SALEM — The Oregon Government Ethics Commission on Friday voted 7-to-1 to deny a proposed settlement in which former Gov. John Kitzhaber agreed to pay $1,000 to resolve ethics complaints that he and first lady Cylvia Hayes used their public positions for profit, failed to disclose conflicts of interest and inappropriately accepted gifts.

Kitzhaber on Wednesday admitted he violated state ethics laws on four occasions and said he did so unintentionally. The former governor said he did not disclose a conflict of interest related to Hayes’ paid consulting contracts based on the advice of his attorney at the time.

Kitzhaber said he was surprised by the commission’s decision, because ethics commission staff members had proposed the terms of the agreement. He had made no further comment as of 12:30 p.m. Friday.

News of the proposed settlement earlier this week spawned criticism that the penalty was too lenient on Kitzhaber’s missteps during his role as the state’s highest elected official.

Several ethics commissioners said they wanted to require Kitzhaber to pay a more severe fine given the former governor’s high-profile position. Accepting the settlement could threaten the legitimacy of the watchdog agency, they asserted.

“That is really troubling to me that we are excusing the behavior of the highest official of our state because he sought counsel,” said Commissioner Charles Starr.

“I think a larger fine is necessary for our reputation as a commission … because anybody serving at the highest level has a greater responsibility to the public.”

Commission Chairman Dan Golden was the dissenting vote in the rejection of the settlement. He said the $1,000 sanction was appropriate, based on the commission’s formula for calculating fines. Kitzhaber had no prior ethics violations, which factored into the recommended penalty, said Ron Bersin, commission executive director.

The proposed settlement “treated this former governor like we do other officials at a higher level,” Golden said. “There is no amount that addresses the loss of credibility and the things associated with the fall of this public figure.”

Friday’s denial means that ethics investigators will write a report on the findings of their probe of the allegations. Once submitted to the commission, the report becomes a public record. Settlement negotiations could continue simultaneously.

The proposed settlement, which Kitzhaber signed, stated that he violated Oregon law four times by benefiting from frequent flier miles he accrued from state travel between 2011 and 2013 and failing to disclose conflicts of interest related to Hayes’ consulting company in 2013.

The company, 3E Strategies, received paid consulting contracts from 2011 to 2013.

In a statement Wednesday, Kitzhaber said he accepted full responsibility for the violations.

“I apologize to Oregonians for failing to disclose a potential conflict of interest, although the ethical violations at issue were wholly unintentional,” Kitzhaber said.

“In the case reviewed by the Ethics Commission, I did not perceive a conflict of interest because I understood the work that Ms. Hayes was doing for various non-profit organizations was not directed at trying to shape or influence state policy but, rather, to educate people regarding the issues to which she had committed her professional career.”

Kitzhaber argued that he also received advice from his attorney that he did not need to disclose a potential conflict.

Ethics Commissioner Alison Kean said she would like to see evidence of that legal advice, which had not been revealed to date as part of the investigation.

The commission voted unanimously in July to pursue an official investigation of the former governor and his fiancée.

The agency in February 2015 had suspended a preliminary review of three complaints of alleged ethics violations against the couple, triggered by pending state and federal investigations.

Kitzhaber and Hayes had been under criminal investigation for more than two years after Willamette Week reported the first lady may have used her position to win several consulting contracts. The scandal eventually prompted Kitzhaber to resign from office in February 2015.

The commission resumed the ethics review in late June after the U.S. Attorney’s Office announced no criminal charges would be filed against the couple. The state Department of Justice abandoned its investigation of the couple because its statute of limitation had expired during the federal probe.

Even though Hayes was an unpaid adviser in Kitzhaber’s office, she and other volunteers are still subject to state ethics law.

Disclosures at the time showed Hayes used a desk, office and computers at the Capitol, according to a report by The Oregonian. Complaints further state that Hayes filed expenses with the state, advised on energy policy related to her environmental consulting business, and had staff from the governor’s office make her travel arrangements. She benefited from receiving consulting contracts as a result of her public office, according to the October 2014 complaint. An Oregon Business Council grant paid $35,000 to give Hayes her own spokesperson while Kitzhaber was promoting the council’s interest in the Oregon Business Plan, the complaint states.

Paris Achen

Portland Tribune Capital Bureau

503-385-4899

email: pachen@portlandtribune.com

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