Asking for trouble

August 05, 1992

State School Superintendent Nancy S. Grasmick's resignation from the board of Blue Cross and Blue Shield of Maryland is entirely appropriate. As the State Ethics Commission determined, there are potential conflicts between her duties as a state official and those as a director of the state's largest health insurer.

The resignation occurred at the time state regulators and congressional investigators are asking tough questions about the management and financial condition of the Maryland Blues. Even though there may be no connection between these concerns and Dr. Grasmick's resignation, the appearance of linkage is hard to avoid.

An appearance of conflicting interests is almost inescapable when state officials sit on boards of corporations and non-profit groups. Government looms large in our society. The state regulates virtually every profit-making group one way or another. Having state officials on their boards creates real conflicts, particularly if the state official periodically uses or appears to use his or her government position to run interference for the company.

The appearance of conflict is serious, and it is for this reason that Robert A. Pascal's membership on the Baltimore Bancorp board is unsettling. As Gov. William Donald Schaefer's appointments secretary, Mr. Pascal's potential for real conflict is great. He has access to the highest levels of state government. He can influence state banking policy through his advice to the governor. Although the State Ethics Commission reviewed his situation last year and suggested certain precautions be taken to avoid conflict, we do not think it is appropriate for Mr. Pascal to continue serving on the banking company's board.

While the conflicts for government officials sitting on the boards of profit-making corporations are obvious, they exist for non-profit groups as well. The Baltimore Symphony Orchestra receives a state appropriation every year. It also obtains revenues by performing for groups of public school children. When times are tough, the symphony can use its government board members to ensure that its state appropriation and youth concerts continue. Is that fair to other non-profits who may not have the same access but offer equally laudable programs?

We believe it is a bad practice to have government officials sitting on boards of directors of profit-making corporations. If government officials want to sit on corporate boards, they can resign their government positions or wait until they return to private life.

Membership on boards of non-profit groups should be decided case by case. Governor Schaefer, the mayor and county executives should admonish their department heads and other top officials to seek guidance from their ethics commissions before they accept appointment to non-profit boards. Prior approval is one way to avoid actual conflicts or even the appearance of a conflict.

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