It may be a coincidence, but an unusual interpretation of the state’s ethics law may have saved Raleigh attorney and lobbyist Bruce Thompson from potential ethical peril. It’s the latest twist involving UNC-TV — an agency of state government — and the network’s compromised coverage of what became known as “The Alcoa Story.”

Ethics watchdogs say UNC-TV’s conflicting roles as both a journalistic enterprise and an arm of state government led to an ethical muddle for Thompson. One of his lobbying clients is Stanly County, which spearheaded efforts by the state to take over Alcoa property via legislation, but he also was a member of UNC-TV’s board, which reviews the network’s programming and fundraising.

Further, he corresponded by e-mail nearly two dozen times with UNC-TV legislative reporter Eszter Vajda between August 2009 and April 2010, when she was covering the Alcoa controversy. Thompson resigned from the board Sept. 7. “I do not want my representation of Stanly County and vigorous advocacy in the ongoing Alcoa matter to cause any problems for UNC-TV,” he wrote in a letter to the board.

Normally this might present conflict-of-interest issues under the state’s ethics law, but UNC-TV is not covered by the law. In December 2009, Gov. Bev Perdue issued an executive order adding 15 state advisory boards, including the North Carolina Film Council and the Economic Development Board, to the group of public agencies and policymaking entities covered by the ethics law.

UNC-TV’s board was not on that list.

If the ethics law covered the UNC-TV board, Thompson, along with the other board members, would have been required to file a Statement of Economic Interest spelling out his assets, property, sources of income, and lobbying contracts, among other things. The state Ethics Commission reviews the statements, flags any actual or potential conflicts of interest, and notifies the board chairman of those conflicts.

The “covered person” is supposed to “refrain from any undue participation in the particular matter” during board meetings. And the ethics law discourages anyone covered by it from using their authority to place undue pressure on state employees like Vajda.

Even though the UNC-TV board is not covered by the state ethics law, “The general idea of conflict of interest and recusal applies to all boards/commissions that are stewards of state and private resources [including UNC-TV], whether covered by the Ethics Act or not,” Frank Perry, director of investigations and public affairs at the nonprofit Foundation for Ethics in Public Service, wrote in an e-mail to Carolina Journal.

“[C]ommon sense parameters of such stewardship would make it clear that Thompson’s ‘conflict of roles/interest’ require recusal or disclosure, and certainly not after the fact,” he wrote.

Before the network aired news stories on the dispute over a state water-quality certificate, a federal license letting Alcoa continue operating four hydroelectric dams in central North Carolina, and legislation enabling a state takeover of its assets, a legislative committee demanded that UNC-TV surrender thousands of pages of e-mails and other journalistic materials.

State Sen. Fletcher Hartsell, R-Cabarrus, chairman of the Senate Judiciary II Committee, wrote UNC-TV General Manager Tom Howe June 30: “I am directing you (as an agent of UNC-TV which is a state agency) to provide to me a copy of all footage, (including all interviews, B-roll, and camera masters) in your possession regarding the Alcoa Corporation’s activities in Stanly County, North Carolina, in and near the Yadkin River (‘The Alcoa Story’).”

Those materials showed that state Senate President Pro Tem Marc Basnight, D-Dare, phoned Howe, alleging “some collusion with some of the Alcoa lobbyists” and station management. Vajda “should not be punished by anyone in your operation” for her Alcoa reporting, Basnight said.

UNC-TV ignores press shield

First Amendment attorney John Bussian, who represents the North Carolina Press Association, said UNC-TV should have claimed an exemption from the General Assembly’s demand for materials under the state’s press shield law. By capitulating to the legislature’s orders, he said, the station left itself vulnerable to future document raids by the government. Newspapers and radio stations on state college and university campuses also could face demands for journalistic materials from the legislature.

During the dust-up over UNC-TV’s Alcoa coverage, “everyone assumed this is a public agency, but its board isn’t covered by the ethics law,” Bussian said. “That isn’t right.”

Vajda was fired in August after public documents from the network revealed that she had developed close ties with lobbyists and public officials who were pushing the takeover. (For example, Vajda solicited $3,000 in travel funds for a friend from anti-Alcoa lobbyist and former speaker of the state House Richard Morgan.)

In the view of many, UNC-TV compromised the network’s independence as a news gathering organization by caving to the wishes of the General Assembly.

The state ethics law is designed “to ensure that elected and appointed state agency officials exercise their authority honestly and fairly, free from impropriety, threats, favoritism, and undue influence.” The law covers not only elected officials and members of policymaking boards (including the boards governing the University of North Carolina system and its member campuses), but also some state advisory boards — including some boards added through executive orders by the governor.

There’s no evidence — or even suggestion — that Thompson did anything other than provide information to Vajda. In an e-mail, Thompson said he had “a duty” to respond to questions from Vajda. “It was not a conflict of interest for me to discuss facts about the Alcoa matter with Ms. Vajda,” he said.

Involvement with Alcoa legislation

Aug. 5, 2009 — three days after Vajda e-mailed Thompson (subject line: “Alcoa”), he testified before Hartsell’s Senate JII Committee on the Alcoa legislation, in part making a presentation about PCBs in fish in Badin Lake.

Then, in a series of e-mails between April 19-27, 2010, Vajda asked Thompson to find someone who could test the waters of Badin Lake. (The subject line read “need scientist ASAP!!!” The heavily redacted e-mails are available (PDF) here.) Thompson wrote to CJ that Vajda had tried to contact Clemson University forestry professor John Rodgers, who conducted a fish tissue study at Badin Lake. Rodgers was involved in litigation, Thompson said, so he suggested Vajda contact Gregory Cope, a toxicology professor at N.C. State University.

Thompson also notes that station management and staff were aware that he represents Stanly County. “At no time did I contact anyone in management at UNC-TV or the UNC General Administration to request anything whatsoever regarding coverage of Alcoa or my client,” Thompson added. “The board does not participate in any editorial, programming, or employment decisions.”

Thompson considered UNC-TV no different than any other news source. “Media outlets often cover issues in which board members are involved,” he said. “This would be no different than [CJ] getting information from Bob Luddy or Art Pope for a story or for The News & Observer to interview [First Amendment attorney] Hugh Stevens, an attorney for Alcoa who also represents the newspaper.”

Luddy is a member of the board of directors of the John Locke Foundation, the nonprofit that publishes Carolina Journal. He is president and CEO of Captive-Aire Systems Inc. and the founder of several private elementary schools in the Raleigh area and the Franklin Academy, a public charter school. Pope, the president and vice chairman of the board of directors of Variety Wholesalers Inc., is a board member of the John Locke Foundation.

Perry, of the Foundation for Ethics in Public Service, says Thompson’s analogy doesn’t fit. Perry notes that UNC-TV is a government entity that receives taxpayer funding — the station’s financial statement notes that 51 percent of its $26.8 million budget comes from state appropriations and another 11 percent from federal grants.

By contrast, CJ (and the John Locke Foundation) receive no government funding and the News & Observer is a private, for-profit enterprise. The state’s ethics laws apply to neither.

‘Conflict of roles’

There’s a murky area surrounding “conflicts of roles” and potential conflicts of interest making ethics watchdogs uneasy about Thompson’s activities. Thompson was serving on the board of UNC-TV, a public agency. The station was reporting on a policy dispute involving one of his clients — Stanly County, another public entity. Records reveal he did not disclose a potential conflict of interest in writing to the UNC-TV board until July, months after the Alcoa-related communications with Vajda began.

He wrote Howe July 8 when the station manager was scheduling a conference call of board members to discuss the Alcoa coverage. “It is probably a good idea for me not to participate in any discussions about the Alcoa issue,” Thompson wrote. “Stanly County is a firm client so I have a potential conflict of interest here. I think it is best for me to stay on the sidelines.”

Thompson may have been under no legal obligation to disclose either potential conflict, but Perry says Thompson should have notified the board’s chairman and legal counsel when Vajda first contacted him last year to get formal advice, nonetheless.

When a public official’s personal interest, such as a financial incentive, may run counter to his ability to provide objective judgment to others, a potential conflict of interest exists, Perry says.

Perdue spokeswoman Chrissy Pearson noted that when Perdue added agencies to the list of those covered by the ethics law the governor’s legal counsel was concerned about boards with “members who clearly could have an interest in the industry covered by the board. Many such boards are statutorily required to have an industry representative on the board. That person would have potential conflicts, so we wanted to clearly point out their ethical obligations to recuse, disclose, etc.”

At the opening of the Sept. 7 UNC-TV board meeting, Chair Betty McCain read Thompson’s letter of resignation. Just before adjourning, McCain introduced a resolution thanking Thompson for his service. It passed without opposition. The Alcoa story, the firing of Vajda, and the decision by station management to not fight the legislative subpoena received no other mention at the 90-minute meeting.

Rick Henderson is managing editor of Carolina Journal.