Three former public officials in Morrow County will each pay $2,000 to settle a state ethics complaint over their dealings with Amazon.

Investigators for the Oregon Government Ethics Commission say the officials sometimes failed to acknowledge they might benefit personally when they voted to award huge tax breaks to Amazon data centers in the region and to sell land to the company for more data centers.

The negotiated penalties are below what ethics investigators initially proposed the officials pay and far below the value of their connections to Amazon, according to the investigation.

The three officials served on the Port of Morrow or Morrow County commissions, elected bodies that approved agreements that advanced Amazon’s expansion. Each held a 20% stake in a fiber-optic company called Windwave Communications that provides connections for Amazon.

State investigators say Windwave’s deals with Amazon generated at least several hundred thousand dollars in revenue for the officials’ fiber-optic company. The ethics commission did not investigate Amazon, which says it acted appropriately in dealings with its vendors in Morrow County.

The Oregon Department of Justice is 18 months into a separate investigation into how public officials in Morrow County came to own Windwave, which had previously been owned by a nonprofit. That inquiry is continuing.

The Oregonian/OregonLive reported on the officials and their overlapping roles with Windwave and their public offices in 2022. The state investigations began shortly afterward.

Marv Padberg and Jerry Healy served on the port commission and Don Russell served on the county commission. All three have left office in the past two years.

The three former officials deny any wrongdoing in their settlement agreement, which goes before the ethics commission Friday for final approval. In a statement, they said they agreed to pay the penalties “because we no longer wished to use time, resources and energy on these issues.”

But a government accountability group said the officials breached the public trust and questions whether the penalties in this month’s settlement will deter similar behavior in the future.

“They’re really defiantly scoffing at the ethics laws. And so in cases like that, what does it amount to? A slap on the wrist,” said Kate Titus, executive director of Common Cause Oregon.

$245M in tax breaks

Morrow County is one of Oregon’s smallest, with just about 13,000 residents. But the community, 160 miles up the Columbia River from Portland, is home to several enormous Amazon data centers near the city of Boardman.

Local officials attracted the company, along with at least several hundred jobs, with $245 million in property tax breaks since 2018. Amazon’s Oregon data centers are full of computers cumulatively worth billions of dollars; the tax breaks largely exempt the machines from property taxes.

Padberg, Healy and Russell all voted to approve Amazon’s tax breaks and all stood to benefit personally from the deals, according to the ethics commission’s investigation. That’s because Windwave had already won contracts to provide fiber to Amazon and was likely to win more as the data centers expanded.

State law requires elected officials to disclose in public meetings when they have an actual or potential conflict of interest in a matter before them. But the law allows them to vote on deals where there is only a potential conflict, so long as they disclose the issue.

The three officials in Morrow County sometimes disclosed their connections to Amazon but failed to do so in several other cases, according to the state ethics investigation. They found Windwave won 14 contracts with Amazon during the period under investigation, from 2018 to 2022, and an additional five contracts before that.

The ethics commission concluded the contracts were worth at least $250,000 to each of the officials, according to records from the investigation. That’s the highest value possible for the purposes of assessing penalties related to ethics violations.

Danny Newman, a Portland attorney representing the three officials, said he understood that $250,000 figure to represent revenue, not the value of the contracts, as stated in the ethics commission’s investigation.

“If the matter had proceeded to hearing, we would have disputed that and shown that the alleged violations themselves did not result in any financial benefit to Windwave,” Newman said in an email to The Oregonian/OregonLive.

The three officials said in their statement that guidance from the ethics commission was inconsistent while they were serving as public officials and that they acted appropriately in their votes.

“We disagree with the commission on its interpretations of its rules here and believe that nothing we did violated the letter or spirit of the law,” they wrote.

Officials face more inquiries

As the ethics commission winds up its work, the state Department of Justice is continuing a separate investigation into how the officials acquired their stakes in Windwave. Padberg and Healy served on the board of a nonprofit called Inland Development Corp., which used to own the fiber-optic provider.

In 2017, Inland moved to sell Windwave to Padberg, Healy, Russell and another local official, longtime Port of Morrow Director Gary Neal. They, and a Windwave executive, ultimately purchased the fiber provider the following year in a deal valued at $2.6 million.

But the investigation by The Oregonian/OregonLive in 2022 found that sale price may have significantly undervalued Windwave by neglecting to account for its rapidly growing revenue and making other decisions that reduced the price the local officials paid — and in turn the proceeds the nonprofit, Inland, received from the sale.

That prompted the Department of Justice to look into Windwave’s sale. Spokesperson Roy Kaufmann said Tuesday that the department’s inquiry remains active.

“This is an ongoing and complex matter,” he said, giving no indication of when the Justice Department expects to complete its investigation.

Amazon said it has had no indication Oregon investigators are looking at the Seattle company in connection with its tax breaks and Windwave contracts.

“Amazon is committed to conducting our business in a lawful and ethical manner, including our operations in Oregon,” the company said in a statement. “We set a high bar for ourselves and our suppliers. Any suggestions to the contrary would be false.”

The ethics commission did investigate Neal, the former port director. The commission overruled its staff last year and dismissed investigators’ case against him. Neal had retired from the port three months into the four-year period during which the ethics commission had authority to investigate.

Last fall, ethics commission staff proposed a settlement with $5,000 penalties for Healy and Padberg and $2,500 for Russell. Susan Myers, the commission’s executive director — who investigated the case before being promoted to lead the agency — said the commission ultimately accepted smaller penalties in because it seeks settlements whenever possible.

“It is our practice to offer or negotiate a stipulated final order (a settlement) if the respondents are willing,” Myers said.

When it cannot reach a settlement, ethics commission staff presents a case to the full commission, which then weighs the allegations against factual disputes or mitigating factors introduced by the officials subject to a complaint. Myers said the ethics commission prefers to educate officials about state meetings law if it can.

“We do want to sanction unethical behavior, but education is one of our primary missions,” Myers said.

That’s a reasonable approach most of the time, according to Titus, with Common Cause Oregon. The state, she said, doesn’t want local officials walking on eggshells and worried about facing severe penalties because they lack expertise in laws governing public meetings and conflicts of interest.

But in some cases, Titus said, public officials may take advantage of the ethics commission’s leniency. She noted that the Morrow County officials continue to deny wrongdoing, notwithstanding the findings by the ethics investigators. So Titus said modest penalties may not be adequate to ensure others are following the law.

“I definitely think in this case it’s not enough,” Titus said.

-- Mike Rogoway covers Oregon technology and the state economy. Reach him at mrogoway@oregonian.com or 503-294-7699.

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