HomeMy WebLinkAbout12-543 Smith
ADVICE OF COUNSEL
June 1, 2012
Chad N. Smith
Borough Manager
Borough of Lewisburg
55 S. Fifth Street, Suite 1
Lewisburg, PA 17837-1867
12-543
Dear Mr. Smith:
This responds to your letters of April 12, 2012, and April 23, 2012, 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.C.S. § 1101 et seq., would impose any prohibitions, restrictions, or disclosure
requirements upon a borough manager who would receive personal loans from friends,
family, or associates.
Facts:
As the Borough Manager of the Borough of Lewisburg (“Borough”), you
request an advisory from the Pennsylvania State Ethics Commission based upon
submitted facts that may be fairly summarized as follows.
The Borough Manager is an appointed position. You state that the Borough
Manager has no authority to vote on any award or significant financial decision made
within the Borough.
You state that Borough Council became aware of various personal loan
agreements (the “Loans”) which you entered into over the course of 2010 and 2011 to
pay off outstanding personal debt. You state that although you have legally binding
agreements with the parties to the Loans, Borough Council was and is concerned with
the perception of such financial arrangements and what a resident could claim was not
disclosed by Borough Council or reported by you.
You seek guidance as to what consequences, if any, borrowing money from
friends, family or associates would have upon you as the Borough Manager, and what
responsibility, if any, you would have to disclose such personal loans to the public, the
Borough Council, and/or the State Ethics Commission. You further seek guidance as to
whether the identity of the creditor of a personal loan to you (such as, for example, a
resident of the Borough or the owner of a business which is not currently doing business
with the Borough but might do so in the future) would affect the disclosure requirements
for a loan that would not exceed $6,500.
Smith, 12-543
June 1, 2012
Page 2
It is administratively noted that although you posed your questions broadly to
encompass yourself and elected or appointed officials generally, you did not establish
legal standing to submit your inquiry as to anyone other than you. Therefore, this
advisory must be limited to addressing your prospective conduct.
Discussion:
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 Borough Manager, you are 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 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
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June 1, 2012
Page 3
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.
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. The use of
authority of office is not limited merely to voting, but extends 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.
The Pennsylvania Supreme Court has held that in order to violate Section
1103(a) of the Ethics Act, a public official/public employee “must be consciously aware
of a private pecuniary benefit for himself, his family, or his business, and then must take
action in the form of one or more specific steps to attain that benefit.” Kistler v. State
Ethics Commission, Pa. , , 22 A.3d 223, 231 (2011).
In each instance of a conflict of interest, a public official/public employee would
be required to abstain from participation, which would include voting unless one of the
statutory exceptions of Section 1103(j) of the Ethics Act would be applicable.
Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have
to be satisfied in the event of a voting conflict.
Section 1104(a) of the Ethics Act provides:
§ 1104. Statement of financial interests required to be
filed
(a)Public official or public employee.--
Each public
official of the Commonwealth shall file a statement of
financial interests for the preceding calendar year with the
commission no later than May 1 of each year that he holds
such a position and of the year after he leaves such a
position. Each public employee and public official of the
Commonwealth shall file a statement of financial interests for
the preceding calendar year with the department, agency,
body or bureau in which he is employed or to which he is
appointed or elected no later than May 1 of each year that
he holds such a position and of the year after he leaves such
a position. Any other public employee or public official shall
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June 1, 2012
Page 4
file a statement of financial interests with the governing
authority of the political subdivision by which he is employed
or within which he is appointed or elected no later than May
1 of each year that he holds such a position and of the year
after he leaves such a position. Persons who are full-time or
part-time solicitors for political subdivisions are required to
file under this section.
65 Pa.C.S. § 1104(a).
Section 1105 of the Ethics Act sets forth the substantive disclosure requirements
for Statements of Financial Interests. Section 1105(b) provides, in pertinent part, as
follows:
§ 1105. Statement of financial interests
(b) Required information.--
The statement shall
include the following information for the prior calendar year
with regard to the person required to file the statement:
. . . .
(4) The name and address of each
creditor to whom is owed in excess of $6,500
and the interest rate thereon. However, loans
or credit extended between members of the
immediate family and mortgages securing real
property which is the principal or secondary
residence of the person filing shall not be
included.
65 Pa.C.S. § 1105(b)(4).
The term “immediate family” is defined in the Ethics Act as follows:
§ 1102. Definitions
“Immediate family.”
A parent, spouse, child, brother
or sister.
65 Pa.C.S. § 1102.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
In your capacity as the Borough Manager, you are required to file Statements of
Financial Interests pursuant to the Ethics Act. You are advised that except with respect
to loans or credit extended between you and members of your immediate family and
mortgages securing real property that is your principal or secondary residence, you
would be required to disclose on your annual Statement of Financial Interests: (1) the
name and address of each creditor--including a creditor of a personal loan--to which, at
any time during the applicable calendar year, you owed in excess of $6,500; and (2) the
interest rate for each such obligation. You would not be required to disclose on your
annual Statement of Financial Interests the name and address of a creditor to whom
you owed $6,500 or less, regardless of the identity of such creditor.
Matter(s) involving your creditor(s) could form the basis of a conflict of interest for
you under Section 1103(a) of the Ethics Act. You would transgress Section 1103(a) of
the Ethics Act by participating in your official capacity as the Borough Manager in
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June 1, 2012
Page 5
matter(s) involving your creditor(s) to the extent that: (1) you would be consciously
aware of a private pecuniary benefit for yourself, a member of your immediate family, or
a business with which you or a member of your immediate family is associated; and (2)
your action would constitute one or more specific steps to attain that benefit (Kistler,
supra).
In each instance of a conflict of interest, you would be required to abstain fully
from participation. Based upon the submitted fact that the Borough Manager has no
authority to vote on any award or significant financial decision made within the Borough,
you are advised that the disclosure requirements of Section 1103(j) of the Ethics Act,
pertaining to voting conflicts, would not appear to apply with respect to your inquiry.
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 Borough Code.
Conclusion:
As the Borough Manager of the Borough of Lewisburg (“Borough”),
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. In your capacity as
the Borough Manager, you are required to file Statements of Financial Interests
pursuant to the Ethics Act. You are advised that except with respect to loans or credit
extended between you and members of your immediate family and mortgages securing
real property that is your principal or secondary residence, you would be required to
disclose on your annual Statement of Financial Interests: (1) the name and address of
each creditor--including a creditor of a personal loan--to which, at any time during the
applicable calendar year, you owed in excess of $6,500; and (2) the interest rate for
each such obligation. You would not be required to disclose on your annual Statement
of Financial Interests the name and address of a creditor to whom you owed $6,500 or
less, regardless of the identity of such creditor.
Matter(s) involving your creditor(s) could form the basis of a conflict of interest for
you under Section 1103(a) of the Ethics Act. You would transgress Section 1103(a) of
the Ethics Act by participating in your official capacity as the Borough Manager in
matter(s) involving your creditor(s) to the extent that: (1) you would be consciously
aware of a private pecuniary benefit for yourself, a member of your immediate family, or
a business with which you or a member of your immediate family is associated; and (2)
your action would constitute one or more specific steps to attain that benefit. In each
instance of a conflict of interest, you would be required to abstain fully from
participation. Based upon the submitted fact that the Borough Manager has no
authority to vote on any award or significant financial decision made within the Borough,
you are advised that the disclosure requirements of Section 1103(j) of the Ethics Act,
pertaining to voting conflicts, would not appear to apply with respect to your inquiry.
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
Smith, 12-543
June 1, 2012
Page 6
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