@NCCapitol

@NCCapitol

Top state officials must disclose outside income

Posted March 17

State treasurer Janet Cowell.

— A couple weeks ago, our friends over at WRAL Techwire wrote a piece about State Treasurer Janet Cowell taking a seat on the corporate board for ChannelAdvisor, a tech firm that helps companies find their audience online.

When this hit the desk of one of our newsroom editors, it made her wonder out loud, "People lost their minds over McCrory and Duke and that lending company. Why is she allowed to do this?"

Fair question.

At various points during his 2012 campaign and subsequent time in office, Gov. Pat McCrory has faced questions regarding his ownership of Duke Energy stock and his service on the Tree.com corporate board before he became governor.

Those stories had less to do with whether McCrory was entitled to own that stock or serve on the board – he was – than whether he properly disclosed what could be potential conflicts of interest.

Perry Newson, the executive director of the North Carolina Ethics Commission, said that most government workers are allowed to pursue other vocations in their off hours, including elected officials.

"There is no blanket prohibition in the ethics act for those situations," Newson said.

The key, he said, is that those officials disclose their potential conflicts on their statements of economic interest, or SEI forms, which are filed annually. Journalists and members of the public can look up those forms online.

After that, Newson said, it's up to public officials to avoid conflicts of interest in "fact specific" situations. A public official is not allowed to take action in a case where he or she has a financial stake and is supposed to recuse himself or herself from such actions. If the official doesn't, that's where disclosure forms and regulators come in.

Cowell, a Democrat who is not seeking re-election this year, is far from the only member of the Council of State – the 10 independently elected statewide officials who oversee various departments – to have income outside of a government salary:

  • Attorney General Roy Cooper lists ownership interest in several residential and business rental properties on his disclosure forms.
  • Labor Commissioner Cherie Berry rents property to the C.O. Jelliff Corp., an auto parts manufacturer.
  • Agriculture Commissioner Steve Troxler lists income related to his Browns Summit Farm, including tobacco buyout payments, on his latest SEI.
  • Insurance Commissioner Wayne Goodwin's SEI lists him as a co-owner of Cotton Exchange Investment Group, a company that owns and leases space in a historic downtown Rockingham building.
  • Lt. Gov. Dan Forest's SEI lists deferred compensation that he earned as an architect before being elected to office, as well as ownership interest in two real estate firms.

In Cowell's case, since she oversees the State Retirement System, she would likely have to recuse herself from any decision involving whether the retirement fund would invest in ChannelAdvisor.

That advice is spelled out in a six-page ethics opinion that she requested earlier this year in regard to her potential service on ChannelAdvisor's board as well as the board of James River Holdings, a Bermuda-based insurance holding company with offices in Raleigh and other U.S. locations.

"Treasurer Cowell would also be restricted from using her official position to advance ChannelAdvisor’s or James River’s business interests," the opinion read. "That would include promoting those companies to the news media, the general public or the investment community if such actions could be reasonably foreseen to result in a financial benefit to those companies. The Ethics Act would also restrict Treasurer Cowell’s disclosure of confidential information or use of nonpublic information obtained in her official position to benefit either company."

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