Scott's Business Ties Violate State Code Of Ethics, Commission Says

Oct 2, 2018

The Vermont Ethics Commission says Gov. Phil Scott has violated the state’s code of ethics by maintaining an ongoing financial relationship with a company that does business with the state.

Allegations of conflicts of interest have dogged Scott since he first ran for governor in 2016. In an advisory opinion issued Tuesday, the state’s five-member ethics commission says those concerns are founded.

“The public official has a conflict of interest because he is financially intertwined as a creditor, who has an ongoing financial interest in a company that contract[s] with the state, which the public official as governor is the chief executive officer,” the commission wrote in a four-page opinion.

While Scott no longer holds an ownership stake in a construction business that often bids on state contracts, he is its largest creditor. He sold off his 50 percent stake in Dubois Construction for $2.5 million shortly after he was elected governor in late 2016, to eliminate what he admitted then was a perception of conflict.

But Scott personally financed the loan that the new ownership team needed to take on in order to buy him out. That means Scott receives $75,000 in interest payments annually from the construction firm.

"It is situations like that that cause people to lose faith in government, if you believe that somebody who is in a position of authority within the government could be benefiting financially from their position." — Paul Burns, Vermont Public Interest Research Group

The state’s code of ethics bars public officials from accepting items of monetary value “from a company doing business with the state of Vermont.” Since DuBois Construction does in fact do business with the state - it won a $250,000 contract from the Department of Buildings and General Services last year - the commission says Scott’s financial ties to the firm run afoul of ethics guidelines.

Paul Burns, executive director of the Vermont Public Interest Research Group, filed the complaint that spurred the Ethics Commission’s opinion.

Burns says he has no reason to suspect that Scott has used his influence as governor to enrich DuBois Construction. But he says the code of ethics exists to prevent the perception of conflict, and the opportunity to commit malfeasance.

“And that’s the kind of thing that we’re worried about … situations where you’ve got an elected official who is in a positon to enrich a business that gives him money,” Burns says. “It is situations like that that cause people to lose faith in government, if you believe that somebody who is in a position of authority within the government could be benefitting financially from their position.”

In a written statement issued late Tuesday evening, Scott’s spokeswoman, Rebecca Kelley, said “the governor is not involved in the business in any way - he sold his share.”

Kelley said Scott’s willingness to personally finance the loan for the people who bought him out was the only way to transfer ownership “without forcing the company to shutter its doors or lay off employees.”

“And he did so in a completely transparent manner,” Kelley said.

Kelley said state contracting procedure is “the most transparent process in state government and is strictly followed by the administration.” And any concerns about a conflict on Scott’s part, she said, “are completely nullified by the strict and transparent procedures and documentation in place.”

Kelley said Burns, a frequent critic of the Scott administration, had ulterior motives for filing his complaint.  

“It is clear this complaint was made specifically for the purposes of a political attack to rehash a long-settled matter weeks before an election,” Kelley said. “The weaponization of Vermont’s newly-formed ethics commission should be deeply disappointing to all Vermonters.”

Now that a commission created a year ago by the legislature to serve as an ethics arbiter has ruled against Scott, however, it’s unclear how the first-term Republican governor will proceed.

The Vermont Ethics Commission has no enforcement powers, and is not authorized to conduct investigations into alleged ethics violations.

Burns says the only way for Scott to disentangle himself from the conflict is “to find another way out of the financial relationship he has with the former business.”

If DuBois takes out a loan from a bank or other creditor, and pays off its $2.5 million debt to Scott, then Burns says the conflict would be eliminated.

Without referencing Scott specifically, the Vermont Ethics Commission said in its advisory opinion that it “advises all public officials to avoid conflict of interest by refraining from having any financial interest in or being a creditor to a company which contracts with the state of Vermont.”

“Avoiding conflicts of interest or even the appearance of a conflict of interest is essential to building a rigorous organization culture of ethical conduct at all levels of government,” the commission wrote.