Phil Scott To Run For Governor, But Does He Have A Conflict Of Interest?

Sep 8, 2015

Lt. Gov. Phil Scott told supporters Tuesday that he wants to be the next governor of the state of Vermont. But the Republican wants to run state government while maintaining ownership of a construction firm that does business with it. And the Vermont Democratic Party says his plans present an untenable conflict of interest.

Scott has devoted most of his professional life to the Middlesex construction firm he co-owns with his cousin, Don Dubois. The firm’s clients include the state of Vermont, which has paid Dubois Construction nearly $3.8 million over the past 15 years, most of it for work on transportation projects.

Scott has been working in recent weeks to figure out how to resolve the apparent conflict, should he run for governor and win. And after announcing his bid to replace Democratic Gov. Peter Shumlin Tuesday morning, Scott said he’s figured out a solution.

“Well, it’s to actually put a blind trust in... that I would put somebody in my place to take over, if I was successful, until I decided to not be governor anymore,” Scott says. “I would absolutely have no control and no input into the operations of the business.”

Scott, however, says that while he’d install a firewall between himself and operations, he’d still retain his ownership of the firm. Conor Casey, executive director of the Vermont Democratic Party, says Scott will hardly be blind to the financial interests of DuBois Construction.

“I believe it’s wholly inappropriate for the head of the executive branch to have ownership in a company receiving taxpayer dollars,” Casey says.

Politicians often used blind trusts as a means of ensuring they can’t use the levers of government for their own personal enrichment. But Casey says the concept of the blind trust relies on officeholders having no knowledge of where their money is invested, and he says Scott’s proposal doesn’t come close to meeting that standard.

"I would put somebody in my place (in the business).... until I decided to not be governor anymore. I would absolutely have no control and no input into the operations of the business." - Lt. Gov. Phil Scott

“I’m not saying it’s illegal, but it certainly doesn’t pass the straight-faced test, and could give the impression of impropriety in state government,” Casey says.

Nick Kusnetz is a reporter at the Center for Public Integrity, an national investigative news outlet that focuses on abuses of power by public officials and private institutions. Kusnetz helped author a corruption-risk scorecard of all 50 states. The analysis included an evaluation of the integrity of procurement standards, and Kusnetz says the arrangement Scott proposes would at the very least raise some eyebrows.

“If the governor has a company and that company is bidding on contracts, I think it seems obvious that there would at least be questions about whether there’s a conflict there,” Kusnetz says.

Scott says voters needn’t worry. When it comes to awarding contracts, state and federal law requires the government to select the quote “lowest responsible bid.” Scott says safeguards built into the system wouldn’t allow for manipulation of the bidding process, and that he wouldn’t engage in it anyway.

“Everyone knows what your prices are, everyone knows – your competitors know, you know what their prices are. It’s unit prices invariably. So it’s fully transparent,” Scott says.

Casey says that if Scott wants to be governor, he ought to divest himself of any financial interest in the company. Scott, however,  says his financial livelihood begins and ends with Dubois Construction.

"I believe it’s wholly inappropriate for the head of the executive branch to have ownership in a company receiving taxpayer dollars." - Conor Casey, Vermont Democratic Party

“That is my retirement by the way – I don’t have stocks and bonds and other things, investments in other areas. This is it. I put the whole ball of wax right there,” Scott says.

The controversy isn’t a new one for Scott, who has had to juggle the role of businessman and public servant since he was first elected to the Vermont Senate in 2001.

Earlier this summer, Vermont Press Bureau Chief Neal Goswami investigated Dubois Construction’s relationship with the state and found that since 2001, the company has received $3.785 million in public funds through more than 250 payments from the state.

Since Scott took office as lieutenant governor in 2011, according to Goswami’s story, Dubois Construction has been paid $2.657 million.

Goswami reported that the majority of the awarded funds came from the Agency of Transportation. When Scott was in the Vermont Senate, he served on the Committee on Transportation.

Scott says entrusting his firm in the hands of someone other than himself is not an easy sacrifice, and one that comes with potential risk.

“I’ve seen years where when you have a downturn in the economy, when your business suffers. I’ve been through some of those, and it’s amazing how quickly a business can erode and fall apart,” Scott says. “So to put somebody in my place is not an easy situation.”

Scott says his foremost concern is for his employees, many of whom have spent decades at Dubois.

“I want to make sure the employees that have given their lives… feel secure in their future, as secure as they can be, that this (business) will continue regardless of where I am,” Scott says.