April 8, 2013

Lawmakers eye ‘blind trust’ in ethics reform bill

The Senate version — for the first time in Florida — would allow elected officials to establish “blind trusts.” Some criticize the move as creating “cloak of invisibility.”

Tucked into a bill hailed by Senate leaders as the “most sweeping ethics reform” in decades is a provision that could shield elected officials from disclosing conflicts of interest or questionable assets.

Under SB 2, which passed the Senate on the first day of the legislative session, any public official who wants to avoid disclosing embarrassing financial information on their financial disclosure forms could create a blind trust to hold their assets.

“This really would be a wolf in sheep’s clothing,’’ said Phil Claypool, the former director of the Florida Ethics Commission who retired last year. “The whole idea is to protect both the public official and the public from conflicts of interest” but under the Senate bill “you’ve just got room for all kinds of mischief.’’

The Senate bill — for the first time in Florida — provides for “blind trusts” for elected officials and was promoted as a way to help public officials “avoid potential conflicts of interest” by allowing them to hand off responsibility for investing their assets to a trustee. The idea is that an elected official would be “blind” to what he owned because the trustee would be banned from disclosing how the assets are invested.

The measure is part of a larger ethics reform package that includes new laws that would force public officials to disclose conflicts and face new restrictions on who they can work for while in office or when they retire from office.

But Claypool believes that the Senate bill essentially “stands the concept of a ‘blind trust’ on its head’’ by creating a “cloak of invisibility” in which elected officials simply “pay a lawyer to draw up a trust” and hide behind it.

“Instead of protecting the public from conflicts of interest…the proposed law would allow officials to use their positions for private gain while ‘blinding’ the public to what’s going on,” he wrote in an analysis for Integrity Florida, the ethics watchdog group.

By contrast, the ethics commission studied several other states and recommended that any blind trust provision be accompanied by safeguards to protect the public. Among them: require the public official to disclose the assets that go into the blind trust so that people know what is being concealed; allow only assets that are readily bought or sold, to avoid an asset sitting in a blind trust that the public official knows is there because it can easily be sold.

A similar ethics bill moving through the House, HB 7131, also would allow for “blind trusts” for elected officials, but it also adopts many of the safeguards recommended by the Ethics Commission.

“The House version is a major improvement over what the Senate did,’’ Claypool said.

Senate President Don Gaetz, key champion of the Senate’s ethics package, does support the changes the House is planning to make to the blind trust piece of the ethics bill,’’ said Katie Betta, Gaetz spokeswoman on Monday.

But the House and Senate both fall short in another area that, Claypool said, “sets the clock back on financial disclosure,’’ he said.

Under both bills, public officials would have 30-days to amend their financial disclosure forms while in office and 60 days after leaving office, even if a citizen has filed a complaint alleging that the form is incorrect.

The so-called “do-over” provision “would take the value out of the disclosure process,’’ said Dan Krassner, president of Integrity Florida, an ethics watchdog group.

He and Claypool are among those warning that the change will serve to protect public officials — not the public.

“Financial disclosure is about reminding officials that they have an obligation to put the public first,’’ he said.

Under both House and Senate bills, “officials would have no incentive to take financial disclosure seriously if these ethics bills pass with the current financial disclosure language.”

Rep. Mike Fasano, R-New Port Richey, has proposed 12 amendments to the House version to close the “do-over” loophole in the financial disclosure bill and impose additional safeguards on the use of blind trusts.

He said it may not be easy to persuade his colleagues to agree.

“If you’re going to have an ethics bill, it should be one that’s going to be as tough as possible on those that are public servants, especially those that are elected,’’ he said. “Otherwise, why bother doing one?”

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