Public Enforcement Letter 95-1

Senator W. Paul White
c/o Thomas Dwyer, Esquire
400 Atlantic Avenue
Boston, MA 02110

July 19, 1994

Dear Senator White:

As you know, the State Ethics Commission has conducted a
preliminary inquiry into allegations that as a state senator you
violated G.L. c. 268A by accepting items of substantial value from
John Hancock Mutual Life Insurance Company ("Hancock") and others.
Based on the staff's investigation (discussed below), the
Commission voted on January 27, 1994 that there is reasonable cause
to believe that you violated G.L. c. 268A, s.23(b)(3). In view of
certain mitigating circumstances (also discussed below), the
Commission, however, has determined that further proceedings are
not warranted. Rather, the Commission has concluded that the
public interest would be better served by disclosing the facts
revealed during our inquiry and explaining applicable provisions of
the law, with the expectation that this will insure both your and
other legislators' future understanding of and compliance with the
conflict law. By agreeing to this public letter as a final
resolution of this matter, you do not admit to the facts and laws
discussed below. The Commission and you have agreed that there
will be no formal action against you, and that you have chosen not
to exercise your right to a hearing before the Commission.

I. Facts

1. You were a state representative between 1973 and 1988. In
November 1988, you were elected to the State Senate. You have
served in the Senate from January 1989 to the present.

2. As a state senator, you have served on the following
committees: Banks and Banking, 1989 to the present (chair, 1991 to
the present); Public Service, 1989 to the present; Ethics, 1989 to
the present; Criminal Justice, 1989 to the present; Post Audit and
Oversight, 1989 to the present (vice-chair, 1989 to the present).

3. In addition, as a member of various committees, you have
participated in hearings on bills of interest to the insurance
industry. Such participation has included voting on whether such
bills should be reported out of committee. You have also voted on
bills of interest to the insurance industry when they reached the
Senate floor.

4. As a state senator, you have co-sponsored several bills
affecting the insurance industry.

5. Hancock, a Massachusetts corporation, is the nation's
sixth largest life insurer doing business in all 50 states.
Hancock offers an array of life, health and investment products.
As a Massachusetts domiciled life insurer, Hancock's activities are
more comprehensively regulated by Massachusetts than by any other
state.

6. Hancock has a Government Relations Department whose
responsibilities include monitoring

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Massachusetts legislation of interest to Hancock and presenting
Hancock's position on such legislation to legislators.

7. According to the Government Relations Department's yearly
internal reports, between 1985 and 1993, it identified, on average,
approximately 125 bills filed each year with the Massachusetts
legislature deemed to be of interest to Hancock. During those same
years, on average, approximately 10 such bills were enacted into
law each year.

8. Edward Baud ("Baud") has worked in Hancock's Government
Relations Department since 1967. Basically, his job has been to
act as a Hancock lobbyist regarding state legislation outside of
Massachusetts in which Hancock has an interest. He is not a
registered lobbyist in Massachusetts. According to his
testimony, he has not attempted to promote, oppose or otherwise influence
legislation in Massachusetts with anyone.

9. As a part of his duties, Baud, for many years, has
regularly attended Council of State Governments ("CSG") meetings in
various parts of the United States. The CSG is a private, non-
profit organization consisting of representatives from both the
legislative and executive branches of the 50 state governments. It
is supported primarily from dues paid by each of the 50 states.
However, it also receives some corporate sponsor dues as well. For
several years, Hancock has been a CSG private sector associate,
paying $3,000 in annual dues. Baud is Hancock's primary
representative to the CSG.

The CSG holds national and regional meetings. The CSG
occasionally deals with issues of interest to Hancock. Baud has
found speakers from the insurance industry to address insurance
issues of interest to the CSG. According to Baud, it serves
Hancock's interests to maintain awareness of what issues are of
importance to the CSG membership, and to try to have some input
regarding those issues which are of importance to Hancock.
However, the CSG does not deal with any specific Massachusetts
legislation.

10. You became involved in the CSG in the late 1970s. In the
1980s, you became an officer of the CSG Eastern Regional Conference
Executive Committee. As such you attended most of the Eastern
Regional Conference Executive Committee meetings.[1] Because of
your being on the Executive Committee, you also attended many
national CSG events. You were elected national chair in 1990, and
served through 1991. As chair, you went to many regional CSG
meetings. Since 1991, you have served on the CSG Executive
Committee and the CSG Governing Board.

11. Between January 1, 1988, and May 30, 1993, Baud paid for
approximately $3,000 in meals and/or beverage expenses for you
and/or your spouse. Approximately $2,600 of those expenses
involved meals and/or beverages that occurred at or near the site
of various CSG meetings or conferences. Although this
entertainment was not part of the formal CSG conference agenda, it
involved socializing with numerous other CSG participants from
various states which took place separate from and in addition to
the CSG functions.[2]

In addition, near Christmas time in 1989, 1990 and 1992, the
Bauds hosted you and your spouse at a dinner or brunch at the Ritz-
Carlton in Boston. You and your spouse's pro rata share of the
cost of that entertainment was approximately $150 in 1989, $120 in
1990, and $160 in 1992.

12. According to your testimony, you met Baud in the early
1980's. You saw each other frequently at various CSG events
throughout the 1980's. On occasion, each of you would bring your
spouse. Over the years, as a result of your frequent CSG
interactions, the four of you gradually came to be close friends.
You exchanged Christmas cards and ornaments. You frequently spoke
to Baud on the phone about personal matters. Your spouses talked
to each other about private matters as well. In March 1992, you
and your wife entertained the Bauds at the Harvard Club at your
expense. Otherwise, you did not pay for any significant
entertainment expenses for the Bauds. (During the relevant time
period, neither of you had been to the other's home.)

You assumed that when Baud paid for your and your spouse's
meals and drinks at CSG conferences, Hancock was the ultimate
source of the payment. Nevertheless, you did not view these
expenses as motivated by business reasons, but rather motivated by
friendship. As to the Ritz-Carlton meals, you assumed that Baud
paid for those meals personally, although you never inquired as to
the source of the payment. You believed that the reason Baud paid
for these Ritz-Carlton meals was purely friendship.[3]

13. According to Baud's testimony, he described his
relationship with you as a "good business, friendly relationship."
While at CSG conferences, he would socialize with you and other
legislators. As he became more actively involved with the CSG, he
began to build close relations with certain key CSG people such as
you, and certain senators from Ohio and New York.

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According to Baud, he entertained you because you were an
active and important participant in CSG events, and not because you
were a Massachusetts legislator.

He also began socializing with you outside of CSG activities.
Once a year he and his wife got together with you and your wife at
the Ritz-Carlton. Hancock paid for these dinners because they
advanced Baud's association with you as an active participant in
the CSG. The dinners at the Ritz-Carlton were motivated, however,
as much by friendship as business, according to Baud.

II. Discussion

As a state senator, you are a state employee. As such, you
are subject to the conflict of interest law, G.L. c. 268A.

Your receiving approximately $3,000 in entertainment from Baud
raises an appearance issue under G.L. c. 268A, s.23(b)(3). Section
23(b)(3) prohibits a state employee from knowingly or with reason
to know acting in a manner which would cause a reasonable person
knowing all of the facts to conclude that anyone can unduly enjoy
his favor in the performance of his official duties.[4]

We begin our discussion by focusing on the approximately
$2,600 of that entertainment you received from Baud at or near CSG
conferences. In the Commission's view, your acceptance of the
$2,600 in entertainment from Baud, knowing: (1) he was a Hancock
lobbyist (even though not registered in Massachusetts); (2) that
Hancock as a Massachusetts domiciled life insurer is particularly
sensitive to regulation by Massachusetts; and (3) that there are
numerous bills of interest to the life insurance industry filed
each year; constitutes acting in a manner which would cause a
reasonable person knowing these facts to conclude that Hancock can
unduly enjoy your favor in the performance of your official
duties.[5] This is so even though you were not lobbied by Baud,
and even though there is no evidence to indicate that you were ever
unduly influenced in the performance of your official duties to
favor Hancock's interest. Ultimately, accepting such entertainment
creates an appearance problem of undue influence. Therefore, it
appears that you violated s.23(b)(3).[6]

The $430 in total Ritz-Carlton entertainment provided to you
by Hancock through Baud is more troublesome. At first blush, it
would not seem to be connected with CSG activities. Baud
testified, however, that he saw these meals as part of his
continuing effort to create a strong close personal relationship
with you as a CSG official, and that he was also motivated by his
friendship with you. In addition, you stated that your
understanding was that the meals were provided out of friendship,
and that, in fact, you were unaware that Hancock was paying for
these meals; you thought Baud paid for them personally.

Although the issue is not free from doubt, the Commission
concludes that the CSG connection and friendship do appear to be
the motivating factors for the Ritz-Carlton meals.[7] These Ritz-
Carlton meals, however, create even more of an appearance problem
under s.23(b)(3) than do the $2,600 in CSG-connected meals in that
they did not take place at or near CSG conferences involving
conference participants. Therefore, it appears that you violated
s.23(b)(3) by accepting this Ritz-Carlton entertainment.[8]

III. Disposition

Based on its review of this matter, the Commission has
determined that the sending of this letter should be sufficient to
ensure your understanding of, and your future compliance with, the
conflict of interest law. Although the Commission is authorized to
impose a fine of up to $2,000 for each violation of G.L. c. 268A,
the Commission chose to resolve this matter with a Public
Enforcement Letter for the following reasons: (1) the
entertainment expenses were from a non-Massachusetts lobbyist; and
(2) both you and Baud were legitimate participants in CSG functions
and most, if not all, of the expenses appear to have been motivated
by your CSG role, rather than your legislative duties. We also
note that you fully cooperated with the Commission throughout its
investigation.

This matter is now closed.

---------------

[1] On at least three occasions, Baud met with you and other CSG
people to help plan Eastern Regional Conference sessions that were
to be held in Boston.

[2] You testified that you considered this entertainment as an
extension of the conference and that the gatherings provided an
opportunity for you and other conference participants from across
the nation to discuss conference topics as well as exchange
information on other issues of common interest among the CSG
participants.

[3] There is no evidence that the Bauds ever paid personally for
any entertaining of you and/or your wife.

[4] Section 23(b)(3) goes on to provide, "it shall be unreasonable
to so conclude if such officer or employee has disclosed in
writing to his appointing authority or, if no

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appointing authority exists, discloses in a manner which is public
in nature, the facts which would otherwise lead to such
conclusion."

[5] You could have avoided the appearance problem by making a
written disclosure pursuant to s.23(b)(3).

[6] It appears that the motive for this entertainment was some
mixture of friendship and a desire on Baud's part to deal with you
as a CSG official. Had the Commission determined that you
understood that Baud's gifts were motivated in part for or because
of an official act performed or to be performed by you as a state
senator, the Commission would have found that you violated G.L. c.
268A, s.3, a more serious violation. (Section 3 prohibits a state
employee from accepting an item of substantial value for or because
of official acts or acts within his official responsibility
performed or to be performed by him.)

[7] Again, that Baud was not a registered Massachusetts lobbyist
and did not apparently seek to influence you regarding any specific
Massachusetts legislation are important in so concluding.

[8] Your argument that you were under the impression that Baud was
paying for these meals privately is not a defense. Section
23(b)(3) has a "know or reason to know" standard. In the
Commission's view, you should have known that Hancock was paying,
since (1) these were expensive meals at the Ritz-Carlton; (2) you
knew Baud was a Hancock employee, and more particularly a Hancock
lobbyist; and (3) you knew it would be relatively easy for Baud to justify such
a dinner as a business expense. Indeed, you knew that on many
prior occasions Hancock, through Baud, had paid for your and your
wife's meals when he and his wife socialized with you and your wife
at or near CSG functions.

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