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3/4/2003
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Where's The Line?

CIOs and other execs are questioning whether relationships with vendors can be too cozy

In the post-Enron era, CIOs and other executives who influence technology-buying decisions may want to think twice before accepting vendors' invitations to enjoy lavish dinners or rounds of golf, even if such perks have long been considered accepted business practices. They're walking a fine ethical line in today's highly scrutinized business environment, and those who cross it in violation of a company's policy or the law could land in big trouble.

The point was driven home last week when the New York State Ethics Commission filed civil charges against Christine Forman, VP and CIO at Nassau Health Care Corp., as well as several other company executives, for accepting gifts and hospitality from technology vendors beyond what's allowed by state laws. The 1,500-bed public hospital system operates the Nassau University Medical Center in East Meadow, N.Y., as well as an extended-care facility in Uniondale, N.Y., and nine community health centers. It receives about $60 million a year in county aid.

The Ethics Commission says that of seven Nassau Health executives named in the complaint, Forman received the most in illegal hospitality--more than $4,000 worth. Nassau Health president and CEO Richard Turan is charged with receiving about $700 in illegal gifts, including tickets to a New York Islanders hockey game. Vendors footed expenses related to trips by the Nassau Health execs to their sites, both in and out of state, to view their software and also paid for lunches and dinners at various restaurants.

RICHARD TURAN PHOTO

Nassau Health Care chose technology from Eclipsys, but not because of any gifts execs received, CEO Turan says.
New York state law dictates that under most circumstances execs at publicly funded institutions can't take gifts or accept coverage from vendors for expenses worth more than $75. Those who do can be fired and face fines of up to $10,000 per violation as well as misdemeanor criminal charges. Following a hearing, the Ethics Commission can levy the fines or, if it deems acts to be criminal, refer the matter to the state attorney general. A spokesman for the commission, made up of five gubernatorial appointees, says there are no allegations of criminal activity in this case.

Forman says she's not guilty of any wrongdoing. "It's not like I was going on golf trips; these were for legitimate business purposes," she says. Part of the problem, Forman says, is that she moved to Nassau Health from the private sector and was never told that she had landed in an environment where expenses are subject to considerably more regulation and scrutiny.

But these days, both public- and private-sector CIOs are beginning to question even seemingly innocent perks that are meant to help buyers and sellers build trust and cement relationships. The chief technology officer for another East Coast nonprofit health-care organization says that he and other executives never took expensive gifts, but in the past would accept, say, an invitation to a vendor's suite at a ball game. "Our philosophy has always been that that's how you generate relationships and get to know who you're doing business with," he says. "But we don't even want a hint of anything improper."

Now even tech vendors with reputations for aggressively wooing customers are less likely to offer enticements such as game tickets, dinners, and trips in the hopes of generating business, says Stuart Robbins, founder and executive director of the CIO Collective, a nonprofit group that offers IT-management advice to small companies. Others agree. "Post-Enron, post-Tyco, you really don't see behavior that's even questionable," whether it's a vendor offering a gift or something more subtle, like a donation to a favored cause, says John Halamka, CIO at health-care provider CareGroup Healthcare System. Halamka also sits on the boards of three public companies.

According to the Ethics Commission spokesman, the vendors vying for the Nassau Health contract didn't initiate the gift-giving. "The information we have indicates that the individuals who are the subject of the complaint actively solicited gifts from the vendors in order that they consider their products," he says.

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