Ethics in the Treasury Securing and Maintaining the Public Trust California Municipal Treasurers Association September 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

ILG Mission: Promote good government CMTA Code #2

Session Objectives Provide tools for analyzing ethical dilemmas Identify steps to take to promote good government in your office and beyond Share resources (and get your input)

Ultimate Objectives Your success & happiness as a public servant Prevent missteps Public trust

What to Do? Sources of guidance Other examples CMTA Code Law Other examples Long-term versus short-term thinking

Thomas Jefferson “Honesty is the first chapter in the book of wisdom”

A Framework: Ethics Versus Ethics Laws

Ethics Versus Ethics Laws Ethics = what we ought to do Laws = what we must do Penalties—Sometimes severe Minimum standards Legal ≠ ethical

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

What Would You Do? Vacation accounting irregularities Agency credit card misuse Agency supplies & equipment Double-dipping on expenses Extravagant expenses This refers to the Sacramento water district scandal scenario that led to the adoption of AB 1234—the finance director was the whistle-blower in that situation.

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?”

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

Resources on Ethics Laws No personal financial gain No perks Transparency Fair process Rest of Story: AB 1234 13

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

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

Ethics in the Treasury: Hard Choices Right versus right Personal cost Loss of job Long-term thinking

Promoting Public Service Ethics The Three Strategies

The Three Strategies Good Practices Your Education Educate Others

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

Educate Yourself CMTA Code #4: Continuous improvement CMTA Code #2: Promote good government AB 1234: Take the training Understand and promote ethics

Educate Others Decision-makers The Public 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”

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

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