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HomeMy WebLinkAbout86-518 AllenSTATE ETHICS COMMISSION - 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 Fehruary 27, 1986 ADVICE OF COUNSEL Mr. Richard A. Allen 376 Livingston Road West Mifflin, PA 15122 Re: Borough Tax Collector, Insurance Broker, Placement of Tax Collector Bond Dear Mr. Allen: 86 - 518 This responds to your letter of February 6, 1986, wherein you requested the advice of the State Ethics Commission. Issue: Whether the Ethics Act presents any prohibition upon a horough tax collector placing his own hond and receiving a commission therefor. Facts: You indicate that you have been elected as the tax collector for the West Mifflin Borough. One of the requirements for your service in this position is the securing of a tax collector fidelity bond in accordance with the Local Tax Collection Law. 72 P.S. 65511.4(b). You indicate that you are also an insurance agent and hroker. In your capacity as tax collector, you received quotes for your tax collector's hond from three different insurance companies. You indicated that the term of the hond would he for a four year period and that the lowest quote received was from the Fidelity Deposit Company of Maryland. You indicate that you have already chosen this company to provide the bond and that the bond must he filed before March 15, 1986. You were the agent who placed this bond for the office of tax collector and you will receive a commission for that placement. You became an agent for the company in fecemher, 1985. The premium for the bond is $14,947.00. The school district is responsible for 77% of this premium and the borough is responsible for the remaining 23 %. You have requested the advice of the State Ethics Commission as to whether there is any prohibition within the purview of the State Ethics Act. Mr. Richard A. Allen February 27, 1986 Page 2 Discussion: As an elected tax collector in West Mifflin Rorough, you are clearly a public official as that term is defined in the State Ethics Act. 65 P.S. i5402. As such, your conduct must conform to the requirements of the Act. See fomal akes , 85 -010. Generally, the Ethics Act provides 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). Within the above provision of law, no public offical may use his position in order to obtain a financial gain for himself, a member of his immediate family, or a business with which he is associated. He may not use confidential information obtained in his office for similar purposes. Rased upon the above provision of law, this Commission on a number of occasions has determined that a borough official may not participate in the borough's discussions or decisions relating to a contract for the purchase of insurance from a company with which the councilmember is employed, associated or for which he acts as an agent. Within Section 3(a) of the State Ethics Act, such a public official may not vote or otherwise decide to award the contract to such a company. See Skrapits, 84 -015; Carmella, 84 -547. The Commission has further determined that within this provision of the Act such a public official, while not prohibited completely from acting as an agent for the placement of such insurance, must in addition to the above requirements, have his abstention publicly recorded along with the reasons therefor. Based upon the foregoing interpretation of the State Ethics Act and previous opinions and advices of the Ethics Commission, you should not act so as to be the individual who decides what bonding company will be selected in this matter if you simultaneously are acting as the compensated agent for the placement of that bond. Thus, under the foregoing factual circumstances, if the bond has not been finalized at this point in time, it is recommended that the horough in which you serve as tax collector be requested to solicit the appropriate proposals and select the insurance company for the provision of this bond. In this respect, you will be completely detached from the selection of the bonding company. If indeed this avenue is possible, you must additionally act in accordance with the open and public process requirements which will be set forth at a later point in this advice. Mr. Richard A. Allen February 27, 1986 Page 3 If the selection of the bonding company has been finalized and there is no likelihood that the decision may he changed at this point-in time, the Ethics Act would prohibit you from receiving any commission in relation to the placement of this bond. This is so especially in light of the fact that you are the final authority for deciding what companies would he solicited for proposals, and what company would ultimately be chosen for the placement of the bond. Your decision as a public official would thereafter result in your receipt of a commission for the placement of the bond. The problem in this situation is heightened by the fact that you became an agent for this company in December. This was one month after your election and at the same time you selected this company for your bond. Thus, if such a commission is accepted for the placement of this bond, you will have used your position in order to obtain a financial gain other than the compensation that is provided by law for a borough tax collector. In order to be complete, we note that you must not receive any future consideration or indi rectly obtain said commission via any future arrangements. In addition to the foregoing, we also note that the Borough Code provides as follows: PENALTY FOR PERSONAL INTEREST IN CONTRACTS OR PURCHASES. Except as otherwise provided in this act, no borough 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 purchase made or contract entered into or expenditure of money made by the borough or relating to the business of the borough, involving the expenditure by the borough of more than one thousand ($1000) in any calendar year, but this limitation shall not apply to cases where such officer or appointee of the borough 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 he possibly benefited thereby either financially or otherwise. 53 P.S. 546404. The above provision of law clearly indicates that an elected or appointed official of the borough may not he interested either directly or indirectly in any borough expenditure in excess of $1000 in a single calendar year. Because of the above limitation, if a borough official, such as yourself, were to obtain a commission from being interested in a borough contract contrary to the above provision of law, your action in securing such a benefit would also seem to he a violation of Section 3(a) of the State Ethics Act. This is so, in light of the fact that you would have used your position in order to obtain a financial gain that is not part of the compensation provided for by law. Indeed, in such a situation you would be receiving a financial gain that is expressly prohibited by the law. See Stone, 85 -597. In the instant situation r1r. Richard A. Allen February 27, 1986 Page 4 you have not provided any information relating to how much of the four year premium will he assess to the borough in each year. If the borough expenditure is in excess of $1 000 in each year, then the above provisions of law would appear to prohibit you from having an interest in this matter and, thus, result in Ethics Act considerations. In the event that the circumstances of this situation would comport with the first option set forth above and the borough council could initiate the selection process and you also are not prohibited by the Borough Code from having an interest in this matter, then you must comply with the open and public process of the State Ethics Act. This process is required pursuant to Section 3(c) of the State Ethics Act which prohibits a public official from contracting with his governmental body in excess of $500 unless such contract has been awarded through an open and public process. The open and public process requirements of Section 3(c) of the Act would require prior public notice of the contracting possibility; public disclosure of all proposals considered and reviewed; and public disclosure of the contract awarded. In addition to the foregoing, you must, as noted in Option 1 above, not participate in the borough's consideration of this matter and your abstention must be disclosed at said public meeting. See Howard, 79 -044. Fields, 82 -006, and Cantor, 82 -004. Conclusion: As an elected tax collector in a borough, you are a public official subject to the requirements of the State Ethics Act. As such, you may not use your position in order to obtain a financial gain other than the compensation provided by law. As such, your conduct must he in accord with the provisions of this advice as set forth above. 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 he scheduled and a formal Opinion from the Commission will he 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. Si nce John J. ontino (ene'. Counsel