Ethics v. Carrigan
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ETHICS v. CARRIGAN

The U.S. Supreme Court made a rare unanimous (9-0) ruling in a case involving an ethics issue. The case involved a city council member, Michael Carrigan, who voted for a casino development where his long-time personal friend and campaign manager was the developer's consultant. Carrigan disclosed the relationship but did not recuse himself from the vote.

Censured. By statute in Nevada, legislators with a conflict of interest are prohibited from voting on proposals where a conflict exists and from advocating the proposal's passage or failure. Carrigan was censured by Nevada's Commission on Ethics for violating the statute. Carrigan sued the Commission claiming he had a First Amendment "free speech" right to vote on all matters that came before him. The Nevada Supreme Court agreed and voided the statute. The Ethics Commission appealed to the U.S. Supreme Court.

Not Free Speech. The Supreme Court reversed the Nevada Supreme Court's decision and upheld the recusal statute. In reaching its decision, the Justices concluded that a legislator's vote is not free speech. Instead, it is an application of political power and legislators must recuse themselves when a conflict of interest taints the exercise of that power.

Historical Perspective. As background for its decision, the court cited the long history of recusal in the United States. In 1801 Thomas Jefferson, drafter of the Declaration of Independence and third President of the United States, imposed the following rule on legislators:

Where the private interests of a member are concerned in a bill or question, he is to withdraw. And where such an interest has appeared, his voice [is] disallowed . . . the laws of decency . . . denies to any man to be a judge in his own case.

Recommendation: Although this particular case involved a Nevada statute, it illustrates the importance of avoiding conflicts of interest. When directors have a conflict, they should disclose it and recuse themselves both from voting and from advocating a particular outcome. To help directors identify potential conflicts, boards should adopt a Code of Ethics. (See Nevada Commission on Ethics v. Carrigan.)

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