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HomeMy WebLinkAbout89-551 MatthewsRonald W. Matthews Box 43 Scenery Hill, PA 15360 Dear Mr. Matthews: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL June 13, 1989 89 -551 Re: Conflict of Interest, Public Official, Contracting with Governmental Body, Township Auditor, Second Class Township This responds to your letter of May 13, 1989, in which you requested advice from the State Ethics Commission. Issue: Whether the State Ethics Act presents any prohibitions upon a Township Auditor or a business with which he is associated from contracting with Second Class Township. Facts: You state that you have been an elected auditor in North Bethlehem Township, Washington County since January 1971. You then state that in September 1983 you acquired the property of your uncle Howard Matthews upon which a block garage stands containing approximately 4332 square feet. You then note that you uncle and the township supervisors entered into a contract on January 14, 1980 in which the township leased the building for the storage of township equipment at $125.00 per month. You then advise that since September 1983 the township supervisors and yourself have been operating under the same agreement. However, you now note that your insurance company will no longer insure the building on your home owners policy because the company has classified the building as commercial which requires a separate policy costing an additional $500.00 per year. You conclude by requesting advice as to whether a conflict would exist if you would enter a new agreement with the township and, if so, how can you recover the (additional) sum. Discussion: As an Auditor for North Bethlehem Township, you are a "public official" as that term is defined in the State Ethics Act. 65 P.S. S402; 51 Pa. Code S1.1. As such, you are subject to the provisions of the Ethics Act and the restrictions therein are applicable to you. Ronald W. Matthews June 13, 1989 Page 2 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. , 531 A.2d 536 (1987). Similarly, Section 3(a) of the Ethics Act would 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. , 540 A.2d 1374 (1988). Likewise, a public official /employee may not use the status or position of public office for his own personal advantage; Huff, Opinion 84 -015. The Commission has determined that if 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 Second Class Township Code provides as follows: Ronald W. Matthews June 13, 1989 Page 3 (f) Except as herein provided, no township official, either elected or appointed, who knows, or who by the exercise of reasonable diligence, could know, shall be interested to any appreciable degree, either directly or indirectly, in any contract for the sale or furnishing of any supplies or materials for the use of the township, or for any work to be done for such township involving the expenditure by the township of more than three hundred dollars ($300) in any year, but this limitation shall not apply to cases where such officer, or appointee of the township, is an employe of the person, firm or corporation to which the money is to be paid in a capacity with no possible influence on the transaction, and in which he cannot be possible benefited thereby, either financially or otherwise: Provided, however, That in the case of a supervisor, if he knows that he is within the exception just mentioned, he shall so inform the supervisors and shall refrain from voting on the expenditures, or any ordinance relating thereto, and shall in no manner participate therein: Provided, further, That any such official or appointee who shall knowingly violate this provision shall be subject to surcharge to the extent of the damage shown to be thereby sustained by the township, ouster from office, and shall be guilty of a misdemeanor, and upon conviction thereof, shall be sentenced to pay a fine not exceeding five hundred dollars ($500): Provided, That in the case of the purchase of material for the construction, reconstruction, maintenance and improvement of roads and bridges, the contract, which shall be in writing, and shall be let only on standard specifications of the Department of Transportation, and materials so purchased shall only be used in accordance with specifications of said department. 65 P.S. 565802 (f) . 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 Ronald W. Matthews June 13, 1989 Page 4 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. As such, and based upon the prior rulings of this Commission, you 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 Ronald W. Matthews June 13, 1989 Page 5 particular section would prohibit a public official from engaging in the contracting process. 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 North Bethlehem Township Auditor, you are a public official subject to the provisions of the Ethics Act. Based upon the information provided herein, the Ethics Act would prohibit you or a business with which you are associated from receiving any financial gain that is strictly prohibited by law. A member of Board of Auditors 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 and all contracting or business transactions with such company must be accomplished through an open and public process as set forth above. Ronald W. Matthews June 13, 1989 Page 6 Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. 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. such. This letter is a public record and will be made available as 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 52.12. Sincerely, Ica... 1:)4 Vincent J. Dopko, General Counsel