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Engineering Firm Shareholder Elected to Public Office

Situation

A major shareholder of an engineering firm is elected to a high-ranking public office. Although the shareholder has no direct involvement in the day-to-day operations of the engineering firm, much of the firm's business involves government contracts, and an officer of the firm—an engineer and asce member—is concerned over the ethical implications of the firm's connection to the public official. He contacts the asce ethics hotline for help in determining his obligations under asce's Code of Ethics.

Question

What ethical concerns might an engineer face when a major shareholder of his or her place of employment is elected to public office?

Decision

The most important factor in determining the engineer's ethical obligations is the extent to which the firm's shareholder takes part in actions that have a direct effect on the firm. If, for example, the shareholder sits on a committee that awards contracts for which the firm is bidding, the shareholder's financial interest in the firm may be in direct conflict with his duty to award contracts in a manner that best serves the public interest. Of course, if the shareholder does not play an official role in decisions affecting the firm but nevertheless uses his position to put pressure on or otherwise influence the decision makers, this too would represent a conflict of interest on the shareholder's part.

Nearly every federal, state, or local government official is subject to statutory regulations banning participation in official actions when the official has a financial or other personal interest in the outcome. For example, section 208 of title 18 of the United States Code prohibits officers and employees of the federal government from involvement "through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise" in any matter wherein the officer or any person or entity related to the officer has any financial interest.

asce's Code of Ethics contains a similar restriction on members engaged in public service. Canon 4 reads as follows: "Engineers shall act in professional matters for each employer or client as faithful agents or trustees, and shall avoid conflicts of interest." Category (a) of the guidelines to practice for this canon adds the following: "Engineers . . . shall promptly inform their employers or clients of any business association, interests, or circumstances which could influence their judgment or the quality of their services." Category (d) goes on to say that engineers "in public service as members, advisors, or employees of a governmental body or department shall not participate in considerations or actions with respect to services solicited or provided by them or their organization in private or public engineering practice."

While all of these ethical obligations relate to the individual public official, the Code of Ethics contains two provisions that might tie an engineer in the shareholder's firm to actions taken by the shareholder. Category (a) of the guidelines to practice for canon 6 reads as follows: "Engineers shall not knowingly engage in business or professional practices of a fraudulent, dishonest, or unethical nature." Further, canon 5 has this to say: "Engineers shall build their professional reputation on the merit of their services and shall not compete unfairly with others."

If an engineer solicits action from a government entity—knowing that an official has failed to disclose a disqualifying conflict of interest or is otherwise exerting undue influence on the decision—this engineer is knowingly participating in an unethical practice, in violation of canon 6. Also, if this action involves awarding benefits to the firm over other firms that are competing for the same benefits, the engineer has engaged in unfair competition, in violation of canon 5.

As an additional consideration, it is important for the engineer to review state and local laws and the rules of professional conduct enacted by his or her licensing board as these may impose more stringent restrictions than asce's Code of Ethics. For example, section 240.15(B)(7) of the National Council of Examiners for Engineering and Surveying's rules of professional conduct reads as follows: "Licensees shall not solicit or accept a professional contract from a governmental body on which a principal or officer of their organization serves as a member." If the engineer's state has enacted a similar regulation, it may be an ethical violation for the engineer to accept work from the government body even if the official in question has taken steps to remove himself or herself from the decision-making process.

The asce ethics hotline advised the member in this case to exercise caution with respect to any government action involving the shareholder in his public capacity. If an engineer believes that a public official involved in government action has a direct conflict of interest, the engineer must ensure that that official recuses himself or herself from the decision, and in such cases an engineer may even be barred completely from soliciting or accepting work from the government body. Furthermore, if an engineer is aware of a potential conflict of interest on the part of a public official—even if he or she does not believe it to require disqualification—it is prudent for the engineer to make full disclosure of the potential conflict to the government body.

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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