Ethics in the TreasurySecuring and Maintaining the Public Trust

California Municipal Treasurers AssociationSeptember 21, 2012 Cal Poly Pomona

Kellogg West Conference Center

Presented By: Michael D. Martello

Interim City Attorney, Sunnyvale, CA

Special Counsel, Ethics Project

Institute for Local Government

www.ca-ilg.org

• ILG Mission: Promote good government

• CMTA Code #2

www.ca-ilg.org

Session Objectives

1. Provide tools for analyzing ethical dilemmas

2. Identify steps to take to promote good government in your office and beyond

3. Share resources (and get your input)

www.ca-ilg.org

Ultimate Objectives

• Your success & happiness as a public servant

• Prevent missteps

• Public trust

www.ca-ilg.org

What to Do?

• Sources of guidance– CMTA Code– Law

• Other examples

• Long-term versus short-term thinking

www.ca-ilg.org

Thomas Jefferson

• “Honesty is the first chapter in the book of wisdom”

A Framework: Ethics VersusEthics Laws

www.ca-ilg.org

Ethics Versus Ethics Laws

• Ethics = what we ought to do

• Laws = what we must do– Penalties—Sometimes severe– Minimum standards– Legal ≠ ethical

www.ca-ilg.org

The Political Reform Act

• Called You Out!!

• All the heavy-duty State officials. . .and then:

“. . .city managers, city attorneys, city treasurers, city councils and other public officials who manage public investments “

. . . not the police chief or city clerk

www.ca-ilg.org

What Would You Do?

• Vacation accounting irregularities

• Agency credit card misuse• Agency supplies &

equipment• Double-dipping on

expenses• Extravagant expenses

www.ca-ilg.org

What Would You Do?

• Laundering Money

• Shifting Expenses—indoor sports

• Reimbursement for Losses – theft/damage

• Gifts from Brokers

• The question in the group meeting: “Does anyone see a problem with this?”

www.ca-ilg.org

Thomas Jefferson

• “In matters of style, swim with the current; in matters of principle, stand like a rock.”

www.ca-ilg.org

Resources on Ethics Laws

• No personal financial gain

• No perks

• Transparency

• Fair process

• Rest of Story: AB 1234

www.ca-ilg.org

Short Term Strategies

• Remind people about audits

• Encourage colleagues to consult with your agency attorneys

• Recognize that people often make decisions in the own self interest

www.ca-ilg.org

Long Term Goals

• Help create an ethical environment– Work on a code of conduct– Incorporate standards into you written

investment policy– Keep track of the questionable gymnastics– Put together a presentation for the broader

audience

www.ca-ilg.org

Ethics in the Treasury:

Hard Choices

• Right versus right

• Personal cost – Loss of job– Long-term thinking

Promoting Public Service Ethics

The Three Strategies

www.ca-ilg.org

The Three Strategies

1. Good Practices

2. Your Education

3. Educate Others

www.ca-ilg.org

Good Practices

• Checks and balances: Minimize likelihood wrongdoing goes undetected– Internal controls– Audits– Transparency– Hiring for ethics

• CMTA Code #4: Observe profession’s technical (and legal) standards

www.ca-ilg.org

Educate Yourself

• CMTA Code #4: Continuous improvement

• CMTA Code #2: Promote good government– AB 1234: Take the training – Understand and promote

ethics

www.ca-ilg.org

Educate Others

• Decision-makers– Tool: Financial Management for Elected Officials– Oversight is a form of check and balance

• The Public– Website/transparency– What does the public need to know to

• Participate in democratic processes?• Prevent corruption? (Most important political office . . .) • Know that there’s “Ethics in the Treasury”

www.ca-ilg.org

Resource to Help

• Includes GFOA recommendations on financial transparency

• Sent to finance directors in early January

• Available online at www.ca-ilg.org/financialmanagement without charge

www.ca-ilg.org

Thomas Jefferson

• “I have the consolation of having added nothing to my private fortune during my public service, and of retiring with hands clean as they are empty.”

Questions, Sharing & Feedback