Pay to Play Law Blog : Pay to Play Lawyer & Attorney : Bribery, Campaign Contributions

My apologies for the headline, but sometimes one must succumb to the siren song of the obvious.

In one of its last acts before its Members left Washington to fight for their jobs, the House passed the “State Ethics Protection Act of 2010” to avoid a growing concern that Federal Highway Administration (FHWA) procurement rules were in direct conflict with the ever-growing roster of state-mandated pay-to-play laws. Lost in the noise of the shuffle out of town is the potential signal that Congress is getting closer to expanded pay-to-play regulation of its own.

Recently, government transportation officials recognized they had a problem. FHWA provides over $40 billion each year to states to offset the costs of various highway projects. As a condition of receiving those funds, state procurement rules must remain consistent with FHWA competitive bidding policies. Unfortunately (or fortunately, depending on your perspective), neither Congress nor FHWA have seen fit to impose procurement restrictions on contractors associated with individuals who contribute money to candidates or parties - which puts FHWA policy in direct conflict with the many states that do. Theoretically, this conflict would preclude pay-to-play states from entitlement to FHWA funds. According to the House Committee on Transportation and Infrastructure summary accompanying the proposed legislation, FHWA has gone so far as to threaten to withhold such funds in light of the conflict.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

We are pleased to have received this post from Jane Moffat, an attorney in the government affairs practice at McKenna Long & Aldridge, who focuses on Canada-U.S. regulatory affairs.

Pay-to-play reforms are also emerging from our neighbors North of the border. Canada’s federal Minister of Finance recently ordered a review of the Government of Canada’s plan to take money from businesses in exchange for their participation in a consultation process about credit card and payment fees. Earlier this year (June 18, 2010), the Minister announced the establishment of the “Task Force for the Payments System Review” as part of the Budget 2010 commitment to review the safety, soundness, and efficiency of the payments system in Canada.

Criticism about companies paying-to-play has recently been directed at the current Conservative government because businesses are being asked to pay as much as $25,000-$45,000 to take part in the task force. Opposition parties and small businesses are complaining about being squeezed out of the public policy process. The Minister is expected to address the issue and it remains to be seen whether opposition parties will respond by endeavoring to enact pay-to-play legislative reforms.

Also of interest in the Canadian political law world is the reaction of organizations such as the Canadian Bar Association (CBA) and the Government Relations Institute of Canada (GRIC) to the federal lobbying Commissioner’s recent guidance on Rule 8 of the Lobbyists’ Code of Conduct. Rule 8 of states that lobbyists “shall not place public office holders in a conflict of interest by proposing or undertaking any action that would constitute an improper influence on a public office holder.” According to guidance given by the Commissioner in late 2009, a lobbyist could risk contravening Rule 8 by engaging in any type of political activity (such as by purchasing a ticket to a fundraiser). The Commissioner was forced to revisit and clarify that guidance on August 23, 2010 after the CBA issued a cautionary opinion respecting the constitutionality of Rule 8. Although the clarifications provide additional -- and debatably, more specific -- information about what the Commissioner deems a breach of Rule 8, further political and legal challenges are expected. The ambiguity certainly remains as to when a lobbyist’s political activities run afoul Rule 8. Equally uncertain is whether Rule 8 is constitutional under Canada’s Charter of Rights and Freedoms. It will be interesting to follow these pay-to-play issues in Canada.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 
Public pensions are not for sale. That was the message surrounding Assembly Bill 1743, signed into law by Governor Arnold Schwarzenegger on September 30. As we reported in February  the bill was sponsored by the California Public Employees’ Retirement System (CalPERS), state Controller John Chiang and Treasurer Bill Lockyer, both ex officio members of the pension fund’s Board. Chiang and Lockyer have touted AB 1743 as legislation that would ensure transparency and promote merit based investment decisions.

Aimed at terminating “bounty-based compensation” and unrestricted gift-giving, under the new law, California state pension placement agents must now register as lobbyists and as such comply with California’s Political Reform Act of 1974. In addition, agents are banned from making campaign contributions to elected board members or setting up contingent fee arrangements. Placement agents that do business with CalPERs or the California State Teachers’ Retirement System (CalSTRS) will be required to submit quarterly compensation reports, and their pay cannot be contingent on the outcome of an investment action. Officials at CalPERS and CalSTRS must each send a report on the use of placement agents in connection with investments by August 1, 2012.

Lockyer stated that the bill “embodies a principle that has been forgotten and flouted in California and across the nation: Workers, retirees and taxpayers come before politically-connected middlemen and wealthy Wall Street interests.” Chiang said that the bill provides the transparency needed to protect state retirees and California taxpayers. Only time will tell if their aspirations are realized by the passage of AB 1743.

• Email This
• Print
• Comments
• Trackbacks
• Share Link