Codifies a standard for conflicts of interest involving employee business activities or financial interests that are incompatible with the proper discharge of official duties.

A BILL FOR AN ACT

SECTION 1. The legislature finds that courts around the nation have established a standard for avoiding conflicts of interest among government employees. This standard is considered settled law and has been codified in the charters of all counties in the State of Hawaii.

According to this standard, employees shall not engage in any business activity or have a financial interest that is incompatible with the proper discharge of their duties or may tend to impair the independence of judgment in the performance of their official duties. The 1931 Hawaii Supreme Court case of Woods v. Treadway articulated this standard for Hawaii.

The state ethics code contains certain prohibited behaviors of state employees to avoid conflicts of interest. In certain conflict situations, these prohibitions include recusal from official actions, a ban on representing or assisting others before state or county agencies, and a bar on the acquisition of certain financial interests.

However, the state ethics code does not prohibit an employee from engaging in a business interest that may tend to impair the independence of judgment in the performance of the person's official duties. The legislature finds that although a court may rule that such behavior violates the ethics code, having the established conflicts of interest standard specified in state law would promote ethical behavior among employees.

The purpose of this Act is to codify a standard in the ethics code for conflicts of interests, so that no employee shall engage in a business activity or have a financial interest that is incompatible with, or may impair the independence of judgment in, the proper discharge of the person's official duties.

SECTION 2. Section 84-14, Hawaii Revised Statutes, is amended to read as follows:

"§84-14 Conflicts of interests. (a) No employee shall take any official action directly affecting:

A department head who is unable to disqualify himself on any matter described in [items] paragraphs (1) and (2) [above] will not be in violation of this subsection if he has complied with the disclosure requirements of section 84-17[; and].

A person whose position on a board, commission, or committee is mandated by statute, resolution, or executive order to have particular qualifications shall only be prohibited from taking official action that directly and specifically affects a business or undertaking in which he has a substantial financial interest; provided that the substantial financial interest is related to the member's particular qualifications.

(b) No employee shall acquire financial interests in any business or other undertaking which he has reason to believe may be directly involved in official action to be taken by him.

(c) No legislator or employee shall assist any person or business or act in a representative capacity before any state or county agency for a contingent compensation in any transaction involving the State.

(d) No legislator or employee shall assist any person or business or act in a representative capacity for a fee or other compensation to secure passage of a bill or to obtain a contract, claim, or other transaction or proposal in which he has participated or will participate as a legislator or employee, nor shall he 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 or agency of which he is an employee or legislator.

(e) No employee shall assist any person or business or act in a representative capacity before a state or county agency for a fee or other consideration on any bill, contract, claim, or other transaction or proposal involving official action by the agency if he has official authority over that state or county agency unless he has complied with the disclosure requirements of section 84-17.

(f) No employee shall engage in any business transaction or activity or have a financial interest, direct or indirect, that is incompatible with the proper discharge of the employee's official duties, or which may tend to impair the independence of judgment in the performance of the employee's official duties."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2005.