By Tara Hoke
Situation
A federal investigation of the former mayor of a large midwestern city uncovers the mayor's involvement in an extensive kickback scheme. The subsequent indictment charges the mayor and several other public and private individuals with multiple counts of fraud, bribery, and conspiracy. One of the individuals named in the indictment is an ASCE member and the president of a large engineering firm that had received millions of dollars in public awards for bridge construction and inspection work during the mayor's term of office.
The indictment alleges that the ASCE member had paid several hundred thousand dollars in kickbacks to the mayor in exchange for the mayor's influence in securing engineering work for the member's firm. Some of the payments took the form of a monthly payment to a fund-raiser and personal friend of the mayor's. These payments, it is claimed, were falsely characterized as "rental" for a derelict office building owned by the mayor's associate. The indictment notes that the mayor's associate had received payments from at least one other company for the use of that same building. This other firm is a real estate company that had received numerous city approvals for development work during the term of its "lease."
While admitting that he had paid money to the mayor's associate, the ASCE member contends that the payments were legitimate consulting fees made out to the fund-raiser for his assistance in "lobbying" government agencies for work. He denies knowing that the mayor's associate falsely recorded them as rental payments or that the funds were shared with the mayor himself.
Copies of articles from the extensive newspaper coverage are forwarded to ASCE's Committee on Professional Conduct, which opens an investigation into the matter.
Question
Did the member's actions in making payments in connection with his firm's solicitation of public contracts violate ASCE's Code of Ethics?
Discussion
Canon 5 of the code reads as follows: "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 also is germane: "Engineers shall not give, solicit, or receive, either directly or indirectly, any political contribution, gratuity, or unlawful consideration in order to secure work." Another perspective is provided by canon 6: "Engineers shall act in such a manner as to uphold and enhance the honor, integrity, and dignity of the engineering profession and shall act with zero tolerance for bribery, fraud, and corruption.
These ethical standards reflect an interesting interplay between ethics and the law. On the one hand, both canons emphasize the importance of legal considerations in their language. Category (a) in the guidelines to practice for canon 5 cites any "unlawful consideration"; canon 6 suggests a legal finding as to acts of bribery, fraud, or corruption. At the same time, both canons seem to make these legal determinations subsidiary to the overarching moral principle of honoring the spirit of fair competition and preserving the integrity of the profession
While a member's intent is a highly subjective consideration, the facts offered numerous suggestions that the member was not acting in accordance with the principles of fairness and integrity. Besides being unable to describe the work that had been performed by the consultant in exchange for the fees, the member had circumvented the company's usual payment procedures to authorize the monthly payments.
When contacted by the Committee on Professional Conduct, the member chose not to defend himself, offering instead to tender his resignation from the Society. Under ASCE's rules of policy and procedure, when a member resigns or is dropped for nonpayment of dues while under an ethics investigation, the termination is deemed to be "with prejudice," meaning that the person may not subsequently rejoin without approval by ASCE's Board of Direction. The board accepted the member's resignation on these terms, and notice of the action was placed in an ASCE publication.
While no two cases are exactly alike, the general framework of a private party making payments for a competitive advantage manifests itself in countless other cases reported in this column and described in the Committee on Professional Conduct's archives. Indeed, the category of bribery and exerting improper influence outweighs by a wide margin any other type of complaint over the past 50 years of ASCE's ethics enforcement activities. It is impossible to say whether this is so because market pressures or institutional practices make such lapses especially easy or because the media attention and notoriety of such cases make them more likely to result in an ethics complaint
Nevertheless, in view of the prevalence of this type of professional misconduct, it is important for professionals to view such cases as this as a cautionary tale on the far-ranging consequences of such activities. Ultimately, the member here was convicted by a federal court on several counts of bribery and sentenced to five years in prison, but the sentence was commuted to community service and the payment of a considerable fine in exchange for his testimony against the mayor. Notice of the conviction was filed with the member's state licensing board, and he ultimately lost his license in his home state and in the two other states in which he had been licensed.
Although prior to trial the member stepped down as president and sold his interest in the company, this did not protect the firm from the taint of involvement in the kickback scheme. Shortly after the member's sentencing, the state department of transportation announced its intention to debar the firm from department projects for three years, citing the firm's "evident disrespect for the law and for the standards of professional ethics." While the company was permitted to continue work on one existing contract, the debarment excluded it from any additional facets of that contract and from any other contracts requiring department approval. The loss was by no means insignificant given that the firm derived more than half of its total revenue from such contracts.
Tara Hoke is ASCE’s general counsel and a contributing editor to Civil Engineering.
© ASCE, ASCE News, October, 2015
