The Vermont State Ethics Commission said this week that Gov. Phil Scott has a financial conflict of interest. The governor rejects the panel’s opinion, however, and says voters can decide next month whether he’s violated the state code of ethics.
Until last year, Vermont was one of only two states without a state ethics commission. This week, the newly formed panel issued its first “advisory opinion” since it was created. In it, the commission says Scott’s financial ties to a company that does business with the state violates the state code of ethics.
The case centers on Scott’s relationship with DuBois Construction, the company Scott founded about three decades ago and remained a partner in until shortly after his election in 2016.
The state has paid DuBois nearly $4 million over the past 15 years, most of it for contract work on transportation projects. During the 2016 campaign, Scott’s political adversaries - like former Vermont Democratic Party Director Conor Casey - said his relationship with the firm raised serious questions about his ability to serve as governor.
“I believe it’s wholly inappropriate for the head of the executive branch to have ownership in a company receiving taxpayer dollars,” Casey said in 2015.
So Scott made a promise: If elected governor, he’d disentangle himself from the construction firm. This week, after the ethics commission’s ruling came down, Scott said he kept that promise.
“I took the unprecedented move of selling my business, my share of the business after the election," Scott said.
But the five members of the independent ethics commission said this week that Scott’s conflict remains, because of the manner in which he severed ties with his firm.
While Scott sold off his $2.5 million ownership stake in the firm, he financed the deal himself, which means the new owners have to make annual interest payments of $75,000 to Scott to satisfy their debt.
State Ethics Commission Chairwoman Madeline Motta says the situation is a pretty straightforward violation of Principle 3 in the state code of ethics, which states that public officials shall not accept an “item of monetary value” from an entity that does business with the state.
“It seemed pretty clear cut to us when we first started working on it,” Motta said in an interview this week.
The governor’s government lawyer, Jaye Pershing Johnson, disagrees with that analysis. She says the provision cited by the ethics commission deals with gifts or other items of monetary value given by a company to a public official.
“The idea that payments made over time pursuant to a contract are a gift or other item of monetary value would take the notion of a gift analysis in an ethics policy beyond the bounds of where it’s been taken before,” Johnson says.
Gordon Witkin is the executive director of the Center for Public Integrity, an investigative news outlet in Washington, D.C., that issued a state-by-state ethics report card in 2015.
Vermont was ranked dead last in terms of ethics enforcement. Less than two years later after the Center for Public Integrity’s investigation, the Vermont Legislature created an ethics panel to vet allegations of conflicts or misconduct.
But Witkin says a scenario like the one involving Vermont’s governor and his ties to DuBois is a tricky one to navigate.
“I think there is a bit of gray area,” Witkin says.
In an ideal situation, Witkin says, Scott would sever all ties to the company.
“The governor should be in a position to get rid of his interest in any company doing business with the state as a sort of ideal squeaky clean kind of move,” Witkin says.
Witkin, however, says that may be easier said than done.
“If your background is in business and you are in a relatively small state and you’ve been a successful business person, completely wiping the slate clean may be a challenge,” Witkin says.
Witkin says it can be appropriate to have different standards for different kinds of public officials. He says the highest standards should be used for the highest-profile positions, like governor.
“Generally, I would lean toward being a little more squeaky clean if your position is a fulltime state position, like a governorship, as opposed to let’s say a state legislator, who is part of a so-called citizen legislature and may be serving only three months a year,” Witkin says.
The important thing, he says, is that Vermont has an ethics commission in place to ask the question.
The state ethics commission doesn’t have the power to investigate allegations of ethics violations, or enforce any kind of discipline or action when they find them.
But Witkin says the commission still serves an important role.
“Which is to say, ‘Hey, we’re going to bring this to the light of day, we think it’s wrong, other people can make their own decisions,’” Witkin says.
And Scott seems content to let exactly that kind of process play out. He says the company isn’t in a position to get a loan from a bank or other creditor to pay off the $2.5 million debt, which means the only way to keep the business afloat, and prevent employees from being laid off, is for him to be the person financing the loan.
And he says state contracting procedures are rigorous enough to prevent him or other public officials from gaming the system of their own benefit.
Motta says the ethics commission stands ready to help Scott and other public officials determine whether they have conflicts of interest, and help resolve them when they do.
“And we still encourage and invite the governor’s legal counsel to sit down with the ethics commission ... and discuss ways that they can mitigate their conflicts of interest," Motta says.
As for Scott's situation specifically, Motta says there's one sure way to eliminate the conflict.
“And one is by removing that company from the state-approved contractor list while the governor is still in office," Motta says. "I mean that’s pretty easy. That’s pretty easy to do.”
Scott, however, says there no reason to take any remedial action, because there's no conflict to resolve. And he says he's bothered by the fact that the commission never gave him an opportunity to make his case to the panel before they issued their advisory opinion.
Scott says he was prepared to testify before the commission, and offer documentation related to the sale of his business, and the specifics of state contracting procedures. Motta says the commission isn't authorized to conduct investigations, and that it would have been "improper for us to accept any kind of extra information.”
Scott says he cares less about the opinion of the commission than that of voters.
“I think we’ll let Vermonters decide in about five weeks whether this is an issue or not," Scott says.
Which means Scott, at least, will interpret the results of November’s vote in the race for governor as a referendum on the commission’s ruling.