By JUSTIN M. FISHBEIN
An editor for a Chicago publisher and a free-lance writer, he is a resident of Long Grove and a former high school board member.

Local officials, the Corrup Practices Act and the Governmental Ethics Act

The Corrupt Practices Act and the Governmental Ethics Act embody the assertion that 'to the public good private respects must yield,' but they make it difficult for some officials to avoid a conflict of interest

IF YOU are an elected or appointed public officeholder in Illinois, then there's a chance that you may unknowingly run afoul of the state's Corrupt Practices Act (111. Rev, Stat., ch. 102, par. 1 ft).

Cook County State's Attorney Bernard Carey terms the act "extremely broad," and adds that it encompasses "a wide range of conduct." This is because the law itself apparently reflects "the concept that public officers must not only avoid conflict, but also avoid the appearance of conflict," according to J. Calvin Bostian, chief of the Opinion Division of the Illinois attorney general's office. In part, this is what the law declares:

Criminal offense
This law is much stronger than other Illinois laws against conflict of interest, such as those in the School Code and the Municipal Code. Violation of those laws is a misdemeanor — a petty offense — although under the Municipal Code, conviction requires forfeiture of office. A violation of the Corrupt Practices Act is a felony — a criminal offense. Conviction also requires forfeiture of office, but that's not all.

— It subjects the officeholder to a fine of from $200 to $1,000, imprisonment of from one to five years, or both.

— It voids any contracts made or procured in violation of the 'law.

— It bars the convicted officeholder from any office or post of trust and confidence in the state for two years.

— It exposes the guilty person to public disgrace and his or her family to public humiliation.

— It makes the officeholder personally liable for attorney fees and court costs if the public liability insurance policy covering his or her position exempts criminal actions.

— A person is subject to prosecution for up to three years after an illegal act was committed. This means that people no longer in office could face prosecution for illegal actions that they unknowingly committed.

Appearance of conflict
Clearly, the law embodies the assertion by the poet John Milton "that to the public good, private respect must;yield." Related to the Corrupt Practice;Act is the Illinois Governmental Ethics Act (111. Rev. Stat., ch. 127, par. 601. 101 ft) that requires elected and appointed officeholders to disclose then economic interests. This act makes it a crime to vote or act on a contract or performance or any work which may benefit the officeholder, directly or indirectly. Together, these laws serve notice that self-dealing by public officials — or even the appearance of self- dealing — will not be tolerated.

According to a recent Illinois attorney general's opinion (NP-789, 7/18/74), a conflict of interest contains five elements:

1. The person must be holding an of- fice, either by election or appointment, under the laws or constitution of this state.

2. The public official must "have either a direct or indirect interest of a prohibited nature."

3. The official in question must be

April 1975 /Illinois Issues/99

An officeholder's interest in a contract is prohibited even though he or she does not derive any direct benefits from it and though there was no intention of bad faith

empowered to act or vote.

4. A prohibited interest must exist at the same time that a contract is made or let.

5. A contract must be made or let. The Corrupt Practices Act obviously applies to everyone from the governor to a trustee of a school or library district. Though this seems clear, the meaning of "interest" is vague. An appellate court opinion states that the law prohibits a "pecuniary" interest in most instances (Panozzo v. City of Rockjord, 306 111. App. 443, 452). However, the Illinois Supreme Court's interpretation is much broader: "The interest against which the prohibition is leveled is such an interest as prevents or tends to prevent the public official from giving to the public that impartial and faithful service which he is in duty bound to render and which the public has every right to demand and receive" (People v. Adduci, 412 111. 621, 626, 627).

Unspecified minimum
To clarify this position, some states have defined what constitutes a substantial interest as any above a specified minimum. The Corrupt Practices Act, however, does not contain such a minimum definition, although the Illinois Governmental Ethics Act does.

For example, a member of the board of a unit of local government such as a school board or a special school district, whether elected or appointed, must disclose the source of income in excess of $1,200 in the preceding calendar year from an entity doing business with the board. The member also must disclose ownership of an entity doing business with the board that is worth more than $5,000 or that yielded more than $1,200 in dividends during the preceding year. Any capital asset that yielded a capital gain of more than $5,000 during the preceding year must be disclosed.

An association with a professional organization (not defined) that provided the board member income of more than $ 1,200 in the previous year must be disclosed. The source of any fee for professional services exceeding $5,000 and rendered to an entity other than the board must be disclosed. The law defines these as the practice of law, accounting, engineering, medicine, architecture, dentistry, and clinical psychology. The sources of any gifts and honoraria worth separately or together more than $500 must be disclosed. So must the identity of any unit of government other than the board that employs the person.

Finally, a board member must disclose ownership in excess of $5,000 or income of more than $1,200 from an entity that during the preceding year sought a license, franchise, permit for annexation, or zoning or rezoning of real estate from the member's unit of government and must describe what governmental action was sought.

Judicial opinions in Illinois are less specific. One opinion (Panozzo v. City of Rock ford} implies, for example, that conflict of interest would not apply to a public official who voted to award a contract to his or her employer if the official's pay is "slight" or the employment "'transient.'" Unfortunately, neither "slight" or "transient" are further defined,

Question of construction
The Illinois Supreme Court opinion in People v. Adduci asserts that "whether or not the interest in any given case comes within the prohibition of the statute may well become a question of construction for the court in view of all the facts and circumstances shown in the particular case." It isn't necessary for a statute to "enumerate the various kinds of interest which may come within its terms," the opinion continues.

"The objectionable interest could consist of any one of numerous interests which would be inconsistent with and repugnant to the duty of the officer to render to the public faithful and impartial service."

Indirect interests
Furthermore, according to the state's highest court (People ex rel. Pearsall v. Sperry, 364 111. 205), an officeholder's interest in a contract is prohibited even though he or she does not derive any direct benefits from it and though there ; was no intention of bad faith. Such an "indirect" interest is any that "would naturally tend to affect" a public official's judgment in his or her determination of whether to let a contract. Officeholders "would be more than human if they could make the same fair and impartial contract with the contractor, as they could with another party with whom they had no relation by way of employment or otherwise," the opinion states. Apparently the term "otherwise" is one of those that has to be defined by the court on a case-by- case basis. Judging by one opinion of the attorney general (S-575, 4/13/75), the term also applies to owning stock or being a director or officer of a contractor such as a bank that is an official depository of the public official's agency. But it also applies to one whose spouse or minor children are stockholders, and it may even apply to an officeholder whose emancipated children are stockholders if these children are only holding the securities on behalf of their parent.

The same opinion (S-575) argues that the phrase "may be in any manner interested" indicates "that it was the intent of the legislature to proscribe the possibility of an officer acting or voting upon a contract in which the officer is directly or indirectly interested."

In one case considered by the

100 /Illinois Issues/April 1975

'We're scaring people out running for office. We are almost to the situation where the only people who can hold public office are those who own nothing, know nothing, and earn nothing'

Supreme Court (Peabody v. Sanitary District, 330 111. 250), the treasurer of a sanitary district owned a third of the stock in a corporation that got a contract from the district. The treasurer did not have a vote on the contract—he wasn't even present when the contract was let—but he could have been called upon by the trustees to advise them as to the financial ability of the corporation to perform under the contract. The court held that the treasurer was disqualified from having any interest in the contract, and the contract was void.

A recent attorney general's opinion (S-787, 7/18/74) contends that a violation of the Corrupt Practices Act can occur even if a public official votes "present," refuses to vote at all, refuses to act, or, as in the sanitary district case, is not even present when a vote is taken.

Rigid enforcement
An Illinois Supreme Court opinion declares that the law against conflict of interest "must be rigidly enforced by the courts, without regard to the moral or equitable considerations that may urge a different policy in particular cases" (School District v. Parks, 85 Ill. 338). This means that even if a school board member, for example, performed labor and furnished wood for a school district while he or she was a director of it, the person is not entitled to be paid with district funds, and if the district did pay the person, it is entitled to recover its money.

The fact that a prohibited interest must exist at the same time that a contract is made or let is also discussed in several opinions of the attorney general. Opinion S-787 deals with the question of whether the renewal of a school district's group health insurance policy is a violation where a board member is also an employee of the insurance company. Although the employee was not on the school board when the original contract was let, renewal "is a manifestation of mutual consent" and "constitutes the making of a contract," the opinion contends. The making or letting of a contract occurs also when failure to terminate a contract results in its renewal, when premiums or commissions are paid, when a contract is modified, or when requests for bids are withdrawn. The sale of bonds to a bank is another example (NP-789), and another is the deposit of public funds in a designated bank (S-575).

Considering all of these strictures, one might expect that both the Corrupt Practices Act and the Illinois Governmental Ethics Act would have their critics. They do.. John E. Juergensmeyer of Elgin, chairman of the local government section of the Illinois State Bar Association, notes that while some state's attorneys have publicly announced that they would adhere to attorney general's opinions dealing with applications of the Corrupt Practices Act, others have interpreted the law their own way. Juergensmeyer says, "This simply points up the fact that the state's attorney of any county has virtually complete and unchecked discretion as to when to prosecute a suspected violation of the statute."

Discretion of state's attorneys
Kane County State's Attorney Gerry L. Dondanville counters that state's attorneys have such discretion anyway. The risk to a public official under such circumstances is highlighted by a situation in adjoining McHenry County. The president of a local school board in that county has been indicted for conflict of interest involving school purchases from a hardware store in which he has an interest. The state's attorney, William J. Cowlin, is a Republican leader, and the school board president, Daniel M alone, ran for county clerk on the Democratic ticket. Whether politics is involved is an open question, since neither man will comment on the case.

The discretionary powers of the state's attorney also are evident in Lake County, where members of a school board were late in filing their statements of economic interest. State's Attorney Jack Hoogasian initiated action against them after receiving an inquiry from an irate resident of the school district. The ethics legislation "doesn't make any sense anyhow because it's poorly drafted," Cowlin observes, but it's still up to a state's attorney to enforce it. Cowlin and Dondanville agree that instances such as these and the penalties for conviction are having an undesirable effect. "We're scaring people out of running for office," Dondanville says. "We are almost to the situation where the only people who can hold public office are those who own nothing, know nothing, and earn nothing."

'Almost a directive' to prosecute
Cowiin says that he regards the stream of attorney general's opinions about the Corrupt Practices Act as "almost a directive" to prosecute offenders. Actually, the attorney general's office has had more inquiries about conflict of interest than about any other topic, according to Bostian. Despite this fact, Cowlin implied in a letter sent to all taxing districts in his county, that strict enforcement of the Corrupt Practices Act would be an "unfortunate circumstance since many fine people serve in appointed positions without pay and are often elected to public office with little or no pay."

Juergensmeyer believes that "it is the almost unanimous feeling that the strict nature of the requirements" of the Illinois Governmental Ethics Act "will frighten away many otherwise highly qualified candidates for these thankless local offices." ¯

April 1975 /Illinois Issues/101

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