I was asked to comment for a Hawaii News Now story broadcast last night concerning a potential conflict of interest situation involving the chair of the Honolulu Authority for Rapid Transportation, which is the agency overseeing construction of the city’s long overdue and far overbudget rail system (“Rail bond deal has financial ties to HART chair, but ethics body finds no wrongdoing“).

HNN reporter Rick Daysog wanted me to comment on the position of the HART board chair, Toby Martyn, who is employed as manager of the local office of a large investment firm that was part of the bond finance management team for the city’s issue of $292 million in general obligation bonds earmarked for support of the rail project. He wanted to know my opinion about whether the chair had a conflict in voting on matters relating to the bond issue.

So I took a look at the available documents, and the applicable city laws.

To his credit, Martyn was apparently concerned about the appearance of a conflict of interest and submitted a disclosure form to the Honolulu Ethics Commission in advance of the scheduled meeting when the bond issue would be on the agenda.

The form indicates that the ethics staff did not perceive a problem: “The facts disclosed do not indicate a conflict of interest exists.”

But, in my view, that’s not the end of the story.

There are two laws that appear to apply in this circumstance.

Section 11-103 of the city charter requires disclosure by any “elected or appointed officer or employee” who has a position that could be seen as creating a conflict of interest.

Section 11-103. Disclosure of Interest —

Any elected or appointed officer or employee who possesses or who acquires such interests as might reasonably tend to create a conflict with the public interest shall make full disclosure in writing to such person’s appointing authority or to the council, in the case of a member of the council, and to the ethics commission, at any time such conflict becomes apparent. Such disclosure statements shall be made a matter of public record and be filed with the city clerk. Any member of the council who knows he or she has a personal or private interest, direct or indirect, in any proposal before the council, shall disclose such interest in writing to the council. Such disclosure shall be made a matter of public record prior to the taking of any vote on such proposal. (Reso. 83-357)

Martyn’s disclosure and the city’s review appeared to comply with this very general provision.

However, there is a much more specific provision in the ordinance that implements the charter provision. This is found in Section 3-8.2 of the Revised Ordinances of Honolulu.

Sec. 3-8.2 Additional standards of conduct.

No officer or employee of the city, except as hereinafter provided, shall:

(a) Participate, as an agent or representative of a city agency, in any official action directly affecting a business or matter in
which (1) such person has a substantial financial interest; or (2) by or for which a firm of which such person is a member, an associate or an employee has been engaged as a legal counsel or advisor or consultant or representative in a matter directly related to such action; provided, that a councilmember is not precluded from voting on such matter before the council so long as a written disclosure has been made in the event there is a conflict of interest involving this subsection and relating to such matter.

While the charter provision requires a determination of whether a conflict or the appearance of a conflict exists, the ordinance is very specific and does not require evaluating the potential for conflict. First, it simply prohibits taking action “affecting a business or matter in which [the official] has a substantial financial interest….”

By definition, the member of a city board or commission is considered an official.

The ordinance defines a “financial interest”, as including employment, or potential future employment, of the official, spouse, or minor children. Certainly being manager of the firm’s Honolulu office is a “financial interest” and undeniably a substantial one.

“Financial interest” means an interest held by an individual, the individual’s spouse or minor children which is: (1) an ownership interest in a business; (2) a creditor interest in an insolvent business; (3) an employment, or prospective employment for which negotiations have begun;

That alone would, by a plain reading of the ordinance, prohibit the official from participating “in any official directly affecting” the business, without requiring a determination of whether or not a conflict of interest existed.

And the second part of the provision would appear to apply as well, since Martyn’s employer was part of the financial team working on the city’s bond issue. Again, this would appear to have barred Martyn from taking part in the official action by voting on the matter.

My concern is not so much the affect of the apparent conflict of interest, but rather that it doesn’t appear the Honolulu Ethics Commission considered the application of the ordinance spelling out this important “additional” standard of conduct applicable to city officers and employees. That signals a potential problem far beyond this particular vote of the HART board.