News: CJ Exclusives

Council of State members offer mixed reaction to limits on employment

Recommendations to restrict outside compensation for treasurer would have to apply to other top elected and appointed officials, attorneys say

State Department of the Treasurer Investment Advisory Committee members on July 28 discuss possible conflict-of-interest guidelines for the state treasurer. From left are David Hartzell, Michael Mebane, John Aneralla, Neal Triplett, and Treasurer Janet Cowell. (CJ photo by Dan Way)
State Department of the Treasurer Investment Advisory Committee members on July 28 discuss possible conflict-of-interest guidelines for the state treasurer. From left are David Hartzell, Michael Mebane, John Aneralla, Neal Triplett, and Treasurer Janet Cowell. (CJ photo by Dan Way)

A recommendation that the state might impose ethics-related restrictions on secondary employment and corporate board memberships on the state treasurer — and possibly other Council of State officers — drew a mixed response from those officials.

At a July 28 meeting of the Investment Advisory Committee, Blake Thomas, interim general counsel for the Department of the Treasurer, said his goal is to “put together a set of concrete proposals” for the IAC to consider regarding secondary employment and corporate board memberships. The IAC helps state Treasurer Janet Cowell develop investment strategy for North Carolina’s nearly $90 billion in retirement funds.

“That proposal could be a new policy, a new state law, or both,” Thomas said. “Frankly, for it to be truly binding on a constitutional officer like the state treasurer, it probably has to be a law, but you [could] set up a policy that would be a guidance.”

The ethics issue emerged earlier this year after Cowell accepted seats on two corporate boards for compensation. The state Ethics Commission approved the action, but Cowell did not advise the retirement board, and some members decided the issue was ripe for review.

“The question is whether that law should change,” Thomas said of the Ethics Commission approval procedure. But in a June meeting with IAC members John Aneralla and Michael Mebane, Cowell insisted that “all similarly situated personnel across state government” should fall under any new guidelines.

At last week’s meeting, Cowell said IAC members must decide what they find objectionable, whether it involves service on outside corporate boards or secondary employment. “Is it time? Is it money?” she asked, and “what conflicts” demand action.

“Under existing law, elected officials and members of the governor’s Cabinet may serve on the boards of for-profit corporations and nonprofit corporations, and they may have secondary businesses or other employment along with their state positions,” Thomas said.

Several members of Gov. Pat McCrory’s Cabinet and Council of State members have held outside jobs or served on for-profit corporate boards while in office, he said.

“I don’t know that any voluntary policy can bind a state constitutional officer,” Thomas said. “I think many attorneys … would say you need to have a constitutional provision or a law,” and limits imposed on the treasurer also are likely to apply to any Cabinet or Council of State member.

“The best way to avoid conflicts of interest is to have great transparency, including the news media calling people out,” said Secretary of State Elaine Marshall. “Otherwise, we have a system housed at the State Ethics Commission. If they feel the current system is inadequate, then I think they should take the lead in such a discussion.”

Marshall does not have any secondary employment or private business ventures, and her only non-governmental board membership is as a volunteer on the North Carolina 4-H Development Fund Inc. Board of Directors.

State Superintendent of Public Instruction June Atkinson “does not have any secondary employment,” said spokeswoman Vanessa Jeter. “[Atkinson] said she would be in favor of restrictions on secondary employment.”

State Secretary of Labor Cherie Berry “does not have a secondary business or secondary job that pays her compensation,” said spokeswoman Dolores Quesenberry.

Berry “believes that when you are elected statewide by the people, your focus should be on carrying out the duties of the elected office,” Quesenberry said. “There are already restrictions in place that prohibit secondary employment that creates a conflict of interest.”

State Auditor Beth Wood said she has “the utmost respect for Janet, and I believe her to be a person of integrity,” but would favor restrictions on constitutional officers’ outside employment.

“The public sees what we do as a full-time-plus job, and I just happen to agree,” Wood said.

“We hold our positions every hour of every day, so we are always on state time. Given that it would be hard to keep the secondary employment and the Council of State job separate. It would be extremely difficult to monitor whether the taxpayers are getting what they expect,” she said.

In addition, many of Council of State officers are involved with national and state professional organizations, must attend job-related events, and tend to their families, along with political and campaign obligations.

“I cannot imagine that any Council of State officer could run their agency properly while also sitting on a corporate board or working a second job,” Wood said.

Brian Long, spokesman for state Agriculture Commissioner Steve Troxler, said Troxler has a farm and agritourism operation, which are listed on his annual Statement of Economic Interest.

“The agritourism operation is small now, but the commissioner hopes to eventually grow it into a retirement business for his wife. His current involvement is mostly on weekends,” Long said.

Troxler “doesn’t think it would be a good idea to restrict constitutional officers’ involvement in entrepreneurial interests,” Long said.

“He can understand concern about an officer’s involvement with boards or entities that have a connection to the office itself, but a blanket restriction on outside employment may be an overreach,” Long said. “And in the commissioner’s case, state law requires the commissioner of agriculture to be a practicing farmer.”

Lt. Gov. Dan Forest, an architect, defers his compensation while he is in office, said spokesman Jamey Falkenbury. He has a financial interest in two real estate firms, but he doesn’t serve on any for-profit corporate boards.

“As for restrictions, our office usually petitions [the Ethics Commission] for a ruling before we proceed with anything that might be deemed controversial. We would honor their ruling on matters,” Falkenbury said.

Noelle Talley, a spokeswoman for Attorney General Roy Cooper, said he “does not have a secondary job.”

Neither Falkenbury nor Talley responded to the question of whether Forest and Cooper would support or oppose a law or constitutional amendment restricting outside employment and corporate board service.

McCrory and Insurance Commissioner Wayne Goodwin did not offer comment for this story.