It is not difficult these days to scan the news and find unethical behavior among those whom we elect to public office. Let’s call it political ethics in action. In the case we’re about to mention, complaints have 
been filed against two politicians: North Carolina Gov. Pat McCrory and U.S. Rep. Mark Sanford of South Carolina. These politicians are being accused of receiving stock payouts while they were in office.
Michael Biesecker and Mitch Weiss, writing for the Associated Press (January 12, 2015), “Group files ethics complaint against Sanford,” detailed the following:
“An Associated Press report last month revealed that the two politicians were granted restricted stock shares while board members at Charlotte-based LendingTree. Both resigned shortly after taking office, which should have rendered the shares worthless, but the company’s board gave them the payouts anyway. Neither official fully described the transactions on their ethics forms. McCrory and Sanford, both Republicans, have previously denied any wrongdoing.”
The complaints were filed the North Carolina advocacy group, Progress North Carolina and against Sanford by Citizens for Responsibility and Ethics in Washington. Naturally, the politicians are blaming the left wing politics of the advocacy groups.
They worked hard for the money
The authors of the article explained that Sanford resigned from the LendingTree, money lending organization in May 2013 and a month later (while he was in office), the board of LendingTree gave him almost $109,000 for his shares of stock. According to the advocacy group, he never detailed the transaction on his ethics form. As for McCrory, he made more than $185,000 from LendingTree in 2013 – also from restricted shares of stock as well as close to $15,000 in cash and dividends.
“The governor also didn’t disclose his ‘business association’ with LendingTree, even though he remained on the board for nearly a month after his inauguration. A spokesman for McCrory has said the wording of the question was unclear.”
We are also told:
“McCrory was sworn in Jan. 5, 2013 – 25 days before the early vesting of his stock and 26 days before his resignation [from the company]. LendingTree also reported to the U.S. Securities and Exchange Commission it paid McCrory $4,375 in directors’ fees for serving on its board through the end of January 2013.”
The Governor was also involved with Duke Energy and indeed he worked for the energy company for 29 years before assuming office:
“AP [Associated Press] reported last year that McCrory held the Duke stock while his administration made regulatory decisions involving his former employer, including appointing utility commissioners who set electricity rates.”
Naturally the politicians have geared up their legal defenses making claims that the ethics questions were either difficult to understand or that they were well within their legal rights to take the money and run.
It all seems to come down to a lack of ethical clarity.
There will always be those who will play it loose with the rules and regulations governing disclosure and what most of us were taught as being “honesty.” The point is not so much to blame McCrory or Sanford and to mire down in politics, but to understand the mechanism that allowed the situation to occur.
What can be done in the future?
The political affiliations of either the advocacy groups or the politicians are largely irrelevant to this discussion. What is most relevant is how the ethical rules in both situations were subjected to such loose interpretation and how the consequences appear to be vague.
Obviously, if the consequences are lax for making a choice such as accepting a payment for stock, then what would be motivation for an unethical person to report receiving the money? We have evidence from the above quotes that the consequences are very lax. Despite the supposed ethics rules, the board of LendingTree decided to give them the money anyway. In terms of the business association with LendingTree, “a spokesman for McCrory has said the wording of the question was unclear.” Apparently, it was unclear for Sanford as well. Even George Washington, “when asked,” admitted to chopping down the cherry tree. Therein, might be a key.
Suppose – just suppose – that prior to taking an oath of office, politicians could be publicly questioned by an ethical oversight committee? Suppose they were not only asked about their business dealings, but they would be advised of the consequences for taking any funds from past, present or future business dealings while in office? In this fashion, when payments “show up,” or failures of disclosure might occur, the consequences could be delineated to all parties; and the consequences could be reinforced.
While I am merely proposing just one, seemingly simplistic “What if?” scenario, the spirit of what I am saying could be or should be hammered out to allow for a better ethical climate.
Politicians do not report to boards of directors or their legal counsels, they report to us. A good ethical framework where the consequences for making bad choices are clearly spelled out could go a long way to cleaning up the process.
