Checking on lifestyles

LIFESTYLE CHECKS as a way of establishing the integrity (or the opposite) of public officials are premised on a simple assumption. A person, especially in public service, is expected to live within his means. This income source is defined as his monthly salary, net of taxes.

The lifestyle check is based on the principle of “living within one’s legitimate (or explainable) finances.” It pays attention to “discretionary” spending. These are purchases of goods and services outside the “basket” of necessities, such as rent, food, and energy. Prices of these commodities are used to set the Consumer Price Index (CPI) and track the quarterly inflation rate.

There is also the statement of assets, liabilities, and net worth (SALN) that details a government official’s financial status. This is intended to include any wealth already amassed or liabilities incurred, and unconnected with present government service. This list does not include assets, including cash, in the name of other people.

Does the salary of a public official buy the same goods and services as an identical amount for his private sector counterpart?

Public officials don’t pay for their staff (some of them are designated as researchers or executive assistants), cars, drivers, domestic help, caregivers; and gasoline, restaurant meals when they’re guest speakers, salaries and food allowances for their security contingent, first class travels abroad, planes for private use when visiting devastated areas, and parking fees when eating out. Do these expenses come out of their own declared income?

Add to these savings and other perks like Christmas and birthday gifts, insider info on stocks and allocations on IPOs, and associates in car dealerships providing discounts (or free test driving) for bullet-proof cars. And what about the undisclosed and undeclared income from other members of the family, some of whom may be management consultants or franchisees of fast-food outlets?

One assumption in a lifestyle check is clear — that flaunting wealth leads to suspicion. Public servants, like academics and NGO leaders, are not expected to be rich or even look like they are.

In the corporate world, lifestyle checks, which are also randomly conducted, can have a second purpose. Does an executive’s lifestyle support the corporate brand? What if a senior executive lives in a low-income rented apartment? Why is this vice-president of a large utility company living in dire straits? Isn’t he paid enough? What does he do with his money?

Can lifestyle checks also deal with unexplained poverty?

Is it only the poor in spirit (and assets) who are certain to be above suspicion? But should that be the case? In the private sector, financial distress is too readily explained by a lack of talent or enterprise, or a clerical position achieved after all those years.

Certain countries aim to make public service attractive by matching corporate remuneration to attract the best and the brightest to serve in government. It is also presumed that the temptation to steal public funds is lessened, if not made unnecessary, when the paycheck is hefty. Even locally, this remuneration practice is upheld, especially in the banking and monetary sector, including sovereign funds. Of course, sometimes the greed is insatiable, and “other income” outpaces the paycheck.

Socially, there is not the stigma that the lifestyle police seem to attach to an extravagant lifestyle. A possible reaction to a government official’s life of unexplained poverty is a distinct lack of ability or a low position in the totem pole. How come his cousin seems to be raking it in at the public works?

Perhaps there is an accepted decorum in spending. In a high-income economy where tech billionaires now rule, there is more attention paid to market cap than a luxurious lifestyle and multiple spouses.

Of course, the definition of an accomplished person is not limited to wealth and how it is flaunted. There are elements of public service, employment generation, intelligence, and long-term vision that enhance the perception of public figures.

Perhaps more than lifestyle checks, rating effectiveness in one’s job is more relevant. Usually, it is the dedicated public servant anyway that adds value to the efficiency of the public sector. He can have a steak dinner with the family now and then… entitled to a senior discount.

Tony Samson is chairman and CEO of TOUCH xda

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