Conflict of Interest Laws in North Carolina, U.S.A.

AUTHOR

A. Fleming Bell

ABSTRACT

Introduction

The law that has developed for public officials in the United States regarding ethics, or what I term fundamental appropriateness, is especially concerned about roles and role conflicts. One common situation that has caught the interest of courts and legislatures is where a public official’s interests as a private individual differ from, or are even in opposition to, the interests of the wider public that he or she is expected to serve. As day-to-day use of computers by individuals in public service has increased, the temptation to take advantage of one’s access to public information for private advantage has become even greater.

Laws dealing with public-private role conflicts vary widely from state to state in the U.S.A. As a professor of public law and government in the School of Government of The University of North Carolina, I am, as one might expect, especially interested in my state’s laws on conflicts of roles and conflicts of interests.

Focus of the Paper

North Carolina’s legislature made major changes in the state’s laws regulating conflicts of interest in public contracting in 2001. Those changes are the subject of this paper. In it, I will explore the current statutes governing contractual conflicts of interests involving the state’s public officials. I will ask why there was a need felt to revise the older law, and I will note and critique some of the principal changes that were made. I will examine how computer technology affects, and is affected by, the requirements of these laws, with a goal of determining ways in which North Carolina’s rules might or might not serve as an example for other jurisdictions.

Some Background on North Carolina’s Laws

The idea that one’s public and private interests may be incompatible and should not be permitted to coexist in the same transaction was expressed in statutory form in the State of North Carolina, one of the thirteen original United States, as early as 1825 or 1826. While not a long time ago by European measures, this dating marks an early statute by North American standards. The original law was passed only 50 years after 1776, when the state’s first constitution was adopted and the United States was founded through the adoption of the Declaration of Independence.

The 1820s conflict of interest statute basically forbade appointed state government officials to make contracts for their own benefit under their governmental authority, a practice commonly known as “self-dealing.” Remarkably, the basic form and language of this law did not change very much between 1827 and 2001, a period of nearly 175 years. The list of officials that it covered was expanded to include elected and local government officials, and certain exceptions were added, but the statutory prohibition that existed when the 2001 General Assembly of North Carolina convened was basically the same as the prohibition that existed in 1827.

Application of North Carolina’s New Conflicts of Interest Laws

The law adopted in 2001 takes an approach different from the old statute. Rather than relying on a single blanket prohibition on conflicts of interest in contracting, it creates certain new offenses, revises the basic statutory rule itself, and adds definitions of terms where none existed previously. It also incorporates other statutes that had existed separately into one unified system. While the law does not itself consider information technology contracts separately from other agreements, a primary goal of this paper, as noted above, is to highlight ways in which computer technology is implicated in the application of the new conflict of interest law.

Two examples will illustrate. (1) The new law prohibits a public official who is not actually involved in making a contract with his or her public body, but who would benefit from the contract in some way, from attempting to influence the contract-maker, including by the giving of gifts. This means that a volunteer city council member who operates a computer repair business cannot give the city manager, who is about to decide which company will receive the city’s annual computer service contract, a birthday gift, even though this is the standard business practice with his private sector clients.

(2) Some local governments in North Carolina have begun to allow their employees to buy computers from the city or county at wholesale prices, as an employee benefit. Other citizens are not allowed to take advantage of this program. Is this a legitimate practice, or are the employees receiving an improper special private benefit because of their public role? The new conflict of interest statute does not speak to this type of contractual arrangement, however, so it must be addressed in other ways.

A Final Note

My paper will consist mainly of new, as-yet-unpublished material from the forthcoming second edition of my book, Ethics, Conflicts, and Offices, A Guide for Local Officials, as well as other original writing. I will also make some use of the first (1996) edition of my book, a copy of which I can provide on request. Both are English-language publications.

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