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HomeMy WebLinkAbout10-573 Confidential ADVICE OF COUNSEL April 23, 2010 10-573 This responds to your letter dated March 1, 2010, 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 impose any prohibitions or restrictions upon an A for a [type of political subdivision] in her public capacity if, in her private capacity as the sole- proprietor of a consulting firm, she would perform work under contract(s) that the consulting firm would have with [types of clients] to [perform certain services]. Facts: You have requested a confidential advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You are currently employed as the A for [name of political subdivision], hereinafter referred to as “the Political Subdivision.” You have submitted copies of the job description for the position of A and an organization chart for the Political Subdivision, both of which documents are incorporated herein by reference. You state that in your position with the Political Subdivision, your current duties include [certain activities]. You state that you also prepare B Cs, but you do not have any authority to approve or recommend approval of such Cs. You state that last year, you registered a consulting firm named [name of firm], hereinafter referred to as “the Firm,” with the Pennsylvania Department of State. You are the sole proprietor of the Firm, and the Firm will have contracted consultants. You state that the Firm has not yet officially opened for business and no monetary transactions have occurred. You state that the main purpose of the Firm will be to contract with [types of clients] to [perform certain services]. You state that any time you would spend working for the Firm would be your own time and would be totally separate from your duties with the Political Subdivision. You further state that the Firm would not contract or subcontract with the Political Subdivision. Confidential Advice, 10-573 April 23, 2010 Page 2 Based upon the above submitted facts, you ask whether you would violate the Ethics Act if, in your private capacity, you would perform work under contract(s) the Firm would have with its client(s). 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 A for the Political Subdivision, you are a public employee subject to the provisions of the Ethics Act. This conclusion is based upon the job description, which when reviewed on an objective basis, indicates clearly that the power exists to take or recommend official action of a non-ministerial nature with respect to one or more of the following: contracting; procurement; administering or monitoring grants or subsidies; planning or zoning; inspecting; licensing; regulating; auditing; or other activity(ies) where the economic impact is greater than de minimis on the interests of another person. 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: Confidential Advice, 10-573 April 23, 2010 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. "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. 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. In applying the above provisions of the Ethics Act to the instant matter, 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 being in that position--for the Confidential Advice, 10-573 April 23, 2010 Page 4 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 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. You are advised that the Firm is a business with which you are associated in your capacity as the owner. In your capacity as the A for the Political Subdivision, you generally would have a conflict of interest in matters that would financially impact you, the Firm, or the Firm’s client(s). See, Kannebecker, supra; Miller, supra. Based upon the facts that you have submitted, you are advised that subject to the restrictions and qualifications as noted above, Section 1103(a) of the Ethics Act would not preclude you from performing work under contract(s) the Firm would have with its client(s). The propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the D. Conclusion: As the A for [name of political subdivision], hereinafter referred to as “the Political Subdivision,” you are a public employee 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) last year, you registered a consulting firm named [name of firm], hereinafter referred to as “the Firm,” with the Pennsylvania Department of State; (2) you are the sole proprietor of the Firm, and the Firm will have contracted consultants; (3) the Firm has not yet officially opened for business and no monetary transactions have occurred; (4) the main purpose of the Firm will be to contract with [types of clients] to [perform certain services]; (5) any time you would spend working for the Firm would be your own time and would be totally separate from your duties with the Political Subdivision; and (6) the Firm would not contract or subcontract with the Political Subdivision, you are advised as follows. The Firm is a business with which you are associated in your capacity as the owner. In your capacity as the A for the Political Subdivision, you generally would have a conflict of interest in matters that would financially impact you, the Firm, or the Firm’s client(s). Subject to the restrictions and qualifications as noted herein, Section 1103(a) of the Ethics Act would not preclude you from performing work under contract(s) the Firm would have with its client(s). 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 Confidential Advice, 10-573 April 23, 2010 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