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HomeMy WebLinkAbout09-538 CaramanicoThomas A. Caramanico McCormick Taylor, Inc. Two Commerce Squart 2001 Market Street, 10 Floor Philadelphia, PA 19103 Dear Mr. Caramanico: ADVICE OF COUNSEL April 8, 2009 09 -538 This responds to your letter dated February 24, 2009 (postmarked February 26, 2009, and received by the Pittsburgh Regional Office on March 2, 2009), by which you requested an 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 permit an engineering and design firm ( "the firm ") to enter into an agreement or arrangement with a charter school for use of the school's gymnasium or classroom facilities for a fee, for the firm's employee wellness program, when the chairman of the board of directors of the firm is a member and chairman of the board of trustees of the charter school, and if so, whether the restrictions of Section 1103(f) of the Ethics Act, pertaining to contracting, would apply to such agreement or arrangement. Facts: You are a Member and Chairman of the Board of Trustees of Freire Charter School ( "the School "), located in Philadelphia, Pennsylvania. In a private capacity, you are a Member and Chairman of the Board of Directors of an engineering and design firm named "McCormick Taylor, Inc." ( "MTI "). You have been authorized by the MTI Board of Directors to request an advisory from the Pennsylvania State Ethics Commission on behalf of MTI. You have submitted facts that may be fairly summarized as follows. You state that you would like to have MTI enter into a contract (hereinafter referred to as the Agreement ") with the School pursuant to which MTI would use the School's gymnasium and /or classroom facilities for a fee of $10,000 per year. You state that MTI intends to use the School's gymnasium for basketball and other sports as part of MTI's employee wellness program. MTI may also use the School's classroom facilities for wellness program seminars after hours. You state that MTI will provide Caramanico, 09 -538 April 8, 2009 Page 2 appropriate insurance and indemnification, reimburse the School for additional needed security, and schedule its use of the School's facilities when such are available. Based upon the above submitted facts, you ask whether the Ethics Act would permit MTI to enter into the Agreement with the School, and if so, whether the restrictions of Section 1103(f) of the Ethics Act would apply to the Agreement. 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 a Member and Chairman of the Board of Trustees of the School, you are a public official subject to the provisions of the Ethics Act. See, Conaway, Order 1248; Popkave, Order 1318; Scales, Order 1394; Eiben, Opinion 04 -002. 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: Caramanico, 09 -538 April 8, 2009 Page 3 § 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. "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. 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. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office, including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Subject to certain statutory exceptions, in each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the public official /public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. It is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest 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 Caramanico, 09 -538 April 8, 2009 Page 4 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 client(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. 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 from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). The term "contract" is defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. Caramanico, 09 -538 April 8, 2009 Page 5 Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. In applying the above provisions of the Ethics Act to your specific inquiry, you are advised as follows. MTI is a business with which you are associated in your capacity as a Member and Chairman of MTI's Board of Directors. 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, in your capacity as a Member and Chairman of the School's Board of Trustees, you would have a conflict of interest in matters that would financially impact you, MTI, or MTI's client(s). The Ethics Act would not prohibit MTI from entering into the Agreement with the School. However, pursuant to Section 1103(a) of the Ethics Act, in your public capacity as a Member and Chairman of the School Board of Trustees, you would have a conflict of interest in matters pertaining to the Agreement. In each instance of a conflict of interest, you would be required to abstain fully from participation and in the instance of a voting conflict, to abstain and fully satisfy the requirements of Section 1103(j) of the Ethics Act. With regard to Section 1103(f) of the Ethics Act, it is noted that the definition of the term "contract" under Section 1102 of the Ethics Act includes "[a ]n agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property." Based upon the submitted facts, the Agreement would not constitute a "contract as that term is defined by the Ethics Act. Accordingly ou are advised that based upon the submitted facts, the restrictions of Section 1103(f) of the Ethics Act would not apply as to the Agreement. The propriety of the proposed conduct has only been addressed under the Ethics Act. The applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Conclusion: As a Member and Chairman of the Board of Trustees of Freire Charter School ( "the School "), located in Philadelphia, Pennsylvania, you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Based upon the submitted facts that: (1) in a private capacity, you are a Member and Chairman of the Board of Directors of an engineering and design firm named "McCormick Taylor, Inc." ( "MTI "); (2) you would like to have MTI enter into a contract (hereinafter referred to as the Agreement ") with the School pursuant to which MTI would use the School's gymnasium and /or classroom facilities for a fee of $10,000 per year; (3) MTI intends to use the School's gymnasium for basketball and other sports as part of MTI's employee wellness program; (4) MTI may also use the School's classroom facilities for wellness program seminars after hours; and (5) MTI will provide appropriate insurance and indemnification, reimburse the School for additional needed security, and schedule its use of the School's facilities when such are available, you are advised as follows. Caramanico, 09 -538 April 8, 2009 Page 6 MTI is a business with which you are associated in your capacity as a Member and Chairman of MTI's Board of Directors. 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, in your capacity as a Member and Chairman of the School's Board of Trustees, you would have a conflict of interest in matters that would financially impact you, MTI, or MTI's client(s). The Ethics Act would not prohibit MTI from entering into the Agreement with the School. However, pursuant to Section 1103(a) of the Ethics Act, in your public capacity as a Member and Chairman of the School Board of Trustees, you would have a conflict of interest in matters pertaining to the Agreement. In each instance of a conflict of interest, you would be required to abstain fully from participation and in the instance of a voting conflict, to abstain and fully satisfy the requirements of Section 1103(j) of the Ethics Act. Based upon the submitted facts, the restrictions of Section 1103(f) of the Ethics Act would not apply as to the Agreement. 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