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HomeMy WebLinkAbout89-536 CampbellRichard L. Campbell, Esquire 1500 South Atherton Street State College, PA 16801 STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL April 27, 1989 89 -536 Re: Conflict of Interest, Public Official, Contracting with Governmental Body, Municipal Authority, Member as President and Director of a Building Supply Company Dear Mr. Campbell: This responds to your letter of March 22, 1989, in which you requested advice from the State Ethics Commission. Issue: Whether the State Ethics Act presents any Authority Board Member or a business with whichthenisupon a associated from contracting with the Authority. Facts: You state that you represent the Spring - Benner - Walker Joint Authority, hereinafter Authority, which is a municipal authority organized by the townships of Spring, Benner and Walker in Centre County Pennsylvania. In addition, you have telephonically advised that Mr. Rex Mattern, the Authority Board Member whose conduct is the subject to this advice, has authorized you to ask for this advisory opinion on his behalf. You state that Walker Township recently appointed Mr. Mattern to sit on the Authority and that Mr. Mattern is president, director and a 16.33% owner of Triangle Building Supplies and Services Inc. which has a retail outlet for construction supplies in Spring Township. After noting that the Authority has obtained materials from that business over a period of years prior to Mr. Mattern's appointment, you state that no further purchases will be made until a ruling is received by the Commission as to whether the Authority may continue to purchase materials and supplies from that business. You advise that Mr. Mattern is willing to abstain in any decision regarding the acquisition of supplies from that company. in this regard, you note that most purchases relate to expenditures under the $4,000 requirement for public advertisement and solicitation of bids. After noting that the Authority is comprised of nine members who are appointed from the three municipalities, requesting advice as to whether the Authority be conclude contract in any manner with Mr. Mattern's business so long as Mr. Mattern remains on the Authority. Richard L. Campbell, Esquire April 27, 1989 Page 2 Discussion: As a board member for the Authority, Mr. Mattern is a "public official" as that term is defined in the State Ethics Act. 65 P.S. §402; 51 Pa. Code X1.1. As such, he is subject to the provisions of the Ethics Act and the restrictions therein are applicable to him. Generally, the State Ethics Act places no per se absolute prohibition upon a public official's employment in a business that contracts with his governmental body. The Act does, however, provide as follows: Section 3. Restricted Activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Under Section 3(a) quoted above, this Commission has determined that use of office by a public official to obtain a financial gain for himself or a member of his immediate family or a business with which he is associated which is not provided for in law transgresses the above provision of law. Thus, use of office by a public official to obtain a financial gain which is not authorized as part of his compensation is prohibited by Section 3(a): Hoak /McCutcheon, Orders No. 128, 129, affirmed McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, A.2d (1983); Yacobet, Order No. 412 -R, affirmed Yacobet v. State Ethics Commission, Pa. Commw. Ct. (1987). Similarly, Section 3(a) of the Ethics Act 3wouldd 536 prohibit a public official /employee from using public office to advance his own interests; Koslow, Order 458 -R, affirmed Koslow v. State Ethics Commission, Pa. Commw. Ct. (1988). Likewise, a public official /employee may not 4 use . the status or position of public office for his own personal advantage; Huff, Opinion 84 -015. Section 2. Definitions. "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. Richard L. Campbell, Esquire April 27, 1989 Page 3 Since Mr. Mattern is president, director and 16.33% owner of Triangle Building Supplies and Services Inc., it is clear that entity is a "business with which he is associated" as that term is defined under the Ethics Act. The Commission has determined that a particular statutory enactment prohibits an official's receipt of a particular benefit, then that official's receipt of such a prohibited benefit, in and through his public office, would also be a use of his office in contravention of the Ethics Act. The Commission has been called upon, on various occasions, to determine whether a specific benefit or financial gain is prohibited by law. See, Allen, Advice 86 -518. In order to determine whether a particular benefit or gain is strictly prohibited by law, the provisions of the enabling legislation of the governmental body in question must be reviewed. In the instant situation, the Municipalities Authorities Act provides as follows: D. No member of the Authority or officer or employee thereof shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the Authority for any matter, cause or thing whatsoever by reason whereof any liability or indebtedness shall in any way be created against such Authority. If any contract or agreement shall be made in violation of the provisions of this section the same shall be null and void and no action shall be maintained thereon against such Authority. 65 P.S. §312(D). The above quoted Code does not appear to contain any exception to the above provision that is applicable in the instant situation. This Commission, has in the past, determined that in a situation where a public official individually or through a business entity that he owns, operates, has a financial interests therein or works as an employee, that entity would be prohibited from receiving compensation for providing services or transacting business with the governmental body pursuant to the above provision of law. See, Weaver, Opinion 85- 014. In the instant situation, Mr. Mattern is president, director and 16.33% owner in the company which seeks to contract with the governmental body. Because of this relationship, Triangle Building Supplies and Services Inc., Mr. Matter is in the type of position with the business entity that would appear to implicate the above prc'visy. of law. Richard L. Campbell, Esquire April 27, 1989 Page 4 As such, and based upon the prior rulings of this Commission, Mr. Mattern would appear to be prohibited from receiving any funds from the governmental body for services rendered or in relation to such a business transaction. Because that financial gain appears to be prohibited by law, the receipt of this financial gain in and through public position, would also appear to be_prohibited by Section 3(a) of the State Ethics Act. See, Fvda, Order-No. 438 -R. In addition to the foregoing, the State Ethics Act provides as follows: Section 3(c) of the Ethics Act provides: (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body 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. Any contract made in violation`of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). In relation to the above provision of law, the State Ethics Commission has generally determined that this provision is a procedure to be used when a public official or employee contracts with his own governmental body in excess of $500. Bryan, Opinion 80 -014; Lynch, Opinion 79 -047. The Commission, however, has also determined that the above provision of law is not a general authorization for a public official to contract with his own governmental body where such is otherwise prohibited by law. The above provision of law clearly is intended to be a procedure to be utilized where contracting is otherwise allowed by law. For example, if a particular business transaction was prohibited under Section 3(a) of the State Ethics Act, this particular section would prohibit a public official from engaging in the contracting process. Richard L. Campbell, Esquire April 27, 1989 Page 5 Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibitions to such contracting, the above particular provision of law would require that an additional procedure, the open and public process, must be used in all situations where a public official is otherwise appropriately contracting with his own governmental body in excess of $500. This open and public process would require: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; public disclosure of all applications or proposals considered and; (4) public disclosure of the contract awarded and offered and accepted. See, Cantor, 82 -004. Thus, in the event that contracting would be allowed, the above process must be employed. Lastly, it must be noted that the propriety of the proposed course of conduct has only been addressed under the Ethics Act. (3) Conclusion: As a Authority Board Member, Mr. Mattern is a public official subject to the provisions of the Ethics Act. Based upon the information provided herein, the Ethics Act would prohibit Mr. Mattern or a business with which he is associated from receiving any financial gain that is strictly prohibited by law. A member of Authority who received such compensation individually or through a business with which he is associated, would be receiving a financial gain that is strictly prohibited by law. Such would, thus, be received in and through public office and would not be in accord with the State Ethics Act. Parenthetically, in the event that there had been no such prohibition upon the receipt of this compensation, then the Ethics Act, generally, would not have been precluded in and of itself this contracting possibility. However, the public official could not participate in any actions relating to the business transaction ar` all contracting or business transactions with such company must be accomplished through an open and public process as set forth above. Lastly, the propriety of the proposed conduct has onli* been addressed under the Ethics Act. Richard L. Campbell, Esquire April 27, 1989 Page 6 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 in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code §2.12. Sincerely, Vincent J. Dopko, General Counsel