Murky ethics in Augusta could chill private business owners seeking public service

Darryl Brown's foray into public service started like that of many others. After working for decades to build a career and a family, there came a time when he felt inclined to give something back to society.

So when Republican Paul LePage was elected governor, Brown was encouraged by his colleagues to contact the transition team about becoming the next commissioner of the Department of Environmental Protection. A soils scientist with more than 30 years working for his land-use consulting company, Main-Land Development Consultants, qualified him for the job.

Or so he thought.

Two months after being confirmed and sworn in as DEP commissioner, Brown was forced to resign after Attorney General William Schneider concluded that he was "unqualified" for the job due to Brown's refusal to reveal proprietary information about some Main-Land clients. By the time that ruling was made, Brown had already agreed to sell his company, which had been hired to work on the Oxford casino project, to address potential conflicts of interest raised during his confirmation.

The whole experience vexes him to this day.

"I'm still baffled by that," Brown says of his departure.

A more recent conflict-of-interest case involved State Treasurer Bruce Poliquin, who is constitutionally barred from engaging in commerce. Poliquin appeared before the Phippsburg Planning Board last year to seek a new business license to expand operations at his Popham Beach Club, for which he is the sole signatory on the company checkbook. He is also the only member of Dirigo Holdings, which is developing a $17 million condo complex in Phippsburg. The treasurer himself is financing the first phase, projected to cost $1.7 million.

Poliquin didn't disclose those interests on mandatory state disclosure forms until the state Commission on Governmental Ethics and Election Practices told him that he must. After saying he didn't think the interests needed to be reported because he didn't receive any profit from them, Poliquin filed an amended form.

When it came time for the AG to weigh in, Schneider determined Poliquin should disassociate himself from his business interests and not appear before government boards. Poliquin remains the state treasurer and is seeking the GOP nomination for the U.S. Senate.

These cases highlight the complications some business owners encounter when they make the transition to public service, while underscoring the ethical ambiguities of Maine's governance standards. Although each case has its own set of facts and standards — commissioners are appointed by the governor, whereas constitutional officers such as the treasurer, secretary of state and attorney general are elected by the Legislature — each man ran up against provisions designed to prevent conflicts of interest. The result, say some political observers, could cause business owners to think twice before leaving the private sector to serve the public.

Ethics and politics

The purpose of conflict-of-interest laws is clear: to prohibit people through their positions of power from enriching themselves or their associates. But sometimes, the application of those laws can be influenced by outside factors, such as politics.

For example, the attorney general determined that Brown appeared "unqualified" to serve as DEP commissioner because Brown wouldn't provide sensitive financial information to the state. The AG needed that information to rule whether Brown was in violation of a state statute that disqualified from the DEP post anyone who received more than 10% of their income over the previous two years from companies with federal Clean Water Act permits.

Absent any guarantees that the financial records would be shielded from public view, Brown says he declined to provide them because public disclosure would jeopardize the sale of his company — an act, ironically, being undertaken to disassociate himself from his company to comply with the state's conflict-of-interest statute.

Meanwhile, Schneider, who is also seeking the GOP nomination for U.S. Senate, determined that Poliquin could stay in office, provided he take certain steps such as appointing a third party to handle his business affairs — similar to the steps taken by Brown a year earlier that hadn't proved sufficient to keep his post.

"During the treasurer's term in office, he should take steps to disassociate himself from the active management of any of the entities in which he is invested and any entities in which he is the sole owner or principal or agent," wrote Schneider, who did not respond to a request to be interviewed for this story. "Furthermore, he should not appear before any governmental bodies on behalf of entities he owns."

The rulings are counter-intuitive, says Dan Boxer, an attorney and adjunct professor at the University of Maine School of Law who for the last three years has co-chaired the school's Symposium on Governance, Business Ethics and Social Responsibility.

"The difference between Darryl Brown and Bruce Poliquin is Darryl Brown immediately sought to comply with the requirement that prohibited him from having that position," he says. "Obviously, the treasurer didn't and the treasurer still has the job. And we don't know what he's done to comply. "

Despite appearing before a municipal board and acknowledging contact with managers with both the Popham Beach Club and Dirigo Holdings, Poliquin maintains that he has never been involved in the active management of his real estate investments. To comply with the AG opinion, he says he has hired the Portland-based Dirigo Management Co. to oversee all of his real estate investments.

"I have been very mindful of what the attorney general suggests," Poliquin says, noting the companies are not affiliated with one another, despite the similar names. "I have had other people always managing [the companies] since I have been treasurer, but I put this additional layer in just so that there wouldn't even be a perception of me being involved in those investments."

Ethically, Boxer says, the treasurer should have been more upfront in disclosing his business interests and taken quicker, more decisive action to remedy any potential conflict or violation, rather than drawing fine lines to argue compliance. Such line drawing puts one on a slippery ethical slope, he says, noting how most people are cognitively biased to believe they and their actions are ethical.

"I think from Day One, he either shouldn't have taken the job if he had those outside interests, or once he took the job, he should have placed them so far beyond his control he couldn't have weekly checked to see how they were doing," says Boxer.

Since the treasurer didn't take those measures and went so far as to appear before a governmental board on behalf of his business, Boxer says, "at that point I think the Constitution was violated and he should have stepped down from the state treasurer position."

Poliquin says the issues were raised by Democrats to score political points, since he and the LePage administration are taking aim at longstanding governmental structures and spending. He says he works 80 hours a week and couldn't possibly have time to run two businesses.

Amy Fried, a political science professor at the University of Maine, also sees politics as playing a role, not only in the allegations, but in how each case panned out.

"Ultimately, the majority party and governor are not interested in removing Bruce Poliquin," Fried says. "Republicans in the Maine Legislature could do so should they wish, and Gov. LePage could encourage them to do so. It seems to me that Mr. Poliquin must have political support from the Republican base. Some significant proportion of Republican legislators and citizens are happy with Poliquin's role as a very public, activist state treasurer."

The Maine Heritage Policy Center, a conservative think-tank, filed an amicus brief in support of Poliquin while the Maine Supreme Judicial Court was considering whether to weigh in on the treasurer's actions. Ultimately the court declined, saying the matter didn't constitute a "solemn occasion," which is defined as an issue of instant concern and "live gravity," meaning a branch of government cannot act without legal clarity.

Brown received no such political support. In fact, after his resignation, it was revealed that five of the seven members on the Board of Environmental Protection were in violation of the state statute, since they worked for companies or municipalities that held Clean Water Act permits.

Rather than cleaning house, which would have brought the DEP to a standstill, the Legislature passed LD 1575, a bipartisan emergency legislation to align the state statute with federal law to allow the commissioner and board members with potential conflicts to serve, provided they recuse themselves if conflicts arise. Brown was not invited back as DEP commissioner and was instead appointed as head of the State Planning Office, which was identified for consolidation. He resigned from that post late last year, saying his work there was finished.

‘Unusual cases'

Kenneth Palmer, professor emeritus of political science at the University of Maine in Orono, says the issues raised about Brown's and Poliquin's private business dealings are somewhat new in Maine. Whereas previous Democratic governors have appointed bureaucrats or folks from the "political class," LePage, like other GOP leaders, tends to pull expertise from the private sector.

"These are unusual cases," says Palmer. "We don't usually have these problems in Maine. So I think they're breaking new ground to some extent."

Such conflicts could be avoided by having a more robust confirmation or election process, Palmer says, especially since the administration seems more inclined to tap the private sector for publicly appointed positions.

"These issues might come up again," he says.

Boxer says such issues could be avoided if the state had a more sophisticated approach to ethics in government. He believes the lack of ethical sophistication was one reason the state received a failing grade on March 19 from the Center for Public Integrity, which studied the risk of corruption in all 50 states.

"It's a cultural thing," Boxer says. "We're a rural state. We're an honest state that doesn't have a history of corruption. People tend to take umbrage when you suggest there may be an ethical issue here. The word 'ethics' immediately implies you're doing something wrong. As a result, we don't have very good provisions for revolving doors for people moving from government to the private sector and vice versa. Look at the conflict-of-interest guidelines for the legislators. They can vote on things that affect them."

Boxer says a lack of clear ethical standards also leads to "out-of-work politicians" being appointed as heads of state agencies, regardless of whether they are qualified.

Pointing to the Maine Turnpike Authority, Boxer says a blind eye to ethics made it easy for Paul Violette, a former lobbyist, to be appointed as the authority's head in 1988. That same ethical void, he says, led to more political appointments to the MTA Board of Directors, which didn't properly oversee Violette, who pleaded guilty in February to embezzling more than $150,000. Boxer says there was no avenue for the turnpike staff to raise these issues without fear of retaliation.

Devising ethical standards and holding annual training for public servants would be a good start, Boxer says, as would establishing clear processes for reporting corruption and conflicts of interest, whether it's an anonymous hotline or other measures.

"Maine hasn't done a very good job requiring its agencies, its public servants, its boards and commissions to really get educated in what ethical thinking is all about," Boxer says. "The tone starts at the top — the governor and the Legislature."

Chilling effect

Barbara McDade is president of the League of Women Voters of Maine, a nonprofit group dedicated to promoting good government through civic engagement. She says the state needs the best and brightest minds in public service.

McDade worries that the murky application of conflict-of-interest standards in the cases of Poliquin and Brown could discourage well-qualified private-sector business people from entering public service. To her, it's a matter of transparency.

"It seems to me they just flipped," McDade says of the outcomes of each case.

The experience gave Brown a feeling of regret. In January, he completed the sale of his company that was initiated to allow him to hold the DEP commissioner post.

"I did not intend to sell my company at that time…I was kind of forced into it," Brown says. "I didn't mind being forced into it, knowing I would have a position with the administration for four years at least."

Brown says he felt obligated to the buyer to see the sale through, even though it was no longer necessary. He says he is too young to retire but he hasn't figured out what the future holds. His experience in the public sector is one he is not eager to repeat.

"It was a tough time in my life," he says. "For a period of time, this thing was always being flashed around about this perceived conflict, and it was tough on me and it was tough on my family."