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HomeMy WebLinkAbout10-542 Confidential ADVICE OF COUNSEL February 3, 2010 10-542 This responds to your letters of December 9, 2009, and December 29, 2009, 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.C.S. § 1101 et seq., would present any prohibitions or restrictions upon A with regard to participating in the consideration of Bs for Cs, the award of Cs, and the administration of Cs when: (1) D is one of the Es for the F or is a G of such a C from Governmental Body H; (2) A’s Immediate Family Member I is an employee of J; (3) D and J are separate non-profit corporations with separate governing boards; (4) The purpose of J is, in part, to provide financial and operational support to K, which is part of D; (5) D is made up of a number of administrative components, including Ls, Ms, and Ns; (6) J is the O for K and is one of the Ns of D; (7) The budget of J is included as part of the total operating budget of D and is separate from the budget of K; (8) The [governing board] of D appoints at least [fraction in excess of a majority] of the members of the [governing board] of J; and (9) A’s Immediate Family Member I serves as P and Q for K without receiving compensation from K or D and without being an officer or employee of K or an employee of D. Confidential Advice, 10-542 February 3, 2010 Page 2 Facts: You have been authorized by A to request a confidential advisory from the Pennsylvania State Ethics Commission on his behalf. You have submitted facts, the material portion of which may be fairly summarized as follows. Governmental Body H administers a number of C Rs. In the past, D has been an E with respect to several such C Rs. Currently, D has at least [number] Bs for Cs pending before Governmental Body H. D is expected to continue to submit Bs for Cs to Governmental Body H in the future. A’s Immediate Family Member I is Individual S. Individual S is an employee of J as well as the P and Q for K. D and J are separate non-profit corporations with separate governing boards. However, the [governing board] of D appoints at least [fraction in excess of a majority] of the members of the [governing board] of J. K is part of D. K is included in the operating Budget of D. D is made up of a number of administrative components, including Ls, Ms, and Ns. J is the O for K and is one of the Ns of D. The budget of J is included as part of the total operating budget of D and is separate from the budget of K. The purpose of J is, in part, to provide financial and operational support to K. K is located at and associated with J. As Individual S’s employer, J hired Individual S and has the authority to supervise, promote, discipline, and fire her. Individual S does not receive compensation from K or D. Individual S is not an officer or employee of K or an employee of D. Neither D nor K supervises Individual S. You state that Individual S has no involvement in the submission of Bs for Cs by D or any of its Ts or Us. You further state that Individual S is not responsible in any way for the implementation or administration of Vs that receive W from Governmental Body H Cs. There are [number] D Bs for Cs that are currently pending before Governmental Body H for Xs. The D Bs for Cs that are currently pending before Governmental Body H were not submitted by or for the benefit/involvement of K. Also, Governmental Body H has not in recent years received any Bs from J. You state that as an employee of J, Individual S would not derive any income from Governmental Body H Cs, and C Y would not in any way support her salary or the work she does for J. You note that Individual S has submitted her resignation to J effective [future date]. You ask whether and in what respects A might be restricted under the Ethics Act from participating in the consideration of Bs for Cs, the award of Cs, and the administration of Cs when D is one of the Es for the F or is a G of a C from Governmental Body H. You have submitted materials in support of your request, including copies of the Articles of Incorporation of J and amendments to same (collectively referred to herein as Confidential Advice, 10-542 February 3, 2010 Page 3 the “Articles of Incorporation”), a recent Annual Report for J and K, various documents pertaining to D, and a one-page summary of the 2008-2009 operating budget for D. Per its Articles of Incorporation, the business and affairs of J are managed by or under the direction of its [governing board]. The [governing board] of D, in its capacity as Z of J, has the right to appoint at least [fraction in excess of a majority] of the members of the [governing board] of J. In the 2008-2009 operating budget for D, J was attributed with approximately [percentage in excess of 25%] of the funds in D’s operating budget. It is administratively noted that a registered fictitious name of J is [name that includes the name of D]. 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion/advice may be given only as to prospective (future) conduct. To the extent you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall, be addressed. A is a public official and an “executive-level State employee” subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. 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 Confidential Advice, 10-542 February 3, 2010 Page 4 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 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. "Immediate family." A parent, spouse, child, brother or sister. "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. A non-profit entity is a “business” as that term is defined by the Ethics Act. Rendell v. State Ethics Commission, Pa. , 983 A.2d 708 (2009). Confidential Advice, 10-542 February 3, 2010 Page 5 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. In applying the above provisions of the Ethics Act to the instant matter, you are advised that “reciprocity of power” may form the basis for a conflict of interest under Section 1103(a) of the Ethics Act, as illustrated by the following Commission Opinions. In Confidential Opinion, 05-004, the Commission held that a school director would have a conflict of interest pursuant to Section 1103(a) of the Ethics Act in matters pertaining to the appointment/employment of a middle school principal for the school district when one of the candidates for the position exercised some administrative authority and influence over the school director as to the latter’s employment as a teacher in a different school district. In Elisco, Opinion 00-003, the Commission held that where a city council member was an assistant principal and another city council member’s spouse was a principal in a certain school district, both council members would have a conflict of interest with regard to voting to invest pension funds through an investment company and its sales representative who was a school director in that school district. This type of reciprocal relationship creates a conflict because, in the respective superior-subordinate relationships, each person might look favorably upon matters that financially impact upon the other. See, Elisco, supra. In the instant matter, the submitted facts present a “reciprocity of power” scenario similar to those addressed in the above cited Opinions. Per the submitted facts, the [governing board] of D appoints at least [fraction in excess of a majority] of the governing board of Individual S’s employer. Individual S’s Immediate Family Member I, A, is in a position to exercise authority with respect to Governmental Body H Cs sought and received by D. Based upon the above, you are advised that while Individual S would remain an employee of J, A generally would have a conflict of interest and would be restricted under the Ethics Act from participating in the consideration of Bs for Cs, the award of Cs, and the administration of Cs when D is one of the Es for the F or is a G of a C from Governmental Body H. In light of the above analysis, there is no need to address whether there would be additional bases for a conflict under the submitted facts. 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. Specifically not addressed herein is the applicability of the [name of a code]. Conclusion: A is a public official and an “executive-level State employee” subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., and the Regulations of the State Ethics Commission, 51 Pa. Code § 11.1. Confidential Advice, 10-542 February 3, 2010 Page 6 Based upon the submitted facts, while A’s Immediate Family Member I, Individual S, would remain an employee of J, A generally would have a conflict of interest and would be restricted under the Ethics Act from participating in the consideration of Bs for Cs, the award of Cs, and the administration of Cs when D is one of the Es for the F or is a G of a C from Governmental Body H. 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