Region Q Board Reviewed by NC State Auditor

Conflict of interest existed! Board has no conflict of interest policy

Ocotober 4, 2007

BEAUFORT COUNTY NC NEWS -- On September 12, the Office of the State Auditor, notified Governor Mike Easley and NC Commerce Secretary Jim Fain, that it has concluded an investigation into a possible conflict of interest involving a member of the Region Q Workforce Development Board, part of the Mid-East Commission.

The Workforce Development Board is a local board required by the Workforce Investment Act (WIA) that is charged with planning, policy development and implementation as well as oversight responsibilities for the workforce development services and programs under WIA. Appointments are chosen by local county commissioners in five counties, Beaufort, Bertie, Hertford, Martin and Pitt, for which the board serves. The board oversees programs for adults, dislocated workers, welfare recipients, youth, job seekers and businesses. Non-private sector Board members represent local community partners such as public schools, colleges, vocational rehabilitation, organized labor, economic development, the employment services, community based organization and department of social services. These programs also provide a Joblink information site.

The results of the investigation did not find any inappropriate conduct related to the allegations, but a conflict of interest exists even if no unethical or improper act occurs. Furthermore, a conflict of interest may create an appearance of impropriety. When a conflict of interest does exist, it should be disclosed to the public. Those public officials with the conflict, should not participate in any decision making that involves the conflict.

The NC State Auditor review disclosed a property lease arrangement between a youth program service provider funded by the Region Q Board, and a nonprofit organization headed by a Region Q Board member. Moreover, the nonprofit organization received direct funding as a Joblink Information Site. Additionally, the board member chaired the committee that recommended the Region Q Board fund the youth program services as well as presided on the Region Q Board that approved funding for the Joblink Information Site.

A review of board meetings minutes relating to the funding approvals found no discussion or disclosure of the board member's involvement with the nonprofit organization that benefitted from the funding, therefore, creating a conflict of interest. Furthermore, other board members knew about the board member's affiliation with the nonprofit organization. However, board meeting minutes did not indicate any of those members acknowledged the board member's relationship during funding decision discussions. In addition, there was no disclosure of the relationship on file with the Region Q Board. This non disclosure obviously creates a situation that could be perceived as inappropriate.

The NC State Auditor has recommended that the Commission and Region Q Board provide conflict of interest education to all board members. In addition, board members should be required to formally acknowledge their understanding of possible conflicts of interest and disclose all potential situations. Each board member should annually complete a conflict of interest disclosure form.

In reply to the State Auditor Les Merritt, both Governor Easley and Commerce Secretary Jim Fain have acknowledged the State Auditor's recommendations, but have only taken and planned the following actions:

• Mideast Board Staff worked on a revision of their code of conduct/conflict of interest form to update the language, with reference to Region Q Board members. Consultation was held with David Francisco, Region Q Workforce Attorney, and based on his comments, the draft was revised.
• On September 12, 2007, Attorney Francisco met with the full Region Q Board and its Youth Committee members and presented the draft code of conduct/conflict of Interest Form and explained the conflict of interest requirements for board members, including a discussion on the new state ethics laws. The Region Q Board did not take any action on the code of conduct laws/conflict of interest forms that this meeting, but instead would e-mail all questions comments/recommended changes before October 15, 2007 to board staff. Staff was charged with revising the draft form based on board member feedback, and present revised document at next Region Q Board meeting scheduled for November 14, 2007.

Furthermore, Commerce Secretary Jim Fain, instructed the division of Work Force Development to assist Region Q Board's establishment of a conflict of interest policy, and to survey other Workforce Development Boards' for adequacy in their conflicts of interest policy.

Ironically, Secretary Fain makes no mention of formal educational training on conflicts of interest ethics, especially when the board presides over a public-private partnership, administering a five-county system of informational and educational programs. I trust that this consultation meeting between Attorney Francisco, the Board and its Youth Committee, is not considered an adequate educational instruction? Especially, when considering the Region Q Workforce Board has no conflict of interest policy in the first place.

The purpose of the new state ethics laws, ratified by Governor Easley, is to have public officials adhere to the highest ethical standards when acting in the public's behalf. Without proper educational instruction, how can public officials be expected to understand the importance of the ethics reform initiative. It is obvious that Region Q Workforce Board and its Youth Committee have completely neglected the new ethics reform initiative taking place across the state. To prevent such errors from occurring in the future while performing their public duties, it would be prudent for the Region Q Workforce Development Board and its Youth Committee to receive formal educational training in ethics. Otherwise, these public officials, appointed by County Commissioners representing the five counties of Beaufort, Bertie, Hertford, Martin and Pitt, in North Carolina will continue to poorly perform their duties, and claim ignorance when exposed.

Auditors Report and NC Commerce Secretary's reply.