Disappeared News

by Larry Geller

Ian Lind continues to investigate the issue of late financial disclosures in his article today More on those fines for late filing of financial disclosures (ilind.net, 6/9/2012). The question of the moment is whether the Ethics Commission is required to fine the non-filers.

I also checked back to see whether the erroneous financial disclosures identified in my March 1 article Financial disclosures the Ethics Commission should have caught… (3/1/2012) have been addressed. See the results below.

Ian correctly notes that the statute requires the Ethics Commission to levy a fine for late filing. He writes:

Going back to the statute, Section 84-17(i), HRS, the commission doesn’t just have the authority to impose a “monetary penalty,” unless I’m totally misreading the statute. They are required to assess the fine.

The statute provides: “Any legislator, delegate to a constitutional convention, or employee who fails to file a disclosure of financial interests when due shall be assessed an administrative fine of $50.”

Now, “shall” means that the Ethics Commission must levy that fine, as opposed to a “may” which both gives them discretion and gives them cover if they are just too busy to get around to doing these things. In other words, “may” can be kind of a loophole for inaction, but “shall” means it will be done. Unfortunately, there is a loophole in the last sentence of the paragraph: “The commission may waive any administrative fines assessed under this subsection for good cause shown.”

The last sentence requires that there be “good cause.” Is “’cause we didn’t get around to it” good cause? Where do we citizens find out why a fine was not levied?

Here’s the section of the statute with the “shall” highlighted. Note that there is another “shall”—a fine of $10 a day that must be assessed if the financial disclosure is not filed within ten days of the due date:

Failure of a legislator, a delegate to the constitutional convention, or employee to file a disclosure of financial interests as required by this section shall be a violation of this chapter.  Any legislator, delegate to a constitutional convention, or employee who fails to file a disclosure of financial interests when due shall be assessed an administrative fine of $50.  The state ethics commission shall notify a person, by registered mail, return receipt requested, of the failure to file, and the disclosure of financial interests shall be submitted to the commission not later than 4:30 p.m. on the tenth day after notification of the failure to file has been mailed to the person.  If a disclosure of financial interests has not been filed within ten days of the due date, an additional administrative fine of $10 for each day a disclosure remains unfiled shall be added to the administrative fine.  All administrative fines collected under this section shall be deposited in the State's general fund.  Any administrative fine for late filing shall be in addition to any other action the commission may take under this chapter for violations of the state ethics code.  The commission may waive any administrative fines assessed under this subsection for good cause shown.

It’s not clear to me whether the “due date” is the original due date or a new due date resulting from the mailing of the notice. Note that there’s nothing saying when the Commission has to mail the notice—it could be immediately, or a decade later. This is not great law.

Reading the statute a couple of times leads me to think that it is worded so that the fine is counted from the original due date, but really, is that clear?

Doesn’t anybody look at these laws before they pass them??

Now, it is possible that the Ethics Commission is also confused about the law. The instruction posted on their web page says “may,” implying that the Ethics Commission has discretion on whether it will levy the fine, and it interprets the due date for the $10 daily fine  as “on the tenth day after the notification has been mailed” (see highlighted text below). Admittedly, the statute is unclear about that due date, but the “may” is clearly a misstatement, unless they are thinking of the “good cause” possibility, but then they say that they will levy the fine. So that first “may” ought also to be a “will,” right?

IMPORTANT: PENALTIES FOR FAILURE TO FILE OR FILING LATE HRS §84-17(i) states that failure to file a disclosure of financial interests constitutes a violation of chapter 84, HRS. The Hawaii State Ethics Commission may assess monetary penalties against persons who fail to file a financial disclosure statement when due. Failure to file a disclosure by the applicable deadline will result in an initial penalty of $50. The Commission will notify a person by registered mail of the failure to file. Failure to file a disclosure by 4:30 p.m. on the tenth day after the notification has been mailed will result in an additional penalty of $10 for each day a disclosure remains unfiled. The Commission may waive any monetary penalties assessed for good cause shown. The filing of an incomplete or false disclosure also constitutes a violation of chapter 84, HRS. Persons who have filed disclosures but have not reported all financial interests as required by law should immediately contact the Hawaii State Ethics Commission for further instructions. Other penalties for failure to file a disclosure may include (but are not limited to) reprimand, probation, demotion, suspension, or discharge.

Let’s go back now to the three state legislators whose financial disclosure forms I highlighted on March 1. To recap, they were:

• Rep. Rida T.R. Cabanilla Arakawa’s 2012 financial disclosure apparently fails to disclose income, as required.
• On Senator Donavan Dela Cruz’s May 19, 2011 filing he simply checked the box indicating no changes to report since last filing.  But his last filing was 12/9/10 which showed him as a Councilmember. Oops!
• Rep. Scott Nishimoto also just checked the same box. He doesn’t report his House of Representatives job.

Visiting the Ethics Commission website just now, none of these forms have been amended. They are the same as the forms posted in the March 1 article.

So three months have passed, and appears that even if a financial disclosure is made on time, it need not be correct.

Each disclosure form ends with this text block, under which the person submitting must sign:

Once again, the question on the table is whether the Ethics Commission is doing its job enforcing the law. I didn’t see any “good cause” escape clause in the statute for letting things ride.

Permalink posted by Larry @ 6/09/2012 11:24:00 AM