Scott Sells His Construction Business, But Questions About Conflicts Persist

Jan 13, 2017

Gov. Phil Scott may have sold off his stake in a company that does business with state government, but critics say he still hasn’t eliminated the financial conflicts related to that business relationship.

For more than 30 years now, Scott has owned a construction company that regularly bids on state transportation contracts. During his campaign for governor, Scott said he’d untangle himself from the business if elected, so as to avoid any financial conflicts while in office.

That sale is now complete – on Dec. 30, Scott sold his $2.5 million share in the firm back to the company itself. But Scott hasn’t exactly severed financial ties with Dubois Construction.

He’s financing the deal himself. And if Scott’s goal was to put to bed any concerns about bringing financial conflicts to his role as governor, he has not succeeded.

“The problem here is that by financing the sale of his business, the governor’s receipt of the money he is owed depends on the business succeeding,” says Paul Seamus Ryan, a veteran campaign finance attorney who has been working on political-integrity issues for 15 years. “The bottom line for conflicts of interest, why they matter, is that it is a problem when a public official can do things as a public official that will benefit them personally financially.”

Ryan is vice president for policy and litigation at Common Cause, a Washington, D.C., based nonprofit that works to guard against government corruption and abuses of power.

"The problem here is that by financing the sale of his business, the governor's receipt of the money he is owed depends on the business succeeding." — Paul Seamus Ryan, veteran campaign finance attorney

Ryan says Scott could have availed himself of other options to resolve the conflict.

“What would alleviate my concerns, what would alleviate the conflicts issue for Vermont taxpayers, would be simply having someone else finance the deal, having this buyer go to a bank,” Ryan says.

At a press conference on Friday, however, Scott said that bank financing was not an option, because of the intricacies of the business. Scott says the company is paying back him over 15 years, at an interest rate of 3 percent, and he says that divesting himself entirely would have required the company to liquidate in an auction.

“Which would have meant many families and employees who have been there for 30, 40, 50 years would no long have an opportunity, no longer have a job,” Scott says.

Scott says he won’t use his executive authority to advance the interests of a company that’s now indebted to him. And he says residents won’t have to take his word for it.

"I'm committed to transparency. I believe we need to have more transparency in order to restore the faith and trust lost by some in state government." — Gov. Phil Scott

“I’m committed to transparency,” Scott says. “I believe we need to have more transparency in order to restore the faith and trust lost by some in state government.”

Scott says the open bidding process used by the state will leave a paper record that would expose any attempts on his part to game the system.

Craig Holman is a government affairs lobbyist at Public Citizen, another Washington-based government watchdog group. Holman says Scott’s arrangement “simply doesn’t cut it.”

“The fact that the governor is financing the deal for the buyer means that the governor would want to make sure that the company stays healthy and financially prosperous,” Holman says.

Ryan says that Vermonters at least have the benefit of knowing where Scott’s financial interests lie.

“And on the grand scheme of things, particularly in light of the President-elect Trump’s press conference yesterday about his conflicts of interest, Vermonters aren’t in a very bad situation here,” Ryan says.

But Ryan says that even the appearance of a conflict can be corrosive.

“Appearances of conflicts undermine the public’s faith in government much the same way as actual conflicts do,” Ryan says.

Vermont's executive code of ethics says “no full-time appointee shall be the owner of, or financially interested, directly or indirectly in any private entity or private interest that is subject to the supervision of his or her respective department or agency.”

Asked Friday if his financing arrangement with Dubois keeps him in compliance with that code, Scott said, “I believe it does.”

Scott says he’ll welcome scrutiny related to Dubois Construction’s bids on government contracts, and that he’s confident voters will be comfortable with the arrangement.