In The Matter of Robert K. Coughlin
December 24, 2008
DISPOSITION AGREEMENT

The State Ethics Commission and Robert K. Coughlin enter into this Disposition Agreement pursuant to Section 5 of the Commission's Enforcement Procedures. This Agreement constitutes a consented-to final order enforceable in the Superior Court, pursuant to G.L. c. 268B, section 4(j).


On September 21, 2007, the Commission initiated, pursuant to G.L. c. 268B, section 4(a), a preliminary inquiry into possible violations by Coughlin of sections 6 and 23(b)(3) of G.L. c. 268A, the conflict of interest law. On June 19, 2008, the Commission amended its preliminary inquiry to include possible violations of G.L. c. 268A, section23(b)(2). The Commission has concluded its inquiry and, on October 17, 2008, found reasonable cause to believe that Coughlin violated G.L. c. 268A, section 23(b)(3), and terminated the inquiry as to the remaining allegations.

The Commission and Coughlin now agree to the following findings of fact and conclusions of law:



Findings of Fact





1. From late January 2007 until August 31, 2007, Coughlin was Undersecretary for Business Development in the Executive Office of Housing and Economic Development ("EOHED"). As such, he was a state employee as that term is defined in G.L. c. 268A, section 1.


2. Coughlin's official duties as undersecretary included acting as an advocate in encouraging companies to stay and expand business in Massachusetts, and encouraging new companies to move here. Coughlin supervised six departments, including the Massachusetts Office of Business Development ("MOBD").


3. In 2007, MOBD assisted Massachusetts companies and companies considering relocating to Massachusetts in obtaining grants and loans from various state agencies, and in dealing with permitting issues at the state and local levels. In 2007, MOBD's Division of Life Sciences specialized in providing these services to the life sciences industry.


4. The Massachusetts Biotechnology Council, Inc. ("MBC") is an association of more than 550 dues-paying biotechnology companies, academic institutions and others involved in the biotechnology industry. One of the functions performed by MBC is to lobby on behalf of its members regarding issues of importance to its members that are under consideration by the legislative or executive branch of government.


5. During Coughlin's tenure as EOHED Undersecretary, MOBD had authority over or provided substantial input regarding several issues of importance to the MBC. One such issue was the $1 billion Life Sciences Initiative ("LSI") announced by the Governor on May 8, 2007, as to which legislation was filed on July 19, 2007.

MOBD also sought to assist MBC-member companies to expand in or relocate to Massachusetts, as it did with other companies.


6. On January 9, 2007, the MBC presidency became vacant. In late January or early February, the MBC formed a seven-person Search Committee to find a new president. The Search Committee was assisted by the MBC senior staff and its Acting President and Chief Operating Officer. In addition, the Search Committee retained the services of a recruiting firm, Levin & Co. The key liaison from Levin & Co. was the firm's chairwoman ("Levin").


7. As of February 2007, Coughlin was regularly interacting with MBC senior staff on MBC business issues that fell within Coughlin's EOHED jurisdiction. On one of those occasions, in Coughlin's office in approximately February 2007, Coughlin indicated that he was interested in being considered for the MBC presidency. On March 27, 2007, at a Massachusetts Development Finance Agency open house, Coughlin again expressed to an MBC senior staff person his interest in being considered for the job, and on March 28, 2007, he agreed to have his name placed on a list of potential candidates being sent to Levin.


8. On April 1, 2007, Coughlin e-mailed his résumé to an MBC senior staff person, with the understanding it would be passed on to the Search Committee. Shortly thereafter, it was provided to the Search Committee.


9. On May 25, 2007, Coughlin met with Levin for more than an hour to discuss his interest in being considered for the job.


10. On June 11, 2007, Coughlin discussed the job with the MBC Search Committee Chair and with its Acting President for approximately an hour to an hour and a half.


11. On June 29, 2007, a Levin & Co. employee sent Coughlin an e-mail requesting that he hold the date of July 31, 2007, for a meeting with the Search Committee. On June 30, 2007, Coughlin e-mailed that Levin & Co. employee stating that he will "put a hold on the 31st" and requesting that he be made aware of the time of his interview "ASAP."


12. In mid-July, 2007, Coughlin consulted with private counsel concerning his interest in the position. [1] Following the consultation with counsel, Coughlin orally advised the Governor's staff of the scheduled MBC interview, and on July 24, 2007, filed two disclosure forms with the Commission, one captioned "Disclosure of Appearance of Conflict of Interest Required by G.L. c. 268A, section 23(b)(3)" [2] and the other captioned "Disclosure of Financial Interest By A State or County Employee As Required By G.L. c. 268A, section 6, 13." [3] Both forms were provided to Coughlin's appointing authority on July 24, 2007.


13. On July 31, 2007, the Search Committee interviewed Coughlin and three other finalists. The Committee then decided to offer the position to Coughlin.

In early August 2007, the MBC offered the job to Coughlin. On or about August 10, 2007, Coughlin accepted the offer. On September 4, 2007, Coughlin began serving as MBC's new president, with an annual salary of $350,000.


14. Coughlin acted as EOHED Undersecretary in matters in which the MBC had a significant interest while he was an applicant for the MBC presidency, including the following:

a. Between April 1, 2007, and July 2007, Coughlin met with MBC senior staff on at least a weekly basis to discuss economic development matters of interest to the MBC or its members;

b. On April 27, 2007, Coughlin attended a meeting with the Governor and MBC representatives and others regarding the Life Sciences Initiative;

c. On June 5, 2007, Coughlin chaired a meeting at the EOHED offices, attended by EOHED staff, MBC employees and MBC-member company representatives. The purpose of the meeting was to formulate tax proposals for the Life Sciences Initiative. MBC senior staff arranged and attended the meeting and sent drafts of tax proposals to Coughlin and his staff in advance of the meeting. At the meeting, Coughlin communicated a message as to additional proposals he would like submitted; and

d. On June 28, 2007, Coughlin had a meeting in his office with senior management of MBC-member company Cubist Pharmaceuticals ("Cubist") in which they discussed Cubist's proposals for the tax component of the LSI. MBC senior staff arranged and attended the meeting.

15. Consistent with ongoing meetings MOBD representatives had with biotechnology companies throughout the Commonwealth for economic development purposes, Coughlin and other MOBD representatives met with GTC Biotherapeutics ("GTC") representatives, including the GTC Chief Executive Office ("CEO"), at GTC's headquarters in Massachusetts on June 22, 2007. The meeting was arranged and attended by MBC senior staff and lasted approximately two hours.

The parties discussed GTC's interest in applying for financial and other support from EOHED through various programs. At that time, GTC's CEO was on the MBC Executive Committee and the MBC Search Committee for the presidency position and Coughlin knew that the CEO held those positions. Neither Coughlin nor any representative of GTC, including its CEO, discussed or mentioned the MBC presidency search or Coughlin's interest in the position before, during or after the meeting.



Conclusions of Law



16. Section 23(b)(3) of G.L. c. 268A, in relevant part, prohibits a state employee from knowingly, or with reason to know, acting in a manner which would cause a reasonable person, having knowledge of the relevant circumstances, to conclude that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is likely to act or fail to act as a result of kinship, rank, position or undue influence of any party or person. The section further provides that it shall be unreasonable to so conclude if such state employee has disclosed in writing to his appointing authority the facts which would otherwise lead to such a conclusion.


17. By submitting his résumé for the MBC presidency on April 1, 2007, and subsequently repeatedly acting in his official capacity as EOHED Undersecretary in matters in which the MBC had a significant interest, Coughlin knowingly or with reason to know acted in a manner which would cause a reasonable person, having knowledge of all the relevant circumstances, to conclude that the MBC could unduly enjoy his favor in the performance of his official duties. In so acting, Coughlin repeatedly violated section 23(b)(3).


18. Coughlin could have avoided violating section 23(b)(3) by making a written disclosure of the relevant facts to his appointing authority before so acting. He did not do so until July 24, 2007, after he had repeatedly acted in his official capacity as just described above. Although Coughlin filed his disclosure with his appointing authority before the date of his interview with the full Search Committee and before he received the job offer, the filing occurred well after April 1, 2007, the date on which he had submitted his résumé to the MBC for consideration.


19. In addition, by submitting his résumé for the MBC presidency, and subsequently acting in his official capacity as EOHED Undersecretary in meeting with a senior official of an MBC-member company regarding that company's interests before the EOHED, while that official was on the MBC Presidency Search Committee, Coughlin knowingly or with reason to know acted in a manner which would cause a reasonable person, having knowledge of all the relevant circumstances, to conclude that the company could unduly enjoy his favor in the performance of his official duties. In so acting, Coughlin violated section 23(b)(3). Coughlin made no disclosure of these facts to his appointing authority.


20. To the extent any of the violations described above took place after Coughlin met with the head of the recruiting firm on May 25, 2007, or after he met with the Search Committee chair and MBC chief operating officer on June 11, 2007, the appearance of impropriety was exacerbated.

In view of the foregoing violations of G.L. c. 268A by Coughlin, the Commission has determined that the public interest would be served by the disposition of this matter without further enforcement proceedings, on the basis of the following terms and conditions agreed to by Coughlin:


(1) that Coughlin pay to the Commission the sum of $10,000 as a civil penalty for repeatedly violating G.L. c. 268A, section 23(b)(3); and


(2) that Coughlin waive all rights to contest, in this or any other administrative or judicial proceeding to which the Commission is or may be a party, the findings of fact, conclusions of law and terms and conditions contained in this Agreement.



STATE ETHICS COMMISSION



[1] According to Coughlin, in early May 2007, in a brief conversation in passing, he told his boss, the Secretary of the Executive Office of Housing and Economic Development, that he, Coughlin, was in the "wide net" of potential candidates for the MBC presidency. He did not disclose that he had already submitted his résumé to the MBC on April 1, 2007, nor did he later disclose to his boss his subsequent meeting with Levin or his meeting with the Search Committee chair and with the MBC Acting President.

[2] The disclosure states: I am interested in the vacant position as President of the Massachusetts Biotechnology Council, a membership organization whose members are intensely interested in life sciences. The financial well being of the organization is a function of the number of its members and the dues they pay. My duties as Undersecretary would ordinarily require me to advocate for passage of the Governor's Life Sciences Initiative and those considering me for the Presidency may have organizational and other interests in that legislation.

[3] That disclosure, as to the financial interest involved, states: "Massachusetts Biotechnology Council is a membership organization and its potential membership will be increased by passage of the Governor's Life Sciences Initiative."