ATLANTA – State workers aren’t supposed to accept anything worth more than $25, and companies that do business with the state are supposed to file annual reports of what they spend on the workers, but observers say it’s a largely ignored part of ethics regulation.
Gov. Nathan Deal, like his recent predecessors, issued an executive order the day he was sworn into office prohibiting state employees or their families from accepting anything of value worth more than $25 from lobbyists or vendors.
Existing state law requires anyone doing business with city, county or state government that spends more than $250 in a year on gifts – including buying lunch or handing out T-shirts — to file an annual report with the Government Transparency and Campaign Finance Commission. Of the thousands of companies providing services to government agencies, only about two-dozen filed a gift report for 2014 activity.
“Here’s the problem: there is no way for any regulatory agency under the current law to know if there is any underreporting,” said Rick Thompson, the former head of the commission charged with policing gift limits. “It’s on your honor because it’s up to self-reporting.”
The information reported by the few companies that do file their expenditures raises questions about abuse.
For instance, Georgia Power Co. reported picking up the cost of meals for an employee of the Department of Economic Development during six days in October that totaled $645, including $167 worth of food in a single day.
The electric utility gave a college dean and several professors each pairs of football tickets worth $80, one project manager for the Economic Development Department two football tickets worth $259 combined, and one of his colleagues $116 in concert tickets. Even senior law enforcement officials with the state were given desk sets of $33.25 which exceeded the limit.
The company reported spending $13,400 on 160 expenditures. While the many lunches and coffees were below the limit, among those being entertained were staffers from the Public Service Commission’s energy division that regulates utilities.
State employees went beyond the limits in what they accepted from other companies as well, like a $49 meal an associate dean took from the KMPG accounting and consulting firm.
There are dozens of other examples in the handful of reports filed.
It is pretty much up to the state employees to keep themselves in line, and few are ever punished for crossing it, according to Deal’s spokeswoman, Jen Talaber.
“Infractions are dealt with on a case-by-case basis, but, as a whole, we have not had problems or issues with noncompliance,” she said.
The vendor disclosing the most is Coca-Cola with $85,000, mostly in drinks for various events or made available for visitors to state agencies and welcome centers but no gifts to individuals.
Two years ago, the legislature reacted to public demands for gift limits on what lawmakers can accept. The law enacted that year capped gifts at $75, except for educational travel and lodging as meals for groups of legislators.
Attention then never broadened to include employee gifts, perhaps because they were already subject to executive orders limiting them to one-third of what the politicians can get.
Companies are permitted to cover the expenses for employee travel to educational conferences in the United States, but the executive order says “the preferred practice is for agencies, and not third parties, to pay such expenses.” Still, some companies have paid thousands of dollars for employees to travel and stay in hotels costing hundreds, including one college administrator whose lodging was listed by ACT Inc. for one date at $448.62.
No one can say how many employees are violating the rules since so few companies file reports. Employees are supposed to report what they receive within 30 days, according to the executive order, but there’s no system for comparing what they report to what companies report.
“If the employee doesn’t say anything about it, and the vendor doesn’t report it, it’s hard to know what’s out there,” said Robert Highsmith, a former member of the oversight commission.
Former commission head Thompson, who now runs the consulting firm RTA Strategies that advises companies on vendor and lobbyist compliance, estimated tens of thousands of companies should also register as “vendor lobbyists” and be subject to the same reporting requirements as any traditional lobbyist.
So-called bona fide sales representatives are not required to register if they are merely taking orders or bidding on an agency’s request for proposals, but Thompson – who is registered — said they become lobbyists if they try to convince an agency to buy something it wasn’t already contemplating.
“If they’re buying lunch, that’s not responding to an RFP,” he said, pointing to a formal opinion of the commission from years ago. “Somebody who’s buying lunches and stuff like that, that is not a bona fide sales person.”
The Department of Administrative Services, which serves as the purchasing arm for most of state government, requires vendors to certify that they are in compliance with all laws.
“For the most part, we put it forth in the initial phase and ask them to verify on the frontend,” said department spokesman Zach Johnson.
But unless a competitor files a complaint, the department’s auditors never check, he said.
Adding to the lack of reporting is confusion about exactly what type of activity triggers a requirement for a company to register because the commission hasn’t had to rule on a case in recent memory about what constitutes the “bona fide sales person” exception.
“As you know, that term has not really been tested or elucidated,” said Highsmith, who is managing partner at the Holland & Knight law firm in Atlanta.
Making it clear won’t be easy either, said Doug Chalmers, an attorney with Chalmers Pak & Burch who’s represented clients before the commission for 12 years.
“It’s not always clear when someone is a vendor lobbyist versus a commission salesperson, but it is very difficult to draft the kinds of laws or rules to require disclosure while not also requiring everyone who had dealings with government to disclose,” he said.
The commission hasn’t tackled vendors and employee gifts because it has been swamped for years with backlogs of campaign-related investigations, staff turnover, tight budgets and controversy.
Most vendors don’t comply because they’re not aware of the requirements, according to experts.
“I don’t have any more data on vendor lobbying, but more vendors are examining whether their people qualify than ever before in my experience,” said Stefan Passantino, a lawyer with the Dentons firm who has practices ethics law here and in multiple states. “This is especially so as the definition of ‘state agency’ in the code has been expanded to include smaller municipalities as well.”
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