In late 1991, pursuant to a less-than-fully-understood authorization by the Crawford and Otsego County Boards of Commissioners acting at an illegally closed meeting, Crawford County Board Chairman Robert McLachlan negotiated and signed (without further Board action) a contract selling the Crawford-Otsego public-authority landfill to City Management Corporation. Simultaneously, McLachlan negotiated (a) the sale of his private garbage-hauling firm to City Management for between $600,000 and $800,000, (b) a consulting agreement under which City Management would pay him $20,000 per year for five years, and (c) a "noncompetition agreement" under which City Management would pay him $12,000 per year for five years.[1]

In January 1992 and January 1993 McLachlan acknowledged to the Crawford County Board the existence of a relationship between himself and City Management which would constitute a conflict of interest with reference to any board action affecting City Management. However, in January 1994 and January 1995 he pointedly made no disclosure although explicitly requested to do so by other members of the board. This failure to disclose was supposedly justified by City Management's agreement in December 1993 to buy out the final three years of McLachlan's consulting contract for a lump-sum payment of $60,000.

In March 1996, after the CEAAG Research Committee released details of McLachlan's relationship with City Management as documented in Michigan State Police reports obtained under the Freedom of Information Act, Crawford County Prosecutor John Huss formally ruled that (1) "the financial relationship existing between Commissioner McLachlan and [City Management Corporation] placed him in conflict with his interest as a public official," (2) Commissioner McLachlan had acted in violation of law on 13 occasions (after 1993), and, applying an 1851 statute (1851 PA 156), (3) "Commissioner McLachlan should forfeit a total of $1,300 to the County of Crawford."

The CEAAG Research Committee agreed with Prosecutor Huss that McLachlan's several contracts with subsidiaries or affiliates of City Management Corporation constituted a prohibited conflict of interest. However, they did not agree with Prosecutor Huss concerning the law which applied to this conflict and the penalties and other consequences of the violation thereof.

The Research Committee was convinced that a 1968 statute (1968 PA 317) superseded the 1851 statute applied by Huss. If the 1968 statute applies, then it appears that (a) McLachlan's negotiation of the final sale contract to City Management in 1991 was in violation of law, (b) numerous other actions by McLachlan also were in violation of law, (c) the penalty on conviction for each violation is a fine of $100 and/or a jail term of up to 90 days, and (d) the County can take legal action to void the contract transferring the landfill to City Management. The last is particularly significant in light a $22 million suit filed by City Management against the counties, alleging breach of contract as a result of the failure of Crawford County's board and townships to ratify a City Management demand for a major increase in the number of counties which can be legally served by the landfill.[2], [3]

To insure application of the correct law in the determination of McLachlan's conflict of interest and its consequences, Rep. Allen Lowe, on behalf of members of the Research Committee, requested an opinion of the Michigan Attorney General. Emphasizing the clear language of 1968 Public Act 317, which imposes criminal penalties on a public official who is "a party, directly or indirectly, to any contract between himself or herself and the public entity of which he or she is an officer or employee," the Attorney General last week ruled that this act does apply to county commissioners and supersedes the 1851 law applied by Huss.[4]

Members of the Research Committee have provided copies of the Attorney General's ruling to members of the Crawford County Board of Commissioners, to Otsego County officials and to Prosecutor Huss, and have advised them of the implications, as outlined above.

Currently, the Research Committee is exploring and will discuss with federal officials the possible applicability to the McLachlan conflict of Section 666 of Title 18 of the United States Code, which provides for fines and/or imprisonment for up to ten years for "an agent of an organization, or of a State, local, or Indian tribal government, or any agency thereof" who "corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more," and imposes the same penalty on anyone who "corruptly gives, offers, or agrees to give anything of value to any person, with the intent to influence or reward an agent of an organization or of a State, local, or Indian tribal government, or any agency thereof, in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more."

Footnotes:

[1] Occasionally conflicting financial details of McLachlan's various agreements with City Management Corporation are taken from Michigan State Police reports of independent interviews with McLachlan conducted by various investigators.

[2] Separate legal actions by the Michigan DNR/DEQ and the county allege that City Management has illegally accepted solid waste from counties not eligible to use its Crawford County landfill.

[3] The provision of the landfill sale contract requiring that the counties (and townships) ratify changes in solid waste management plans demanded in the future by City Management is of dubious legality in that it involves (a) the transfer to a private party (City Management) of public responsibilities assigned by the Legislature to the counties and townships, (b) the infringement of one county board on the prerogatives of future county boards, and (c) the infringement of the county board on the prerogatives of cities and townships.

[4] State of Michigan, Frank J. Kelley, Attorney General, Opinion No. 6906, June 25, 1996.

For further information, contact the CEAAG Research Committee:

David Kneff (517-348-8580)
Norman Bancroft (515-348-2908)
Joseph Callewaert (517-348-2148)
Stephen P. Dresch (906-482-4899)