Pecuniary Interest FAQ 1
What laws govern public officials in ethical matters?
The state ethics code applicable to local public officials, found in Wis. Stat. § 19.59, establishes minimum standards of ethical conduct that prohibit local public officials from using their public office to benefit or enrich themselves, their immediate families, or organizations with which they’re associated.
The state ethics code prohibits local public officials from engaging in four types of conduct:
(1) Using their office to obtain financial gain or anything of substantial value for the private benefit of themselves, their immediate families, or organizations with which they’re associated.
(2) Receiving anything of value if it could reasonably be expected to influence the local public official’s vote, official action or judgment, or could reasonably be considered a reward for any official action or inaction.
(3) Taking official action substantially affecting a matter in which the official, an immediate family member, or an organization with which the official is associated has a substantial financial interest or using their office in a way that produces or assists in producing a substantial benefit for the official, an immediate family member, or an organization with which the official is associated.
(4) Offering or providing influence in exchange for campaign contributions.
The underlined terms above are statutorily defined. “Organization” is broadly defined and includes any “corporation, partnership, proprietorship, firm, enterprise, franchise, association, trust or other legal entity other than an individual of body politic.” Wis. Stat. § 19.42(11). An official is “associated” with an organization when they or a member of their immediate family is an officer, director, or trustee; owns at least 10% of the organization; or is an authorized representative or agent. Wis. Stat. § 19.42(2).
Municipalities may enact a local ethics code that is more stringent than the state ethics code. It cannot be less stringent. Local public officials should be familiar with the local ethics code, if their municipality has adopted one.
Local public officials, and municipal employees, should also be aware of the pecuniary interest prohibitions in Wis. Stat. § 946.13. With limited exceptions, § 946.13 prohibits local public officials from having a private financial interest in public contracts in two manners. Section 946.13(1)(a) prohibits public officials and employees, in their private capacity, from negotiating, bidding for, or entering into a contract in which the official or employee has a direct or indirect private financial interest, if the official or employee is authorized or required to participate in their capacity as official or employee in the making of that contract. This prohibition does not depend on whether the official or employee takes action; what matters is that they are authorized to take action. Therefore, abstention from voting or refraining from taking action regarding the contract will not prevent a violation.
Section 946.13(1)(b) prohibits officials and employees from participating in the making of a contract in their capacity as official or employee or exercising discretion regarding a municipal contract, if the official or employee has a direct or indirect financial interest in the contract. This prohibition requires an affirmative action from the official or employee for a violation to result. Therefore, abstaining from voting or taking other action relating to the contract will prevent a violation.
Violation of § 946.13 is a Class I felony and it is a strict liability statute. That means an official or employee does not need to intend to violate the statute; an inadvertent violation can still result in criminal liability.