We can learn two important lessons from the recent Pennsylvania Turnpike pay to play scandal.  The first of these lessons is straightforward, but important:  beware of providing benefits to public officials who can influence contracting or regulatory decisions impacting your company.  The second—and less intuitive—lesson, which has been lost amidst the furor over the scandal, is that compliance with gift and campaign finance rules alone may not always be sufficient to protect you and your business.

The Pennsylvania Turnpike scheme, which resulted in criminal charges filed against eight public officials and private sector individuals, involved a former Democratic Floor Leader of the State Senate, leadership of the Pennsylvania Turnpike Commission, and corporate executives of two private companies, among others.  The grand jury’s findings provide significant insight into the alleged details of the scheme.  In short, the officials from the State Senate and the Commission allegedly collaborated to regularly solicit campaign contributions and gifts from consultants and others doing business before the Commission and steered contracts toward responsive donors.

Some of the firms viewed the political contributions to be “part of their marketing budgets,” “something that we need to do in order to be able to pursue these type[s] of projects.”  Others, perhaps more cognizant of the optics of the donations, “believed it to be the ‘800 pound gorilla in the room that no one wanted to talk about’ and the key to getting work with the Turnpike.”

The first lesson to learn from the Turnpike scheme is that businesses should be wary of requests from public officials who can influence contracting decisions.  If your marketing staff are writing off campaign contributions as business expenses or if your client development staff are under the impression that providing expensive meals, gifts, trips, and tickets to public officials is the gateway to obtaining contracts, take care.  There is sometimes a fine line between acceptable business practices, pay-to-play law violations, and outright bribery.  The Turnpike scheme reminds us to monitor business development practices to ensure that what started with acceptable activity does not slide across that line.  The business and reputational impact for a company caught up in a scandal can be significant, even aside from serious repercussions for those directly involved.

The second, and somewhat subtler, lesson of the Turnpike scheme is that straightforward gift rule compliance may not be enough to protect a business.  Although some of the alleged details of the Turnpike case are outrageous, a gift or contribution need not be excessive in order to be illegal.  A gift or political contribution to a public official could be of a permissible value and be appropriately reported, yet still lead to criminal penalties.

Why?  For business professionals, it may be useful to consider that an otherwise permissible gift can become illegal if the intent in giving the gift is improper, such as giving a gift to influence a public official’s actions.  The takeaway for compliance professionals is this:  merely checking to ensure that a gift or political contribution is within gift rule limits, or not given during the legislative session, or reported properly on a lobbying disclosure form, or that it meets any other standard compliance requirements may not be enough.  If the gift or contribution, otherwise permissible, is, or appears to be, given to influence the actions of a government official, there is a real risk of unwanted scrutiny and perhaps even criminal prosecution.  It is also vital to understand the nuance of the relationship between your company and the public official and anticipate problem areas.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Kevin Glandon Kevin Glandon

Kevin Glandon is an associate in the firm’s government affairs, litigation, and white collar defense and investigations practice groups.  Glandon advises a wide range of clients regarding the Federal Election Campaign Act and FEC regulations; state and SEC pay-to-play restrictions; federal and state…

Kevin Glandon is an associate in the firm’s government affairs, litigation, and white collar defense and investigations practice groups.  Glandon advises a wide range of clients regarding the Federal Election Campaign Act and FEC regulations; state and SEC pay-to-play restrictions; federal and state campaign finance, gift, and lobbying laws; and U.S. House and Senate ethics rules.