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February 2012

Exercise Caution in Offering Gratuities

Situation

News clippings are forwarded to ASCE’s Committee on Professional Conduct detailing the grand jury indictment of an ASCE member on charges of bribery and conspiracy. The indictment states that the member, an engineering consultant and lecturer, gave personal checks to a civilian employee of the U.S. military over an eight-month span in an amount totaling $8,000. The indictment alleges that the checks were offered in exchange for the employee’s assistance in arranging contracts between the employee’s department and the ASCE member. The newspaper accounts note that the member and his consulting firm received no fewer than three contracts from the U.S. military during or shortly after receipt of the personal checks, including a no-bid training project awarded directly by the employee and a substantial laboratory testing project awarded by a selection board on which the employee served as chair.

The member ultimately pleads guilty to one count of offering an illegal gratuity and is sentenced to three years’ probation. In lieu of a $1,000 fine, he is required to do community service work.

Question

Did the ASCE member’s actions in giving personal checks to a public employee in exchange for assistance in procuring contract work violate ASCE’s Code of Ethics?

Discussion

Guidance here is provided by canon 5 of the Code of Ethics: “Engineers shall build their professional reputation on the merit of their services and shall not compete unfairly with others.” Category (a) in the guidelines to practice for this canon adds the following: “Engineers shall not give, solicit, or receive, either directly or indirectly, any political contribution, gratuity, or unlawful consideration in order to secure work, exclusive of securing salaried positions through employment agencies.” Also relevant is category (c) in the guidelines to practice for canon 6: “Engineers shall act with zero tolerance for bribery, fraud, and corruption in all engineering or construction activities in which they are engaged.”

When contacted by the Committee on Professional Conduct, the member vehemently denied that he wrote the checks to influence the public employee’s actions in awarding contracts. He asserted that the funds were merely loans to the employee made on the basis of their friendship. The member explained that he had met the employee several years prior to the loans when he, the member, was doing work in connection with another contract and that they had remained friends. The member contended that at the time of the events described in the indictment the public employee was the owner of a small family restaurant but that because of a recent medical setback he was unable to successfully run the business. The employee was seeking a buyer to purchase the restaurant, but he told the member he did not think he could sell the business unless he could keep it open and operating.

The member said that he made a series of loans to his friend, expecting to be repaid when the business was sold. The sale, however, was made only at the break-even price, and the employee informed the member that he would not be able to repay the loans. Instead, the employee offered to attempt to sell another piece of land he owned and to repay the loans from the proceeds. When that second plan failed, the employee offered to transfer ownership of the land to the member. While this meant that the member would have to make payments to the bank on the land, he accepted the arrangement in an effort to receive some return on his loans.

With regard to the contracts, the member argued that none of the contracts awarded to him had been influenced by his loans to the employee. He stated that two of the three contracts in question were direct followups to contractual work he had done for the government agency, meaning that his firm was the best, if not the only, entity for performing the subsequent work. He said that the only unrelated contract was a small one to provide a training seminar for public employees, that the employee’s supervisor had approved the award, and that the supervisor had expressed his satisfaction both with the selection of the member and with the member’s performance.

While the prosecutor argued that the land transaction was a facade to disguise the illegal gratuity, the member asserted that the attorney had privately acknowledged the difficulty of the case and had expressed a willingness to make a deal. Despite his reluctance to plead guilty to an offense he did not feel he had committed, the member claimed that he accepted the deal for probation to avoid the uncertainty and expense of a trial.

Finally, the member conceded that in the back of his mind he realized that lending the money might hurt him in the future, but he argued that he did not feel he had done anything morally or ethically wrong. He emphasized his long career of professional service and stated that he felt he had been trapped by circumstances that were largely beyond his control.

The members of the Committee on Professional Conduct believed the member’s claim that he had not offered a gratuity for the purpose of procuring work and thus had not contravened canon 5. Moreover, they were impressed by what they deemed to be his sincere and honest admission of his mistakes, and they felt he had already been punished by both the criminal prosecution and the accompanying press coverage. In accordance with its policy of recommending formal discipline only when such action “is the only appropriate course,” the committee members voted that this case did not rise to the level of an ethics violation requiring formal discipline. However, the letter sent to the member informing him of this decision also stated that it was the consensus of the committee that he had exercised poor judgment in his dealings with the public employee. The letter cautioned him not to engage in similar actions in the future.

In the December 2011 issue, this column discussed ethics provisions governing the offer of gifts to state or federal employees and the acceptance of those gifts by such employees. It is worth noting that the definition of “gift” in the federal ethics statute, as in many state and local ethics provisions, includes not only outright gifts of cash or other items to a public employee but also any “favor, discount, entertainment, hospitality, loan, forbearance, or other item having monetary value.” The inclusion of loans in this definition reflects the very real possibility that a public employee may be swayed in the performance of his or her official duties by the wish to favor a person who is owed a financial debt. In view of this potential conflict of interest and the significant ethical and legal consequences that could arise even from the appearance of impropriety, this month’s case should serve as a cautionary tale for members considering private transactions with a public employee, even in the absence of an improper motive.

Members who have an ethics question or would like to file a complaint with the Committee on Professional Conduct may call ASCE’s hotline at (703) 295-6061 or (800) 548-ASCE (2723), extension 6061. The attorneys staffing this line can provide advice on how to handle an ethics issue or file a complaint. Please note that individual facts and circumstances vary from case to case and that the general summary information contained in these case studies is not to be construed as a precedent binding upon the Society. 

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