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HomeMy WebLinkAbout08-575 ConfidentialADVICE OF COUNSEL September 17, 2008 08 -575 This responds to your letter of August 7, 2008, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would impose any prohibitions or restrictions upon an individual serving as an elected county A with regard to contracting to perform services for a [type of firm] in his private capacity, where: 1) the services would involve soliciting business from and marketing [type of services] to [types of clients]; and (2) said individual's employment contract with such firm would expressly exclude him and the firm from doing business with the county and its governmental bodies for as long as said individual would serve the county as a public official /public employee subject to the Ethics Act. Facts: As the elected A for B County ( "the County "), you request a confidential advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. As the elected County A, you are a member of the C. You state that you have experience making decisions on all aspects of the County D. You state that you wish to pursue a currently available position with a firm ( "the Firm ") that specializes in E. In such position, you would solicit business from and market [type of services] to [types of clients]. You state that in your capacity as an "independent contractor" for the Firm, you would initially be compensated by salary and commission, with future options to buy into an equity position as a shareholder. You state that the Firm does not currently have and has not previously had any business relationship with the County or any of its governmental bodies. You state that your "employment" contract with the Firm would expressly exclude you and the Firm from doing business with the County and its governmental bodies, such as, for example, the C, for as long as you would serve the County as a public official /public employee subject to the Ethics Act. Based upon the above submitted facts, you ask whether the Ethics Act would prohibit or restrict you from engaging in your contemplated business activities. Confidential Advice, 08 -575 September 17, 2008 Page 2 Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As the elected County A, you would be considered a public official /public employee subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (j) Voting conflict. - -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his Confidential Advice, 08 -575 September 17, 2008 Page 3 immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. 65 Pa. C. S. § 1102. It is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interests does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by loeing in that position - -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity or private clients(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. If a business with which the public official /public employee or immediate family member is associated or a private customer /client would have a matter pending before the governmental body, the public official /public employee would generally have a conflict of interest as to such matter. Kannebecker, supra; Miller, supra. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation and in the instance of a voting conflict, to abstain and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Confidential Advice, 08 -575 September 17, 2008 Page 4 In applying the above provisions of the Ethics Act to the instant matter, the submitted facts do not clearly indicate whether you would provide services to the Firm as an employee of the Firm or as an independent contractor. You are advised that any business as to which you are a director, officer, owner, or employee or in which you have a financial interest would be considered a business with which you are associated. A self - employed individual is included within the definition of the term "business" as set forth in the Ethics Act. Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest" as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, you would have a conflict of interest in your public capacity in matters that would financially impact yourself, any business(es) with which you would be associated, or the customer(s) /client(s) of any business(es) with which you would be associated. See, Kannebecker, supra; Miller, supra. In response to your specific inquiry, you are advised that Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity, from engaging in the aforesaid proposed business activity, but in your public capacity, you would be required to comply with the restrictions of the Ethics Act and particularly Section 1103(a) of the Ethics Act as set forth above. The ropriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the F. Conclusion: As the elected A for B County ( "the County "), you are a public official /public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Subject to the statutory exceptions to the definition of "conflict" or "conflict of interest' as set forth in Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, you would have a conflict of interest in your public capacity in matters that would financially impact yourself, any business(es) with which you would be associated, or the customer(s) /client(s) of any business(es) with which you would be associated. Based upon the submitted facts that: (1) you wish to pursue a currently available position with a firm ( "the Firm ") that specializes in E; (2) in such position, you would solicit business from and market [type of services] to [types of clients]; (3) you would initially be compensated by the Firm with a salary and commission, with future options to buy into an equity position as a shareholder; (4) the Firm does not currently have and has not previously had any business relationship with the County or any of its governmental bodies; and (5) your employment contract with the Firm would expressly exclude you and the Firm from doing business with the County and its governmental bodies, including but not limited to the C, for as long as you would serve the County as a public official/ public employee subject to the Ethics Act, you are advised as follows. Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity, from engaging in the aforesaid proposed business activity, but in your public capacity, you would be required to comply with the restrictions of the Ethics Act and particularly Section 1103(a) of the Ethics Act as set forth above. The propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Confidential Advice, 08 -575 September 17, 2008 Page 5 Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code §13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Robin M. Hittie Chief Counsel