Two months ago, WW reported a highly unusual situation: The Oregon Business Council, which advocates for Oregon's largest employers, in 2013 hired a spokeswoman for first lady Cylvia Hayes. A group pushing a political agenda would not usually be allowed to provide staff support for the governor's office.

Documents Gov. John Kitzhaber's office has now released to WW show that Kitzhaber's general counsel, Liani Reeves, objected to the original wording of the spokeswoman's contract because of what she termed "legal and ethical issues." She was so uncomfortable with that arrangement that she asked OBC to rework the language of the contract so that it would pass legal muster.

That contract and other issues relating to Hayes' unusual role in Kitzhaber's administration, which WW first reported in October, are currently the subject of an Oregon Government Ethics Commission investigation.

In September 2013, Oregon Business Council proposed hiring Therese Lang to publicize the Oregon Prosperity Initiative, which Kitzhaber had assigned Hayes to lead.

One email—released under Oregon's public records law in response to a request from WW made a month before Kitzhaber's Nov. 4 re-election—shows Reeves urged the business group to change the description of Lang's duties from "Focused, Proactive Support and Coverage of First Lady Activities" to "focused, proactive support and Coverage of the Prosperity Initiative" (emphasis added).

The replacement of the phrase "First Lady" with "Prosperity Initiative," would make the hiring look less like a favor, or even contribution, to the governor.

Reeves had good cause for concern. As originally proposed, the hiring would have been an end-run around state contracting laws, which require transparency.

Second, Oregon's government ethics laws prohibit public officials from accepting gifts worth more than $50 from any person or group that has a "legislative or administrative interest" in that public officials work. The Oregon Business Council's action allowed Hayes to promote herself and her agenda at a time she was pushing her private consulting business.

The prospect of hiring Lang was particularly sensitive because of the Oregon Business Council's influence.

Since winning office in 2010, Kitzhaber has adopted the annual Oregon Business Plan, which the group produced, as his own economic development plan. Last year, for example, Kitzhaber invested enormous political capital in two of the central planks of Oregon Business Council's 2013 plan—building the Columbia River Crossing Project and cuts to the Public Employee Retirement System

For the business group to hire a spokesperson for Hayes could have the appearance of a gift—or perhaps even a reward to Kitzhaber and Hayes for his having promoted OBC's agenda.

Todd Donovan, a political science professor at Western Washington University, told WW in October that the appearance of an advocacy group hiring a spokesperson to promote a state initiative is troubling.

“The question there is, does it look like a quid pro quo?” Donovan said. “Even if it’s not, it’s a major problem for a business group to hire somebody who’s effectively filling a spot on the governor’s staff.”

The situation is complicated by Hayes' unusual position. As first lady, she often represents the governor's office and the state of Oregon in speeches and at events. Kitzhaber also named Hayes an adviser on energy and economic development, including her in senior staff meetings and policy-making. Both roles make her a public official and subject to Oregon ethics laws, as Reeves acknowledged earlier this year.

Hayes earlier rejected any concerns about the business group hiring a spokeswoman for her in an October statement to WW.

“[Gov. Kitzhaber] believes the Oregon

Business Plan is the right direction for Oregon, as should be evident by

every speech he’s given over the past five years,” Hayes told WW. “Yes, I share a commitment to reducing poverty in

Oregon with my fiance and with executives from some of the largest

companies in Oregon. That’s not a conflict. That’s common sense, and

maybe even common decency.”

The Oregon Business Council complied with Reeves' request to change the wording of the contract to make it seem as if Lang reported to the business group instead of Hayes. Prosperity Initiative documents suggest that change was a distinction without a difference. 

A two-page document under the heading "Office of the First Lady," for instance, described the initiative without mentioning the Oregon Business Council. A state employee, Robert Lee, was listed as the "initiative coordinator" and Lang was listed as "communications director." Press releases Lang produced were similarly focused on Hayes.

The website for the Prosperity Initiative, oregonprospers.org, has been disabled, and Hayes' official state  website no longer includes any mention of the Prosperity Initiative.

Reeves did not immediately respond to questions about the legal and ethical issues she said Lang's hiring presented.