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Lawmaker Raises Conflict of Interest Concern in Governor's Office

Updated: 12/12/2013 7:27 AM
Created: 12/11/2013 7:19 PM KSTP.com
By: Tom Hauser

As Governor Dayton's chief of staff, Tina Smith is one of his most trusted advisors. Since August, she's also served as chairperson of the Destination Medical Center Corporation (DMCC). 

It's an eight-member non-profit corporation overseeing a huge public-private development in the Rochester area. It was lobbied for heavily by the Mayo Clinic during the last legislative session. Now, it's being guided by the chief of staff for the governor who signed the legislation into law.

"I find your acceptance of her dual roles to be troubling and a massive ethical concern for the state," GOP Representative Peggy Scott (R-Andover) wrote to Governor Dayton this week.

Scott says the DMCC will oversee the spending of $585 million in public money as part of an eventual $6 billion development. She says the DMCC will likely seek additional legislation regarding everything from environmental policy to labor and employment law. It's possible they could also seek additional funding from the legislature and governor. "It is almost impossible to conjure a scenario where Ms. Smiths roles do not create an ethical conflict for the governor's officer or the DMCC," Scott says in her letter.

The governor's office dismisses the criticism as coming from "some Republican legislators, either bored or looking for attention." Bob Hume, the governor's deputy chief of staff, says in a statement the governor appointed four members to the board as allowed by the legislation. "Before appointing Ms. Smith to the Board of the Destination Medical Center, the Governor's General Counsel reviewed the relevant statutes and requirements, and concluded that there was no legal impediment to such an appointment," Hume said in the statement.

Scott also brought her concerns to Jim Nobles, the Minnesota Legislative Auditor, who ultimately sided with the governor. Again, his opinion is based primarily on a state law written in such a way to permit the governor to appoint members to represent his interests. In a letter to Scott, he reached this conclusion: Based on the state law that mandated the composition of the...board, Ms. Smith, the Governor's Chief of Staff, does not have a conflict servings as...board chair."

However, he does acknowledge to Scott "there is a basis for your concern" based on previous cases and a "model policy" written by the attorney general's office for avoiding conflicts of interest on non-profit boards.  In a phone interview, Nobles said after reviewing the situation he's convinced Smith "wears one hat," the one the governor gave her to represent his interests.

Scott isn't convinced Smith can represent the DMCC and state taxpayers equally.  "There may be a time budgetarily and in the policy realm where she's going to face some very tough decisions," Scott says, "where her loyalties are probably going to have to be divided."

Larry Jacobs of the Humphrey School of Public Affairs at the University of Minnesota agrees, saying it could be difficult to be seen as having a close relationship with the Mayo Clinic. "How's she going to be able to do both jobs?" Jacobs wonders.  "Will she have the time? Will she be able to treat all the other interests in Minnesota in the same fair and equal way?"

Smith was elected chairperson at the first DMCC board meeting in August and has presided over several meetings since then. In addition to the state money, the Mayo Clinic will also invest $3.5 billion in the project, along with $2 billion from private investors and $128 million from local governments who are also represented on the board. 

Hume, in his statement from the governor's office, says the governor "believes a representative of his administration on the board, to watch over the state's sizable investment, and to work with other stakeholders to assure the maximum benefits to the people of Rochester and the entire State of Minnesota, is highly desirable." 

Click here to read the legislative auditor's report.

Statement from Deputy Chief of Staff Bob Hume:

“It has become clear that some Republican legislators, either bored or looking for attention, are sending the Governor letters, which reach the press as soon as, or even before they reach him. Now, over four months after the Governor made his appointments to the Board of the Destination Medical Center, Representative Scott has found the time to express her displeasure. She is entitled to her opinion about the Governor’s appointments; however, they are the Governor’s prerogative, not hers.

“Before appointing Ms. Smith to the Board of the Destination Medical Center, the Governor’s General Counsel reviewed the relevant statutes and requirements, and concluded that there was no legal impediment to such an appointment.

“Representative Scott’s claims of an ‘ethical conflict’ or a violation of ‘duty of loyalty’ have no validity whatsoever. Ms. Smith was at the very top of the Mayo Clinic’s recommendations for appointment to the Board. After the Governor appointed her, the other Members of the Board made their own, independent decision to unanimously elect her their Chair.

“Unlike Representative Scott and most other Republican legislators, the Governor does not see a problem with a partnership between a non-profit entity, like Mayo, and state government. In fact, he believes a representative of his administration on the board, to watch over the state’s sizeable investment, and to work with other stakeholders to assure the maximum benefits to the people of Rochester and the entire State of Minnesota, is highly desirable.”


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