Loading...
HomeMy WebLinkAbout08-583 ConfidentialADVICE OF COUNSEL October 14, 2008 08 -583 This responds to your letters of August 21, 2008, and September 8, 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 present any prohibitions or restrictions: (1) Upon a state legislator's A, who in his private capacity is co- founder of a privately owned for - profit company ( "the Company "), with regard to providing services to the Company - -with or without compensation - -in relation to a governmentally- funded program; to changing his Commonwealth work schedule, with the approval of his supervisor, in order to participate in the program; or to being reimbursed by the Company for startup costs and expenses; or (2) Upon the aforesaid state legislator with regard to promoting programs of the type provided by the Company but not the particular program with which the A is involved; and whether the answers to the above questions would be different if the Company would change its status from for - profit to non - profit. Facts: You have been authorized by a Member of the Pennsylvania [chamber of the eneral Assembly] (hereinafter referred to as the State Legislator ") and the State Legislator's A (hereinafter referred to as "Employee B ") to request a confidential advisory from the Pennsylvania State Ethics Commission on their behalf, based upon submitted facts that may be fairly summarized as follows. Employee B was recently promoted to his current position. You have submitted a copy of the job description for Employee B's current position, which document is incorporated herein by reference. Employee B is the co- founder of a privately owned, for - profit company ( "the Company') that provides C services for [type of clients] who attend [type of institutions]. Confidential Advice, 08 -583 October 14, 2008 Page 2 The Company's program of such D services (hereinafter referred to as the Program ") is federally funded under the E Act. You state that providers of programs of D services must submit an application for approval by Commonwealth Governmental Body F. The programs are supervised and monitored by Gs. The Gs also control and allocate the federal funding to the approved program providers from [type of governmental funds] that are set aside for the programs and paid to the program providers after the [program clients] have completed C services. Based upon the above submitted facts, you pose the following questions, which are hereinafter referred to as your "specific questions ": 1. Whether the Ethics Act would permit Employee B to work as an H or I for the Program in addition to performing his public employment responsibilities; 2. Whether the Ethics Act would permit Employee B to receive a salary from the Company or, in the alternative, to perform volunteer work for the Program; 3. Whether the Ethics Act would permit Employee B to change the beginning and end times of his Commonwealth workday in order to participate in the Program, where Employee B would maintain a Commonwealth workweek of at least 37.5 hours, as is required of full -time employees, and the change in workday hours would be approved by Employee B's supervisor; 4. Whether the Ethics Act would permit Employee B to be reimbursed by the Company for out -of- pocket expenses incurred in association with start -up costs and expenses related to the Company; 5. Whether it would be a conflict of interest for the State Legislator to promote D service programs but not specifically the Program; and 6. Whether the answers to the above questions would be different if the Company would change its status from for - profit to non - profit. 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. The State Legislator is a public official subject to the provisions of the Ethics Act. Employee B is a public employee subject to the provisions of the Ethics Act. See, e.q., [name], Advice [cite]. 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. Confidential Advice, 08 -583 October 14, 2008 Page 3 (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 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. Confidential Advice, 08 -583 October 14, 2008 Page 4 "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. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Section 1103(a) of the Ethics Act generally does not prohibit public officials /public employees from having outside business activities or employment. However, a public official /public employee may not use the authority of the public position - -or confidential information obtained by being in that position - -for the advancement of the public official's /public employee's own private pecuniary benefit or that of a business with which he or she is associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the ursuit 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, 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 a business with which the public official /public employee is associated in his private capacity (Gorman, Order 1041; Rembold, Order 1303; Wilcox, Order 1306), or private client(s) (Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010). If the private employer or business with which the public official /public employee is associated or a private customer /client would have a matter pending before the governmental body, generally the public official /public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, 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. As a public employee, Employee B would generally have a conflict of interest under Section 1103(a) of the Ethics Act in matters that would financially impact him, a member of his immediate family, or a business with which he or a member of his immediate family is associated. In the instant matter, the submitted facts do not disclose the specific nature of the relationship between Employee B and the Company. Therefore, you are advised that to the extent Employee B is a director, officer, owner, or employee of the Company or has a financial interest in the Company, the Company is a business with which Employee B is associated. There is no basis in the submitted facts for concluding that the State Legislator has any involvement with the Company. Therefore, there is no basis for concluding that the Company is a business with which the State Legislator is associated. You are further advised that to the extent the activities of a state legislator relate to "legislative actions" (introducing, considering, debating, voting, enacting, adopting, or approving legislation), they are constitutionally controlled and are exempt from the purview of the Ethics Act and the State Ethics Commission. Confidential Opinion, 05 -009; Confidential Confidential Advice, 08 -583 October 14, 2008 Page 5 Opinion, 05 -003; Confidential Opinion, 05 -002; Confidential Opinion, 04 -010; Corrigan, Opinion 87 -001. Your specific questions shall now be addressed. In response to your first specific question, you are advised that Section 1103(a) of the Ethics Act would not prohibit Employee B from working as an H or I for the Program in addition to performing his public employment responsibilities. In response to your second, third, and fourth specific questions, you are advised that based upon the submitted facts, Section 1103(a) of the Ethics Act would not prohibit Employee B from: receiving a salary from the Company or, in the alternative, performing volunteer work for the Program; changing his Commonwealth work schedule, with the approval of his supervisor, in order to participate in the Program, where he would continue to maintain a Commonwealth workweek of at least 37.5 hours; or being reimbursed by the Company for out -of- pocket expenses incurred in association with start -up costs and expenses related to the Company. In response to your fifth specific question, you are advised that based upon the submitted facts, the State Legislator would not have a conflict of interest under Section 1103(a) of the Ethics Act with regard to promoting D service programs. Lastly, you are advised that, based upon the submitted facts, the answers to the specific questions posed in your advisory request would not change if the Company would change its status from for- profit to non - profit. Act. The propriety of the proposed conduct has only been addressed under the Ethics Conclusion: The Member of the Pennsylvania [chamber of the General Assembly] on whose behalf you have inquired (hereinafter referred to as the State Legislator) is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The State Legislator's A (hereinafter referred to as "Employee B "), on whose behalf you have also inquired, is a public employee subject to the provisions of the Ethics Act. Based upon the submitted facts that: (1) Employee B is the co- founder of a privately owned, for- profit company ( "the Company") that provides C services for [type of clients] who attend [type of institutions] (2) the Company's program of such D services (hereinafter referred to as the Program ") is federally funded under the E Act; (3) providers of programs of D services must submit an application for approval by Commonwealth Governmental Body F; (4) the programs are supervised and monitored by Gs; and (5) the Gs also control and allocate the federal funding to the approved program providers from [type of governmental funds] that are set aside for the programs and paid to the program providers after the [program clients] have completed C services, you are advised as follows. As a public employee, Employee B would generally have a conflict of interest under Section 1103(a) of the Ethics Act in matters that would financially impact him, a member of his immediate family, or a business with which he or a member of his immediate family is associated. To the extent Employee B is a director, officer, owner, or employee of the Company or has a financial interest in the Company, the Company is a business with which Employee B is associated. Section 1103(a) of the Ethics Act would not prohibit Employee B from working as an H or I for the Program in addition to performing his public employment responsibilities. Based upon the submitted facts, Section 1103(a) of the Ethics Act would not prohibit Employee B from: receiving a salary from the Company or, in the alternative, performing volunteer work for the Program; changing his Commonwealth work schedule, with the approval of his supervisor, in order to participate in the Program, where he would continue to maintain a Confidential Advice, 08 -583 October 14, 2008 Page 6 Commonwealth workweek of at least 37.5 hours; or being reimbursed by the Company for out -of- pocket expenses incurred in association with start -up costs and expenses related to the Company. Based upon the submitted facts, the State Legislator would not have a conflict of interest under Section 1103(a) of the Ethics Act with regard to promoting D service programs. Based upon the submitted facts, the answers to the specific questions posed in your advisory request would not change if the Company would change its status from for- profit to non - profit. Lastly, 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 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