August 13, 2007 Edition

Ethics in Economic Development

In a 2004, “A Note Among Friends” article raised the issue of “Ethics in Economic Development.” At that time, the nation was obsessed with ethical and legal troubles of individuals at companies such as Enron, Adelphia, Tyco, HealthSouth, and Martha Stewart, as well as in federal and state governments. Just over three years later, the names may have changed but business and governmental ethical practices, or the lack thereof, remains controversial in the news.

For example, it was reported this month that a lobbyist, generally considered the most effective in North Carolina, had loaned $500,000 to the former N.C. House Speaker. Suppose for a moment that one of your board members, seeking assistance for a project in your city or county, had offered such a loan to an important legislator. Unlikely? Yes, but upon reflection, any of us can imagine similar unethical scenarios that could drag our organization into the muck of scandal. Even if legal, some apparently great deals may begin to turn ugly in the light of day.

In the last few years, states have moved to codify and enforce ethical standards of conduct in government. South Carolina and Virginia have changed many provisions of their lobbying and campaign finance code. North Carolina, Governor Mike Easley signed a law establishing an Ethics Commissions with some hard new rules, saying: “…citizens have the right to know that the power they entrust to public officials is not abused for private gain or personal interest."

Not surprisingly, much of the emphasis on ethics is placed on lobbying. The term lobbying is generally applied to activities at the state or federal level. It has been defined as influencing or attempting to influence legislative or executive action, or both, through direct communication with a legislator, legislative employee or public servant, or their immediate family. It also includes developing goodwill and building relationships with legislators and influential members of the executive branch with the intention of influencing current or future legislative or executive action. Bringing it closer to home, many of our economic deals, particularly incentivized projects, necessarily involve secrecy among our board members. Secrecy automatically heightens the suspicions of local citizens, always concerned with motivations. Opening complete records of the negotiations to total transparency once the deal is done is important to retaining your organization’s ethical reputation.

Our state, regional and international economic development organizations spend a lot of time and resources lobbying, legally, for justifiable ends. As economic developers, most of us rely on our general sense of what is right and what is wrong. We wouldn’t have to look it up in a law book if we were offered a subtle bribe to help influence a deal. So if we, individually, aren’t hanging out in Washington with IEDC or SEDC, or in our state capitols with VEDA, NCEDA and SCEDA, taking influential politicians out to dinner, why should we be overly concerned with the ethics of lobbyists? The answer is that, if we are members of the organization doing the lobbying, we are there, in the legislative halls and we are paying for those dinners. We are professional economic developers with a duty to be completely ethical and ensure that our organizations uphold our personal standards. Moreover, we are citizens, concerned with good and honest government. We should be paying attention to what our organizations and others are doing in the government halls and offices.

The Southern Economic Development Council, America’s oldest organization of economic developers, adopted a code of ethics in 1983 and if you become a member, you must sign a pledge to follow the code:

“As a member of the Southern Economic Development Council, I pledge to adhere to the following principles:

To maintain personal integrity in all relationships with my professional associates and the corporate and private citizens whom I    serve, and to conduct myself in such a manner as to inspire the confidence of those I serve.

To elevate the standards of my profession by maintaining high levels of service and conduct, striving continually to enhance the professional image of the industrial/economic development field.

To continue to acquire and to share my knowledge of the industrial/economic development with others, supporting efforts to further proficiency in this field.

To keep my objectives and activities in full accord with the principles of free enterprise and the enhancement of industrial/economic development as a profession.”

Our 2004 article asked if it were time to write or revise the codes of ethics for our economic development organizations. We are convinced that the time is now for NCEDA, VEDA, and SCEDA, as well as ED organizations internationally, to review, reaffirm, revise, or adopt codes of ethics or professional standards that bind the membership to ethical behavior.  SH

Bob Comer

We hope you find this newsletter informative and will join in the dialogue among ED professionals by submitting ideas to us. However, the last thing we want to do is waste your valuable time with spam or spin. So if you would like to unsubscribe, email cmorphis@sanfordholshouser.com with UNSUBSCRIBE in the subject heading.