Kitzhaber's Office Bent State Ethics Standards to Suit First Lady Cylvia Hayes, Records Show

Gov. John Kitzhaber's then-chief of staff and top lawyer last year tried to stop First Lady Cylvia Hayes from running her private consulting business out the governor's mansion and from continuing to use her title for paid speaking engagements, records recently released to WW show.

Hayes would not abide by those restrictions and Kitzhaber's staff backed down, records show, rewriting ethical guidelines so Hayes could continue to use Mahonia Hall and the first lady title for her personal business.

The documents reveal a different version of events from the narrative Kitzhaber has presented regarding Hayes' work in his office.

The records were released late Friday to WW under the state's public records law. The release follows an Oct. 8 WW cover story about Hayes' private consulting business. The story reported Kitzhaber's staff had struggled with potential ethical problems created by Hayes' use of her public position to drum up private contracts for herself. (The story was based in large part on records WW had requested from the governor's office starting in July.)

Under state law, Kitzhaber is responsible for making sure people in his office are not involved in conflicts of interest or are using their public positions for personal gain.

Kitzhaber's office has told WW that Hayes is a public official under state ethics laws. Kitzhaber is now trying to back away from that position. His office today asked the Oregon Government Ethics Commission for an opinion as to whether Hayes fits the definition of public official.

Hayes serves as a policy adviser to Kitzhaber. While she is not paid by the state, Hayes maintains a desk in the governor's office and works as part of his staff.

Although both Kitzhaber and Hayes have emphasized the volunteer nature of her advisory and first lady roles, ethics laws say the fact that she is unpaid is irrelevant. "Many public officials are volunteers," says the Oregon Government Ethics Commission's Guide for Public Officials.

On Oct. 8, WW reported Hayes has pushed for the state to change its economic and energy policies while accepting payments from private advocacy groups seeking to influence those same policies.

In some cases, Hayes solicited private consulting contracts with groups she was already working with in her public role as first lady and adviser to Kitzhaber. Records show she has routinely used her title as first lady and as adviser to Kitzhaber when making paid appearances at the behest of her private clients. 

State ethics law prohibits public officials from using public resources for personal benefit. That would include Mahonia Hall, the governor's mansion owned by the state.

Kitzhaber, seeking re-election to a fourth term, has defended his actions, saying his office held Hayes to the highest ethical standards. 

On Oct. 10, the governor appeared at a Portland City Club debate against his Republican opponent, state Rep. Dennis Richardson (R-Central Point).  

Richardson asked Kitzhaber whether he would call for a special prosecutor to look into allegations against Hayes. Kitzhaber said no investigation was necessary, adding that his office had set up "protocols, guidelines and legal reviews” to make sure Hayes was following ethics laws. 

"We welcome whatever scrutiny people want to give," Kitzhaber said at the debate. "We have not violated the law; we have simply given a modern professional woman an opportunity to continue her career. And in 2014, it seem ludicrous to conclude that a woman, who has had a successful career long before she met me, and long before she became first lady, should be expected to give up her career and her life’s work because she is married—hopefully soon—to a governor.” 

But records show Kitzhaber did more than simply encourage Hayes to continue with her career; he gave her free access to the inner working of the governor's office and allowed her to land private consulting deals based on contacts she developed there.

The newly released records show how Kitzhaber's office shaped the standards applied to Hayes.

In 2013, Hayes signed consulting contracts worth $85,000 with three advocacy groups with issues before the governor's office: Demos, Resource Media, and the Energy Foundation. That sum more than tripled the income Hayes reported on her 2012 tax return.

Hayes' contracts, signed between March and June 2013, all posed potential conflicts of interest. Hayes had worked with the Energy Foundation and Demos in her role as first lady as adviser to Kitzhaber, and Resource Media was promoting many of the same issues Hayes was advocating in her public role.

In July 2013, Kitzhaber's then-chief of staff, Curtis Robinhold, and his general counsel, Liani Reeves, pushed to have Hayes make full disclosure of these potential conflicts, as the law requires.

Records show that on July 23, Robinhold and Reeves provided Hayes with a response to her notification that her contracts could present a potential conflict of interest.

The two Kitzhaber staff members wrote out directives that Hayes was to follow to prevent her from violating conflicts of interest laws.

"You should not engage in any consulting activities for [clients] using State supplies, facilities, equipment, employees, records or other public resources," Robinhold and Reeves wrote. "This includes use of government buildings such as conference rooms and the state-owned Mahonia Hall."

Robinhold and Reeves also tried to curb Hayes' use of her title of first lady in her consulting business. For example, in their July directive regarding her contract with the advocacy group Demos, they wrote to Hayes:

"You should not use your 'First Lady' title in the work that you are doing for Demos. In your outreach to government officials, stakeholders, business leaders, etc. or in conjunction with your organizing, information sharing, fundraising, public speaking or writing activities in your work for Demos, you should identify yourself as Cylvia Hayes, 3E Strategies and consultant for Demos, and you should not refer to your title or position as 'First Lady.'" (3E Strategies is Hayes' consulting company.)

Kitzhaber spokeswoman Rachel Wray tells WW the July directives were "drafts." 

But that doesn't fit with what the records show. The directives are not labeled as drafts, and both Robinhold and Reeves signed and dated them. Records show, however, Hayes did not. 

That forced Robinhold and Reeves to craft new guidelines Hayes would accept.

"Cylvia asked for clarification on different aspects of the forms, specifically related to her part-time residence at Mahonia and the First Lady title," Wray tells WW. "That clarification is reflected in the final versions."

More than a month later, Robinhold and Reeves then produced a second set of conflict guidelines dated Aug. 29. Those revised guidelines dropped the prohibition on using Mahonia Hall for work with her existing clients—and the prohibition on Hayes using her title.

"You may include your 'first lady' title in a biographical profile associated with your contract work already obtained," they wrote in the Aug. 29 document. "You should keep a clear distinction between when you are performing work related to your paid position with Demos and when operating as First Lady of Oregon," they wrote.

Hayes signed the Aug. 29 documents that relaxed the ethical standards Robinhold and Reeves originally sought. Records show, however, Hayes continued to advocate on behalf of clients using the first lady title and without disclosing her work as a paid consultant.

Robinhold, who left Kitzhaber's office earlier this year, was traveling and unavailable for comment. Reeves assisted Wray in responding to WW's questions about the conflict forms.

WWeek 2015