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HomeMy WebLinkAbout84-553 PomeroyMrs. Kay C. Pomeroy 110 Bowman Avenue Cranesville, PA 16410 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 April 24, 1984 ADVICE OF COUNSEL 84 -553 RE: Borough Secretary; Contracts between Borough and Spouse of Secretary Dear Mrs. Pomeroy: This responds to your letter of March 19, 1984, in which you requested advice from the State Ethics Commission. Issue: You ask what restrictions are placed upon the ability of your husband to contract with the Borough of Cranesville, where you serve as Borough Secretary. Facts: You are the Borough Secretary of Cranesville Borough. As such, you have no administrative, judicial, or voting powers, nor are you able to write checks, issue permits, or purchase supplies without the Borough Council's . prior approval. Your husband, Gary Pomeroy, is the owner of a sole proprietorship which engages in excavation work and snow removal work. Although Mr. Pomeroy is a member of the Cranesville Borough Sewer Authority, he holds no elected or appointed office with the Borough itself. Mr. Pomeroy would like to contract with the Borough of Cranesville for amounts in excess of $500. However, and as you point out in your request for advice, you assume that such contracts could be awarded only if they are awarded pursuant to an open and public process. You also raise a question concerning provisions of the Borough Code, specifically, 53 P.S. 46404, which prohibits any contracts in excess of $1,000 between a Borough and a Borough official. You indicate that you believe the Ethics Act, 65 P.S. 412, controls in the event of statutory conflicts, and you have requested a ruling concerning this matter. Specifically, you ask three questions which are as follows: Mrs. Kay C. Pomeroy April 24, 1984 Page 2 1. May the spouse of the Borough Secretary be permitted to engage in contracts with the Borough of Cranesville in excess of $500 so long as these contracts are awarded after an open and public process, 2. Are the provisions of 53 P.S. 46404, which prohibits contracts in excess of $1,000 between a Borough and a third party where a Borough official has a direct or indirect interest in the contract, applicable to a contract between the Borough and the spouse of the Borough official where such contract, in excess of $500, is awarded puruant to the open and public process requirements of the Ethics - Act? 3. If the spouse of the Borough official were to incorporate his business and own 100% of the stock, would such action change or alter the opinion as to either questions 1 or 2 above? With reference to all of your questions, you indicate that you have no interest in your husband's business except such interest as may exist by virtue of your marital status. Discussion: Initially, the Ethics Commission notes that, as a statutory entity, its jurisdiction and its power are strictly limited to the authority granted it at 65 P.S. 401 et seq. Thus, it has no authority to interpret and /or enforce the provisions of other codes, for example, the Borough Code, especially 53 P.S. 46404. Specifically, the Ethics Commission notes that it has no authority to interpret what constitutes a "direct" or "indirect" interest under 53 P.S. 46404. We may only interpret and apply the Ethics Act. Thus, this Advice should not be construed as clearance to act under the Borough Code or any other codes or laws. Assuming without deciding, that, as Borough Secretary for the Borough of Cranesville, you are a "public official" within the meaning of the Ethics Act, 65 P.S. 401 et seq., your conduct as Borough Secretary is governed by the Ethics Act. However, while the Act contains some restrictions against contracts between a husiness with which a public official or his /her spouse is associated and the governmental body with which he or she is associated, the Act does not totally prohibit the person or his or her family or a business with which a family member is associated from engaging in business. The Ethics Commission has defined "conflict of interest" as existing where an individual represents two or more persons whose interest are adverse to each other. See Alfano, 80 -007. While the situation you present does not present a per se conflict of interest, there are some restrictions that apply to you or a business with which your spouse is associated under the Ethics Act. Mrs. Kay C. Pomeroy April 24, 1984 Page 3 Section 3(a) of the Ethics Act provides that no public official shall use his public office or any confidential information obtained through his ha ding public office to acquire financial gain for himself, his immediate family, or a business with which he is associated. See 65 P.S. 403(a). "Business" with which you are "associated" is defined as: "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 holder of stock. 65 P.S. 402. Under this definition, you are clearly "associated" with your husband's business. Thus, you may not use your position as Borough Secretary to secure financial gain for your husband's business, nor may your pass any confidential information acquired through being Borough Secretary to your husband's business. In this respect, as Borough Secretary, you should not participate in any decisions, discussions, or recommendations that would lead the Borough to engage in services of your husband's business. Section 3(b) of the Act states that no person shall give to a public official /employee nor shall any public official accept, any thing of value based on any understanding that the official's vote, action, or judgment would be influenced thereby. See 65 P.S. 403(b). Future employment, income, etc., is a thing of value and thus, you may not allow your official actions or judgments with regard to your husband's firm be influenced by the offer or acceptance of any thing of value from that firm or your husband. Further, Section 3(c) of the Act states that no public official, member of his immediate family, or any business in which the official or member of his immediate family is an officer, director, or owner of greater than 5% of the equity at fair market value may contract in an amount in excess of $500 with the governmental body with which the official is associated unless the contract has been awarded through an open and public process. See Howard, 79 -044. Previous opinions of the Commission have held that the term "governmental body" in Section 3(c) refers to the governmental body with which the public official is "associated." Bryan, 80 -014 and Lynch, 79 -047. Therefore, the "open and public process" limitation of Section 3(c) applies if, and when, your husband's firm attempts to work for the Borough under a contract in excess of $500. It must be emphasized that Section 3(c) presents no absolute prohibition on your husband contracting with the Borough. Section 3(c) requires, however, that any contract valued in excess of $500 be awarded only after an open and public process. In its opinion in Howard, 79 -044, the Commission stated that ,an open and public process must meet the following criteria: Mrs. Kay C. Pomeroy April 24, 1984 Page 4 1. prior public notice; 2. public disclosure of all proposals considered; and 3. public disclosure of the award of the contract. Thus, to respond to your first question, it is clear that if these standards are complied with and competitors of your husband's business have a reasonable time within which to submit their proposals, your husband's business could contract with the Borough of Cranesville for a contract in excess of $500 should the opportunity arise. In addition, as generally stated above, if your husband's firm contracts with the Borough in accordance with Section 3(a) and Section 1 of the Ethics Act, in order to avoid any appearance of a conflict of interest, you must also abstain from any action, recommeddation, or other process of consideration of the award of the contract to your husband's firm. With regard to the second question dealing with the Borough Code's prohibition on a Borough official having a direct or indirect interest and a contract in excess of $1,000, the Ethics Commission cannot interpret what constitutes a direct or indirect interest under the Borough Code. We would point out that you /your husband can comply with both the Ethics Act and the Borough Code by entering into contracts in excess of $500 pursuant to an open and public process, which contracts do not exceed $1,000. However, we cannot say that there is a conflict between Section 3(c) of the Ethics Act and the Borough Code or that the conflict of law provision, 65 P.S. 412, applies in your case. While the Ethics Act permits public employees and public officials and their spouses, etc., to contract with the governmental body with which they are associated in excess of $500, it does not entitle any one to contract in excess of $1,000 where that right may be limited by other codes or laws. In essence, while the Ethics Act is a "permissive" law, it does not permit or entitle a public employee /official who complies with the Act to escape the restrictions of other "limiting" laws so long as those laws do not directly conflict with the provisions of the Ethics Act. See Toohey, 83 -003. Thus, there is no conflict of law in that you can comply with both the Ethics Act and the Borough Code. With regard to the third question, whether or not your spouse incorporates its business and owns 100% of stock thereof, you would still be "associated" with that business by virtue of the definition of "business with which you are associated" in the Ethics Act, and therefore, the discussions and conclusions as to questions No. 1 and 2 would not be altered. Conclusion: If you follow the guidelines discussed above, you should meet with no conflict or an appearance of a conflict with the public trust under .the Ethics Act. Mrs. Kay C. Pomeroy April 24, 1984 Page 5 As to your second question, the Ethics Commission has no authority to interpret other statutes, codes or laws, and points out the compliance with the Ethics Act is not necessarily equivalent to compliance with other codes where such codes have requirements which differ from, but are not in conflict with the Ethics Act. Where an individual can comply with the requirements of the Ethics Act and the Municipal Code, the conflict of laws Section, 65 P.S. 412, does not apply or supercede the provisions of the other code or law. Finally, with regard to your third question, the discussion is not altered if your spouse incorporates and owns 100% of the stock with his business. Pursuant to Section 7(9)(ii), this 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, providing the requestor 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. CW /rdp Sincerely, deg I , Sandra S. Christianson General Counsel