An Elected Official's Guide to Ethics & Conflicts of Interest

When I talk to newly elected officials, I always start with the same reminder: Congratulations! And welcome to a higher standard.

Being elected to a municipal governing board comes with legal responsibility and ethical commitment. In the state of North Carolina, our General Assembly makes those expectations very clear with mandatory ethics training for all municipal officials and a municipal code of ethics.

Ethics
North Carolina law requires elected municipal officials to complete two hours of ethics training within the first 12 months of taking office.¹ At the League, we offer both on-demand and in-person ethics training through the Advancing Municipal Leaders (AML) program. The League’s attorneys conduct these trainings, and we focus on four core duties:

1. The duty to act with a public purpose. Every vote, every policy, every decision has to serve a public purpose. If any action taken by you or your governing board primarily benefits a private individual or business, you’re in dangerous territory.
2. The duty to vote. The rule is simple: Board members must vote... unless there is a conflict of interest.²
3. The duty not to accept private benefit for public action. In most cases, you may not receive a direct benefit from contracts³; you may not accept gifts or favors from vendors doing business in your town⁴; doing so can result in criminal penalties.⁵
4. The duty to act transparently. This is the foundation of trust between local governments and their constituents. All municipal boards must comply with the Open Meetings Law and Public Records Law.⁶

Mandatory Code of Ethics
Every town must adopt a local code of ethics. At minimum, the code should address an official’s duty to obey the law, uphold the integrity and independence of the office, avoid impropriety, faithfully perform official duties, and conduct public business openly.⁷ Adopting a code is not the finish line; it’s the starting line. Municipal boards should revisit and revise their code of ethics as modern issues appear and new members join the board. The League is happy to review your municipality’s code of ethics and provide suggestions.

Conflicts of Interest
Conflicts of interest are one of the most common ways that well-meaning officials end up in hot water.

A conflict arises when an official has a financial or personal interest in the matter under consideration.
Sometimes it’s obvious: an official’s spouse stands to profit from a contract, for example.

But oftentimes it’s less clear. Most conflict-of-interest violations don’t happen because someone is trying to be corrupt. They happen because someone didn’t recognize the conflict soon enough.

That’s why officials should familiarize themselves with several key North Carolina statutes:

• G.S. § 160A-75
  Requires members to vote, but allows them to be excused when they have a financial interest or when the matter involves their official conduct.
• G.S. § 14-234.3
  Prohibits participation in or voting on contracts with nonprofits with which the official is associated.
• G.S. § 14-234(b1)
  Prohibits participation in or voting on contracts in which the official or their spouse derives a direct benefit.
• G.S. § 160D-109(a)
  Bars voting on legislative development regulation decisions when the official has a direct, substantial, and readily identifiable interest. This includes rezoning petitions and text amendments involving close family, business, or associational relationships.
• G.S. § 160D-109(d)
  Applies to quasi-judicial proceedings and prohibits participation when the official has a fixed opinion before the hearing, has undisclosed ex parte communications, has a close relationship with an affected party, or has a financial interest in the outcome.

Final Thoughts
Ethics violations and conflicts of interest can unravel a board meeting fast. They can disrupt proceedings, trigger complaints and invite public scrutiny. In some cases, board actions can be challenged or invalidated.

And depending on the violation, consequences may include civil liability or criminal penalties.

But even when there’s no lawsuit and no prosecution, reputational damage can be lasting, not just for the individual official, but for the entire municipality. Public trust is hard to build and easy to lose.

Key Takeaways

1. Ask yourself: What is the public purpose here? Does the answer make you uncomfortable? If so, ask your town’s attorney to evaluate the action from a public purpose perspective.
2. Be cautious if there’s a chance you might benefit from a contract being voted on by your board, or if a current or potential vendor wants to give you a gift or favor.
3. When a potential conflict comes up, disclose it early and ask for guidance from your town’s attorney, as well as the League’s attorneys, before you act.

1 See G.S. § 160A-87.
2 See G.S. §160A-75; see also G.S. §160D-109 (allowing members to unilaterally recuse themselves from voting where conflicts of interest exist are alleged to exist in the context of land use matters).
3 See G.S. §14-234. 
4 See G.S. §133-32.
5 See G.S. §14-217; see also G.S. §14-234.1.
6 See Chapter 143 (Open Meetings Law) and Chapter 132 (Public Records Law) of the N.C. General Statutes. 7 See G.S. §160A-86.