PROVIDENCE — Government reform groups, Governor Carcieri and some legislators yesterday demanded that the state Ethics Commission close a “loophole” in the state’s ethics laws that they said is discrediting state government by allowing corruption to flourish.

The provision they want changed is an obscure but pivotal section of the law that forgives some otherwise-illegal conflicts of interest, cases where public officials, their relatives or business associates benefit from their official actions. The commission held a workshop yesterday to accept proposals and hear testimony on whether to change it.

Although the debate focused on the state legislature, the issue also comes up regularly in local government and may also have affected the outcome of the recent, unsuccessful federal prosecution of two CVS executives accused of bribing former state Sen. John Celona.

Calling Rhode Island “the most corrupt state in New England,” Robert Benson, a board member of the group Operation Clean Government, said the ethics code must be tightened up “to restore the public’s trust.”

In the last half dozen years, at least seven state legislators prosecuted for an assortment of ethical and criminal violations have suffered penalties ranging from fines to, in the case of Celona and former House Majority Leader Gerard M. Martineau, jail. There is also a continuing federal investigation of influence peddling at the State House.

The existing rule, a letter from the governor’s office said, “shields activity that would otherwise be considered unethical,” and lets state legislators introduce and vote on legislation “that would directly benefit the financial interests of themselves and their private employers.”

Common Cause of Rhode Island urged replacement of the present exemption with a much tighter rule that would bar officials, like legislators, from voting on an issue if they, their relatives or business associates would benefit any more than the general public or businesses in general.

The provision in question, referred to as the “class exception,” forgives a conflict of interest if the public official involved, his relatives or business partners, benefit no more from his actions than other members of “a significant and definable class” affected by the law.

For example, the commission in January dropped five charges against state Sen. Frank Ciccone, D-Providence. Ciccone, a union official, was accused of breaking the ethics law by voting for legislation benefiting the unions he works for.

His bill, which died in the House, would have saved public employee unions money by shifting some of the cost of mediation from the unions to the state. It would have affected union locals that Ciccone represented, but the commission ruled that because it would also have affected more than 100 other locals no differently, his votes qualified for the exception.

Yesterday, organized labor and the local chapter of the American Civil Liberties Union opposed a change, saying it would interfere improperly with the General Assembly’s role.

Lawyer Robert Mann, representing a coalition of labor organizations, said there is a solid body of law protecting legislators from interference.

“You cannot regulate how these legislators participate in the legislative process,” he said.

The ACLU said in a letter that eliminating the exemption could undermine legislative government by unfairly disenfranchising both elected officials and their constituents.

State Rep. Joseph Trillo, R-Warwick, on the other hand, said that union-affiliated legislators who are union members have so distorted the law in the unions’ favor that state and local government can barely function.

The legislative immunity issue has already come up during the commission’s ongoing prosecution of former state Senate President William Irons, with the commission arguing, successfully so far, that the state Constitution gives the commission special authority to do so.

Commission Chairman James Lynch Sr. has said repeatedly that he wants a change in the “class exception,” and some other commission members yesterday indicated interest.

“Many of us think that something needs to be done,” said commission member Ross E. Cheit.

He called the Common Cause suggestion “a great start,” but he and other commission members also pointed to complications.

For example, Cheit wondered how a town council member who was elderly could legally vote on anything affecting elderly residents, like property tax exemptions, because it would affect that council member more than “the general public.”

blandis@projo.com