It's past time for the Florida Legislature to spell out exactly how top elected officials should handle their personal wealth to avoid conflicts of interest. Three years after the issue helped derail gubernatorial candidate Tom Gallagher and sparked unsuccessful efforts to pass reforms, it has again resurfaced. This time, it's Chief Financial Officer Alex Sink whose portfolio is under scrutiny even though she sought to do the exact opposite of what Gallagher did.
But Sink's well-intentioned effort of creating a blind trust has left the public somewhat in the dark. She should take steps to fix that problem. But the bigger burden is on the Legislature to enact reforms to guide statewide elected officeholders.
Sink, a Democrat and former head of Bank of America in Florida and board member for Raymond James Financial, was the CFO-elect in December 2006 when she decided to put an estimated $10 million in assets into a blind trust managed by personal friends. She was inspired, she said, by Gallagher, a Republican whom she would succeed as CFO. His bid for governor lost steam that year after revelations he had traded stocks in companies that he played a role in regulating or granting government contracts. The state ethics commission found probable cause Gallagher had violated conflict of interest laws, but the commission eventually dropped the charges because his ownership shares were so small.
In creating her trust, Sink said she relied heavily on pending legislation introduced by state Sen. Mike Fasano, R-New Port Richey. Unfortunately, the bill never passed.
The legislation would have required the state's executive officers — governor, lieutenant governor, CFO, attorney general and agriculture commissioner — to place their publicly traded assets into mutual funds or a blind trust managed by nonrelatives where the beneficiary could not control the assets. The proposal would require the politicians to disclose what assets were placed in the blind trust at inception, but it would shield the trust's holdings subsequently. The politician would have to report trust income on state financial disclosure forms. The ethics commission would maintain records of trust agreements.
Sink's trust agreement specifies she should not be informed or consulted about the sale, purchase, retention or other disposition of the assets in the trust. The trustees are overseen by a "trust protector," her husband's law partner, a relationship acceptable under Fasano's plan. While Sink did provide a list of assets that went into the fund — including shares of Bank of America, which has state government contracts — the list did not detail what other stocks were in two major investment accounts. Possible stocks include what she would have received as a board member at Raymond James, which her agency helps oversee. Nor did Sink publicly detail the assets' values at the time. Sink should make that public to adhere to the spirit of Fasano's bill.
Critics of blind trusts for politicians say they mask conflicts of interests by giving beneficiaries a way to claim neutrality on future votes or regulatory decisions when there is every likelihood the trust still contains much of the original assets. They contend full public disclosure of assets would be better.
But under Florida law, that would require well-heeled politicians to be constantly filing conflict of interest memos or abstaining altogether from regulatory actions on matters that might affect their portfolio. That's not in the public's interest, either.
A better, if imperfect, solution is Fasano's plan, which the Legislature should approve next spring. Removing politicians' control over their personal assets helps ensure their decisions are based in the public's interest, not their own, and allows officials to do the job they were elected to do.
The trustees of Sink's trust may well have sold her bank stock due to the collapse of the industry. For personal financial reasons, she must certainly hope so. She claims she doesn't know. And that's the way it should be.