HAWAII LEGISLATORS' HANDBOOK Chapter 12

ETHICS

The State Ethics Commission (Hawaii Const. art. XIV; HRS ß84-21)

Article XIV of the Hawaii Constitution requires the adoption by the Legislature of a code of ethics applicable to appointed and elected officers and employees of the State. It further requires the code to be administered by an ethics commission. The State Ethics Commission is composed of five members appointed by the Governor from a panel of ten persons nominated by the Judicial Council. The members are prohibited under the Constitution from taking an active part in political management or in political campaigns. The Commission is attached to the Office of the Auditor for administrative purposes and employs a full-time executive director and staff.

Administration and Enforcement (HRS ß84-31)

The State Ethics Commission is responsible for prescribing the necessary forms for the disclosures required of legislators. If a legislator wishes to determine whether a particular activity will violate the Code of Ethics, the legislator may request an advisory opinion as to whether the facts and circumstances of the particular case constitute or will constitute a violation. If no advisory opinion is rendered within thirty days after the request is filed with the Commission, the opinion is deemed rendered that the facts and circumstances do not constitute a violation. A request is not deemed filed until all information pertinent to a decision in the case has been received by the Commission. Any opinion rendered or deemed rendered, until amended or revoked, is binding on the Commission in any subsequent charge concerning the legislator who sought the opinion and acted in reliance on it in good faith, unless material facts were omitted or misstated in the request.

The Commission is required to initiate, receive, and consider charges of violations of the ethics law which must be in writing and signed by the person making the charge under oath. Where the Commission initiates the charge, it must be signed by three commissioners. In deciding such charges, the Commission may investigate and hold hearings. It is empowered to subpoena witnesses and take testimony, administer oaths, and require the production of relevant books and papers.

The jurisdiction of the Commission in investigating and taking appropriate action extends to within six years of an alleged violation. There is no limitation, however, if fraud or other device prevents the discovery of a violation.

If after a hearing the Commission determines that there is sufficient cause to file a complaint against a legislator, it issues a complaint and refers the matter to the appropriate body of the Legislature. The complaint contains a statement of the facts alleged to constitute the violation and is a matter of public record. The Legislature must take appropriate disciplinary action within thirty days of the referral of the complaint and must notify the Commission of the action taken. Days the Legislature is not in session are not included in the thirty-day period. Any disciplinary action taken or the fact that no disciplinary action is taken, is matter of public record.

The Code of Ethics contained in chapter 84, Hawaii Revised Statutes, applies in general to all nominated, appointed, or elected officers or employees of the State (with the exception of justices and judges who are under the jurisdiction of the Commission on Judicial Conduct), and in the particular instances set forth below to the legislator.

Gifts. (HRS ß84-11) The law prohibits a legislator from soliciting, accepting, or receiving, directly or indirectly, any gift, whether in the form of money, service, loan, travel, entertainment, hospitality, thing, or promise, or in any other form, under circumstances in which it can reasonably be inferred that the gift is intended to influence the legislator in the performance of the legislator's official duties or is intended as a reward for any official action on the legislator's part.

Gifts Disclosure. (HRS ß84-11.5) This law requires legislators to report gifts from a donor valued singly or in the aggregate in excess of $200 if the source of the gift or gifts has interests that may be affected by discretionary action or lack of discretionary action by the legislator. Gifts given to the spouse or dependent child of a legislator from one source are also considered in determining if the gift or gifts exceed $200. The gifts disclosure law does exempt some gifts from disclosure, such as political campaign contributions that comply with state law, and gifts received by will or intestate succession.

The gifts disclosure statement must be filed on June 30 of each year, and covers the period from June 1 of the preceding calendar year to June 1 of the year of the report. All gifts disclosure statements are required to include:

1. A description of the gift;

2. A good faith estimate of the value of the gift;

3. The date the gift was received; and

4. The name of the person, business entity, or organization from whom, or on behalf of whom, the gift was received.

The gifts disclosure statement is a public record and is available for inspection and duplication at the office of the State Ethics Commission.

If gifts meet the criteria for disclosure, they must be disclosed in accordance with the law. However, merely disclosing a gift does not mean that the gift is acceptable under the ethics code. Thus, before accepting gifts, legislators may wish to contact the State Ethics Commission for an opinion as to whether a gift is acceptable in the first place.

Confidential Information. (HRS ßß84-12, 84-18(a); Senate Rules 35, 83) No member of the Legislature shall disclose information which by law or practice is not available to the public and which the legislator acquires in the course of the legislator's official duties. The information shall not be used for the legislator's personal gain or for the benefit of any other person.

Fair Treatment. (HRS ß84-13) The Code of Ethics further provides that no legislator shall use or attempt to use the legislator's official position to secure or grant unwarranted privileges, exemptions, advantages, contracts, or treatment for the legislator's self or others. Specific examples are given which include the following:

1. Seeking other employment or contract for services for the legislator's self by the use or attempted use of the legislator's office or position.

2. Accepting, receiving, or soliciting compensation or other consideration for the performance of the legislator's official duties or responsibilities except as provided by law.

3. Using state time, equipment, or other facilities for private business purposes.

4. Soliciting, selling, or otherwise engaging in a substantial financial transaction with a subordinate or a person or business whom the legislator inspects or supervises in the legislator's official capacity.

The law does provide that nothing shall be construed to prohibit a legislator from introducing bills and resolutions, serving on committees, or from making statements or taking action in the exercise of legislative functions. Each legislator, however, is required to file a full and complete public disclosure of the nature and extent of any interest or transaction which the legislator believes may be affected by legislative action.

Conflicts of Interest. (HRS ß84-14; Senate Rule 82; House Rule 28.2) Legislators are prohibited from assisting any person or business or acting in a representative capacity before any state or county agency for a contingent compensation in any transaction involving the State. They are further prohibited from assisting any person or business or acting in a representative capacity for a fee or other compensation to secure the passage of a bill or to obtain a contract, claim, or other transaction or proposal in which the legislator has participated or will participate as a legislator. Additionally, no legislator shall assist any person or business or act in a representative capacity for a fee or other compensation on such bill, contract, claim, or other transaction or proposal before the Legislature.

Contracts. (HRS ßß84-15, 84-16) State agencies are prohibited from entering into any contract to procure or dispose of goods or services, or for construction, with a legislator or a business in which a legislator has a controlling interest, involving services or property in excess of $10,000 unless:

1. The contract is awarded by competitive sealed bidding pursuant to HRS ß103D-302;

2. The contract is awarded by competitive sealed proposal pursuant to HRS ß103D-303; or

3. The agency posts a notice of its intent to award the contract and files a copy of the notice with the State Ethics Commission at least ten days before the contract is awarded.

Any contract entered into by the State in violation of the Code of Ethics is voidable on behalf of the State, in addition to any other penalty provided by law.

Financial Disclosure. (Hawaii Const. art. XIV; HRS ßß84-3, 84-17; Senate Rule 82; House Rule 28.1) Within thirty days of being elected each legislator must file a disclosure of financial interests with the State Ethics Commission for the period from January 1 of the preceding calendar year to the time of filing. After filing an initial disclosure statement, the legislator must make an annual filing with the State Ethics Commission between January 1 and May 31 for the period from the date of the last filing to the date of the current filing. The financial disclosure is a public record and available for inspection and duplication at the office of the State Ethics Commission.

The financial disclosure is of the financial interests of the legislator, the legislator's spouse, and dependent children. If a legislator fails to file a disclosure of financial interest as required by the Code of Ethics, the failure is a violation of the ethics law. The filing of an incomplete or false disclosure also constitutes a violation of the law.

All disclosures are required to include:

1. The source and amount of all income of $1,000 or more received, for services rendered, by the person in the person's own name or by any other person for the person's use or benefit during the preceding calendar year and the nature of the services rendered. Information that may be privileged by law or individual items of compensation that constitute a portion of the gross income of the business or profession from which the person derives income need not be disclosed.

2. The amount and identity of every ownership or beneficial interest held during the disclosure period in any business incorporated, regulated, or licensed to carry on business in the State having a value of $5,000 or more or equal to ten per cent of the ownership of the business and, if the interest was transferred during the disclosure period, the date of the transfer. An interest in the form of an account in a federal or state regulated financial institution, an interest in the form of a policy in a mutual insurance company, or individual items in a mutual fund or a blind trust, if the mutual fund or blind trust has been disclosed under this requirement, need not be disclosed.

3. Every officership, directorship, trusteeship, or other fiduciary relationship held in a business during the disclosure period, the term of office, and the annual compensation.

4. The name of each creditor to whom the value of $3,000 or more was owed during the disclosure period and the original amount and amount outstanding. Debts arising out of retail installment transactions for the purchase of consumer goods need not be disclosed.

5. The tax map key number and street address, if any, and the value of any real property in the State in which the person holds an interest whose value is $10,000 or more; and, if the interest was transferred or obtained during the disclosure period, a statement of the amount and nature of the consideration received or paid in exchange for such interest, and the name of the person furnishing or receiving the consideration.

6. The names of clients personally represented before state agencies, except in ministerial matters, for a fee or compensation during the disclosure period and the names of the state agencies involved.

7. The amount and identity of every creditor interest in an insolvent business held during the disclosure period having a value of $5,000 or more.

Specific amounts need not be disclosed. However, the legislator must indicate whether the amount is at least $1,000 but less than $10,000; at least $10,000 but less than $25,000; at least $25,000 but less than $50,000; at least $50,000 but less than $100,000; at least $100,000 but less than $150,000; at least $150,000 but less than $250,000; at least $250,000 but less than $500,000; at least $500,000 but less than $750,000; at least $750,000 but less than $1,000,000; or $1,000,000 or more. Stock ownership may be reported by the number of shares.

Former Legislators. (HRS ß84-18) The Code of Ethics applies to former legislators in two ways. No former legislator shall disclose information which by law or practice is not available to the public and which the legislator acquired in the course of official duties or use the information for personal gain or the benefit of anyone.

Within twelve months after termination of the former legislator's employment, no former legislator shall represent any person or business for a fee or other consideration, on matters in which the legislator participated as a legislator, nor on matters involving official action by the Legislature.

These provisions do not prohibit any agency from contracting with a former legislator to act on a matter on behalf of the State within the twelve-month period nor do they prevent a former legislator from appearing before any agency in relation to such employment.

Lobbyist Registration. (HRS ch. 97) The State Ethics Commission also administers the state law on lobbyists. A lobbyist includes any individual who for pay or other consideration communicates (for more than five hours in any month or spends more than $750 during a reporting period) with any executive or legislative officer to influence legislative or administrative action. Lobbyists are required to file a statement of expenditures and other information including the subject area of the legislative and administrative action which was supported or opposed by the person filing the statement.

The Ethics Commission has, among other powers and duties, the power to conduct a confidential investigation upon a verified complaint, of any person to determine whether the person is in compliance with the rules and law on lobbyists. Where there is a preliminary conclusion of a violation, the commission may refer the person to the attorney general or prosecuting attorney for prosecution, or assess an administrative fine. Before a fine can be assessed, the commission must offer the person the opportunity for a contested case hearing.

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