Board of Ethics

“Where People Count” 1000 Civic Center Drive, Niles, Illinois 60714 Telephone (847) 588-8000 ● Fax (847) 588-8051 ● TDD (847) 588-8059 Mayor Robert M. Callero Trustees MINUTES Kim S. Biederman James T. Hynes BOARD OF ETHICS Joe LoVerde Village Hall, Council Chambers Louella B. Preston October 15, 2009 – 5:00 p.m. Andrew Przybylo Alan Weel Village Manager A Special Meeting of the Board of Ethics was held on Thursday, October 15, 2009, at George R. Van Geem 5:00 p.m. at the Village Hall. Village Clerk Marlene J. Victorine The meeting was called to order at 5:05 p.m. by Chairman Joe LoVerde. Present: Also in Attendance: Trustee Joe LoVerde, Chairman George Van Geem, Village Manager Attorney Joseph Annunzio Scot Neukirch, Finance Director and Attorney Mike Siegel Treasurer Michael Fries Absent: Trustee Louella Preston Approval of Minutes No minutes for approval. Opening Statement Chairman LoVerde apologized for the last minute scheduling of this meeting and the absence of Trustee Preston. Issues come up that dictate the Board to meet. The Board must meet the requirements of postings and notice and it is unfortunate when all members can’t make it, but it is necessary, not intentional, to conduct the business of this Village. Chairman LoVerde announced that he has requested to be removed from the Finance Committee. In fairness to the Board of Ethics, he wanted to remove himself from the perception of being involved and having a dual role on another committee that may possibly make recommendations and changes that may come back to the Board of Ethics at some point. www.vniles.com  Board of Ethics Meeting, October 15, 2009 Village Investment Policies and Procedures Chairman LoVerde stated that one of the requests from the Board of Ethics was to discuss meeting with the Finance Committee in an open and public meeting to review the Village’s Investment Policy. The Village of Niles Investment Policy now only dictates the Treasurer. Chairman LoVerde assumes that the Village Manager, because of his financial background as a CPA, has some input when the Finance Committee meets and asked if they have designated people that make decisions on the investments. Scot Neukirch, Finance Director and Treasurer, responded affirmatively that this has been their practice and they do meet with the Finance Committee regarding purchasing investments. Chairman LoVerde asked if anyone else within the Village structure employee-wise, other than outside investment advisors, have any input on decision making and investments. Mr. Neukirch responded that historically the Finance Director, Village Manager, and the Finance Committee have been making the decisions. Chairman LoVerde stated that it is things like that, that they would like to see some changes in. Chairman LoVerde asked that when the Board of Trustees receives the monthly investment report, if, at some point, they could see the actual confirmations or receipts that support the fact that the funds are there. Mr. Neukirch responded that the annual audit confirms that. Chairman LoVerde suggested that for transparency and openness the supporting documents that actually show confirmation, either a brokerage statement or bank statement, that support the investment should be sent to the Chairman of the Finance Committee. Mr. Neukirch said he can add the bank statement. The Board of Trustees can decide whether they also need it. Mr. Van Geem asked if Chairman LoVerde is looking for the trade confirmation on an actual purchase of an investment or a sale of an investment. Chairman LoVerde replied that includes anything that clearly indicates and supports the trade and the value of the CD or a bank statement, even for their holdings. Chairman LoVerde is making suggestions for discussion with the Finance Committee and would like Mr. Neukirch’s and Mr. Van Geem’s feedback on whether that would require too much paperwork. Mr. Neukirch stated that he puts together the Treasurer’s report by consolidating all the different bank statements we have on a monthly basis. In the General Fund, the majority of the holdings are on our Amalgamated statement and that would be easy to supply. Mr. Neukirch thought it was a good idea to provide the backup to the Finance Committee and something they could certainly do. Chairman LoVerde asked if the investment advisors listed in Exhibit A of the Investment Policy have changed since 1999. Mr. Neukirch responded that the Village doesn’t have any investment advisors for the non-pension fund investments. He wasn’t sure where the list from Exhibit A originated from. Gary Karshna from Capital Gains was probably on the list because he was the current investment advisor for the pension funds, which are separate. The Village is not employing Capital Gains for this Investment Policy. 2  Board of Ethics Meeting, October 15, 2009 Chairman LoVerde summarized by saying he would like to see an open meeting with the Finance Committee to update and revise the Investment Policy. Mr. Neukirch stated they addressed updating the 10-year Policy at the first meeting of the new Finance Committee, along with getting input from the new members on the General Fund investments. Attorney Siegel suggested that Mr. Neukirch get the Finance Committee’s input on the monthly form of reporting to the Board of Trustees. Attorney Siegel thinks, at some point, the Practices and Procedures Subcommittee is going to ask for this Investment Policy to see if the policies and procedures for investments are being followed and that the paperwork and reporting is operating as intended. He suggested incorporating the Code of Ethics that the Village is going to adopt into the investment policy. Attorney Siegel noted that the Village received an award for good accounting and reporting for their Annual Financial Report but questioned whether the report from the auditors is certified. Mr. Van Geem responded that it is a certified, full-fledged audit, an unqualified opinion required by State Statute. He added that this audit is not designed to detect fraud, but is designed to do a statistical sample of the Village’s transactions in order to determine that there are no material misstatements of financial information. The auditors do limited testing of controls and substantive testing of all major transactions. Attorney Siegel suggested that the Finance Committee look at exactly what the accountants are and aren’t doing and decide if it’s appropriate. The Finance Committee should also make sure the investment policy is appropriate. For example, have the accountants reviewed the investment ordinance, investment policy, Finance Department policies and procedures and whether each of these items are being followed. Other Business Chairman LoVerde stated that the Practices and Procedures Subcommittee requested the Board of Ethics to review and approve their “Mission Statement”. This will be addressed at the next regular meeting of the Board of Ethics on November 5, 2009. Chairman LoVerde stated that the Ethics Board should make sure that the procedure rules set out are consistent with the Ordinance adopted for the role of the Subcommittees. Executive Session Motion to move to Executive Session was made by Attorney Siegel, seconded by Attorney Annunzio at 5:20 p.m. to discuss Hotline complaints. All concurred. The meeting reconvened to Regular Session at 5:40 p.m. Present were: Chairman LoVerde, Attorney Siegel, Attorney Annunzio, and Michael Fries Also present: Village Manager George Van Geem Report from Village Attorney on Hotline Complaints Attorney Annunzio reported on the Hotline Complaint addressed in Executive Session. He stated that it is his understanding that the complaint is going to be withdrawn. In order to do this properly, a set of procedures will have to be put into place to allow the complaint to be 3  Board of Ethics Meeting, October 15, 2009 withdrawn. Attorney Annunzio asked the complainant for a written withdrawal as the basis to procedurally withdraw the complaint. The Village Manager stated he would do that. Mike Fries agrees that the Board of Ethics needs to adopt procedures for complainants to withdraw complaints, and procedures to identify where a complainant should go if there is a complaint against a member of the Board of Ethics. He thinks that the Village Attorney should advise the complainant that the matter is not being acted upon because he does not believe there has been an ethical violation alleged. Mr. Fries stated that is his opinion, for the record. Chairman LoVerde asked if there is a legal requirement that if someone files a complaint and then chooses on their own to withdraw the complaint, do we need a formal written procedure for this. Attorney Siegel stated that this needs to be discussed because he can envision a situation where somebody files an ethics complaint, somehow there is pressure put on that person from a third party, and even if somebody wants to withdraw a complaint that the Board of Ethics finds some support for, he’s not sure that the decision should always be left to the complainant. Once the Board of Ethics is on notice that there is a problem, Attorney Siegel thinks we have a duty to investigate it. Attorney Annunzio agreed and stated that at some point during the investigation it takes on a life of its own and whether the complainant wants to drop it or not it’s too late. We also need to think about these procedures, is there going to be mention for frivolous complaints. Attorney Annunzio asked what happens if we get a weekly complaint from someone. Mike Fries stated that comes with the territory. Chairman LoVerde stated that he recalls reading an ethics code hotline procedure administered at another municipality that there is a disciplinary action for a hotline complaint that turns out to be false and maybe damages someone’s credibility. So, when we are revising these procedures that should also be considered. For example, if an employee says something about his boss that is proven to be not true, does someone that filed a hotline complaint just walk away from the employee relationship that they have with the Village. Attorney Siegel stated that we’d have to look at whether it is intentional or what the standard should be. It is intentionally false, is it malicious? You don’t want to do something that stops people in good faith from coming forward. Attorney Annunzio stated that we should just let the complaints come in and the investigation will determine what we do with these complaints. If somebody sends a frivolous complaint every week that goes nowhere, at some point, the complaint itself becomes a possible ethics violation. The Board of Ethics should look at the Ethics Code to see if it has something in it about using the hotline as a retaliatory instrument. Attorney Annunzio stated that in normal practice that since it is in Executive Session it stays in Executive Session and nothing is ever brought out until after an investigation is made as to the veracity of the complaint. Unfortunately we can’t stop someone who makes a complaint to the hotline and then announces it to the newspaper. 4  Board of Ethics Meeting, October 15, 2009 How is the complaint handled if it is against one of the members of the Board of Ethics? Chairman LoVerde asked the Board’s permission to work on these issues, because they seem to be of major importance in the procedural end of it. Attorney Annunzio thinks the system is working because we have been presented with a problem we would have never considered at the time of writing the original procedures, and the procedures themselves allow us to create procedures when the time comes when they become necessary. Attorney Annunzio stated that he will write a set of procedures for discussion on these matters and forward to the Board for review and discussion. Next Meeting The next meeting is scheduled for November 5, 2009, at 6:00 p.m. Motion to adjourn was made by Attorney Siegel and seconded by Attorney Annunzio. All concurred and the meeting adjourned at 5:50 p.m. Marlene J. Victorine Village Clerk 5