Business & Economy

Lawmakers seek to shut revolving door between state and private sector

Karen Marshall, chief of ConnectVT. VTD Photo/Taylor Dobbs
Karen Marshall, chief of ConnectVT. VTD Photo/Taylor Dobbs

Republican Rep. Kurt Wright and Democrat Rep. Sarah Buxton are teaming up on legislation that would shut the so-called revolving door between state government and the private sector it often regulates.

Buxton and Wright are proposing that executive branch employees be prohibited from joining a company they’ve regulated or take a job which “involves a matter in which the public official directly and substantially participated in,” for one year after leaving public employment.

The bill is being nicknamed the “Karen Marshall bill” by some lawmakers in the Statehouse, after the recent controversial move by Marshall, the state’s telecommunications czar, to VTel, a Springfield telephone company that has received substantial state and federal funds.

“That really highlighted the crux of the problem we’re trying to solve,” Buxton said. “That was very clearly wrong.”

Although Buxton says that Marshall’s move prompted the legislation, she hopes the bill will instill a wider “awareness in watching where some of those [administration] officials go, and what is proper, and what isn’t.”

Buxton told VTDigger that the fact that a state regulator sometimes retains proprietary information, like corporate trade secrets or other detailed financial information, is another factor at play.

“When you are a regulator, when you’re in a position deciding where money goes in government, you become knowledgeable about protected, private information — proprietary information — that companies have,” explained Buxton.

“It isn’t fair in our small state that you might then go and work for what might be a competing company, having knowledge of all those factors,” she said.

The penalties suggested in the bill are stiff. If found guilty of violation, a former public employee could face a fine of up to $10,000. In addition, a public worker could be required to repay “any economic advantage” gained by the improper change in employ and reimburse the state for its investigative and legal work.

The Vermont attorney general would enforce the policy through the courts, which could issue orders temporarily or permanently banning the employment.

Gov. Peter Shumlin said through spokeswoman Sue Allen that he’d “want to review the bill before commenting on specific legislation.”

“Gov. Shumlin has said that it is important for appointees to follow the rules that are in place, and for the standards to include safeguards – while also recognizing that state appointees need to be able to return to the private sector,” continued Allen in an email.

Those already existing standards include a broad executive code of ethics, established in statute, and which executive branch employees must sign.

The code says among other things that all executive branch appointees must not use their public position to advance their personal interests, and that they can’t have financial interests in anything they officially oversee.

It also bans former employees from being paid to appear before any public agencies or the Legislature, on any matter they’ve worked on in state government, for one year after they leave office.

Currently, only the governor has the right to punish any violations of this ethical code. The administration has maintained that Marshall didn’t break the ethical code, because she voted to grant VTel state funding before she sought employment with the firm.

Wright, the Republican co-sponsor of the bill, said he’d received numerous complaints from the public about Marshall’s move to VTel.

“Frankly, it seems like good government common sense to say: There’s got to be at least a one year waiting period, if you’re in the executive branch, and you’ve had regulatory authority over someone: that you wait one year before taking a job with them,” Wright said. “It’s really about transparency, good government, and making sure that we don’t look like we’re doing something inappropriate to the public.”

Although Buxton and Wright both alluded to this as a serious problem in recent years, with a string of unsettling cases, neither could cite other recent examples of dubious public to private job shifts offhand.

Buxton said that the energy sector and jobs in economic development were the most likely places where these conflicts of interest happened in Vermont, while Wright said this wasn’t a problem with the Shumlin administration in particular.

Although Buxton had considered adding similar prohibitions on legislators, she decided to keep the bill narrow.

The bill has widespread support already, with at least 60 co-sponsors and tripartisan support.

Here’s a copy of the bill as introduced. The final draft was submitted to legislative council on Tuesday.

Editor’s note: Because of technical problems encountered with the original Document Cloud embed, we have removed the bill in PDF form. You can find it by clicking on the link above.

CORRECTION: The $10,000 fine is in addition to reimbursement costs a public employee could incur as a result of financial gain and a state investigation.

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Nat Rudarakanchana

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  • Randy Koch

    But what about legislators who then revolve not into the “private sector” but into the “public-private sector”, the nether world that is the Vermont executive branch in a system where the gov. promises to “create jobs” (ie, shamelessly promote certain wealthy cronies)? A legislator has a particular mandate to represent constituents today and then adm. cronies tomorrow. Lucie Leriche is that latest example of this other revolving door now working hand-in-glove from within the adm. with Alex Maclean who revolved directly out of the adm.

  • Moshe Braner

    I would think the “economic advantage” can be well above the $10,000 level. I am not convinced that laws like this can work, but at the least the fine should be based on a percentage of the pay the person is getting in the new employ.

  • Ron Pulcer

    “Although Buxton had considered adding similar prohibitions on legislators, she decided to keep the bill narrow.”

    Why limit this bill to just the administration? Is it because a “broader” bill could not get the votes, even on a bi-partisan bill?

    I support the intent of the bill. However, by going the route of a narrower bill (excludes VT Legislators), it creates two sets of rules. Congress has a track record of two sets of rules (i.e. Martha Stewart goes to jail for insider trading, but Congress exempted itself from using info obtained in Congressional hearings to purchase stocks, … until Steve Croft of CBS 60 Minutes informed the viewing public / taxpayers). The Vermont Legislature can do better than Congress, or at least we can only hope.

    Since this is a bi-partisan bill, why not add a resolution stating that Vermont Republicans and Vermont Democrats urge their party colleagues in Congress to do likewise to stop the revolving door syndrome? Better yet, why don’t both parties in Vermont declare independence from their respective national parties?

  • Ken Hertz

    Wouldn’t any fines assessed here be covered by the employer? (“grossed up” of course)

  • Jim Smith

    Sarah Buxton is a hypocrite. She wins her district by virtue of her association with Vermont Law School. Every year a few more students move to SoRo and they vote just enough to get her re-elected and then move. It’s absurd how she uses her position there to secure votes from temporary transient students. Take out the school or her job there and she isn’t returning to the state house.

  • Mark Jefferies

    Vtdigger. What is happening. Why isn’t the AG looking into this corruption??? And why isn’t Vtdigger pushing for answers?