filing does not indicate any contract amounts with any company over $5,000 or ten percent of their income for Kailo Communications. Under INCOME FROM INTEREST, DIVIDENDS, ROYALTIES & RENTS Part 5 under SOURCE OF INCOME he lists consulting fees in a range for his spouse as being between $10,000-$24,999 from “various” sources, leaving the question open how much did Carol Scott get from Chase Power and did it meet the threshold, something that should have been of the utmost importance to Valdez in his determination and due diligence.

So what did Valdez base his legal opinion on? Seemingly the last line of his opinion is the answer, “Based on the information you provide, you do not come within the prohibited substantial interest definition and therefore would not have a conflict of interest. Pursuant to the state statues and the Corpus Christi Code of Ethics you are allowed to participate in the consideration of any matter involving Chase Power (Las Brisas).”

So WtP asked to see what Scott had submitted. The City produced the following two paragraph statement shown here in its entirety.

Carlos,

I would like to ask you to give me a Conflict of Interest Opinion regarding a previous business relationship my wife had with Chase Power (the developer of the proposed Las Brisas project). She had a consulting contract with Chase that she terminated in the fall of last year. The contract income represented under 10% of total income of 2009. Her last invoice to Chase was in early October and paid on 10/16/09. She has done no work for them since then.

I intend to participate in the Las Brisas discussion and vote unless you tell me that I have a conflict of interest because of the information outlined above.

Please advise.

Mark

And that’s not all
Kailo Communications has other interests in seeing the water contract passed. Scott may have unwittingly pointed it out himself. He discussed the fact that the water contract would reduce the water rates to industrial users on refinery row significantly. Scott said, “I think there is a significant benefit to our industrial sector.” He went on to say how much, “Flint Hills around $400,000 a year in savings, Valero around $400,000 a year and Citgo around $250,000 a year in savings.” “Let me tell you we saved you guys a million dollars.”

On its website Kailo Communications lists under clients, Flint Hills Resources and Citgo. It begs the question does Carlos Valdez work to protect the citizens of the City or the interests of the Council? Who knows, maybe there are five citizens out there who are willing to take it to the ethics committee who recommended this abomination of a policy and see if they still feel the same way.