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HomeMy WebLinkAbout81-521 MaderSTATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 March 9, 1981 ADVICE OF COUNSEL Mr. Ben Mader Pennsylvania Department of Agriculture 2301 North Cameron Street Harrisburg, PA 17110 RE: Conflict of Interest, Stockholders Dear Mr. Mader: 81 -521 This responds to your letter of January 28, 1981, in which you, as Administrator of the Pennsylvania Fair Fund, requested an opinion from the Ethics Commission. Issue: In your letter you requested advice as to whether the Administrator of the Pennsylvania Fair Fund may hold shares in a local fair. Facts: You advised us that the Pennsylvania Fair Fund is empowered by statute to distribute funds to county and community fairs, and other groups involved in the promotion of agriculture. The funds distributed came from the state's portion of pari- mutuel wagering at tracks in the Commonwealth. The money is distributed according to a statutory scheme classifying fairs and reimbursable expenses for each class of fair. The statute also specifies the dollar amounts reimbursable to groups promoting agriculture. The Administrator of the Pennsylvania Fair Fund supervises compliance with the statute and provides advice on how to improve fairs. The Administrator does not sit on the committee to oversee and approve applications for capital improvement, matching funds. You further advised us that you have been offered a share in the Gratz Fair in Dauphin County. The $500 share would allow you to be elected to the twelve stockholder board of the Gratz Fair. Discussion: As Administrator of the Pennsylvania Fair Fund you are a public employee subject to the provisions of the Ethics Act. The Act, 65 P.S. §401 et seq., defines "public employee" as: Mr. Ben Mader March 9, 1981 Page 2 "Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a nonministerial nature with regard to: (1) contracting or procurement; (2) administering or monitiring grants or subsidies,.... (5) any other activity where the official action has an economic impact of greater than a de minimus nature on the interests of any person." Id. at §402. (emphasis added) you administer and monitor grants and subsidies as Administrator of the Pennsylvania Fair Fund you come with the above definition of public employee. The Act does not, however, prohibit you from acquiring an interest in the Gratz Fair. Acquisition of this interest, however, does impose upon you several duties under the Ethics Act. You should bear in mind that the Ethics Act forbids a public employee from using confidential information received through holding public employment to obtain financial gain for himself, his immediate family, or a business with which he is associated. This is defined as any business in which you serve as director, officer, owner, employee or holder of stock. 65 P.S. §403(a). Since you will be associated with the Gratz Fair you must not use confidential information obtained through your post as Administrator to obtain financial gain for yourself or the Gratz Fair. It Further, Section 3(c) of the Act states in pertinent part: ... no public employee ... 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...." 65 P.S. §403(c). If the interest you acquire in the Gratz Fair is equal to or greater than 5% of the fair market value equity of the business, Gratz Fair may not contract with the Pennsylvania Fair Fund, Department of Agriculture, unless the contract is awarded through an open and public process. Gratz Fair can contract with the Pennsylvania Fair Fund, Department of Mr. Ben Mader March 9, 1981 Page 3 Agriculture in an amount over $500 if these open and public steps are followed: (1) Prior public notice about the contract, and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. Howard 79 -044. The Ethics Act also mandates that public employees employed by the Commonwealth file a Statement of Financial Interest for the preceding calendar year with the department where he is employed no later than May 1 of each year of his employment and for the year after he leaves public employment. 65 P.S. §404(a). The contents of the statement of financial interest are set forth in 65 P.S. §405. We specifically note that §405(b)(8) and (9) require reporting of any directorship (Board of the Gratz Fair) in any business entity and any financial interest (share in Gratz Fair) in any legal entity engaged in business for profit. These items must be reported. Section 401 of the Ethics Act also provides that public employees should avoid even the appearance of a conflict of interest. 65 P.S. §401. Accordingly, if any matter concerning the Gratz Fair comes before you as Administrator of the Pennsyl- vania Fair Fund you should abstain from reviewing, deciding or taking action in the matter or refer it to another person in your department. Conclusion: The Administrator of the Pennsylvania Fair Fund, Department of Agriculture is a public employee subject to the provisions of the Ethics Act. The Act does not forbid the Administrator from acquiring an interest in the Gratz Fair: (1) If the Administrator does not use confidential information obtained through his public employment to obtain financial gain for himself or the Gratz Fair. (2) If the Administrator files a statement of financial interest noting his interest in the Gratz Fair. (3) Further, if the administrator's interest in the Gratz Fair is equal to or greater than 5% of the fair market value of the business, Gratz Fair may not enter into a contract for greater than $500 with the Pennsylvania Fair Fund, Department of Agriculture unless the contract is awarded through an open and public process as discussed above. (4) If any such share is obtained, the Administrator should abstain from deciding, reviewing, and recom- mending action on Gratz Fair matters that come before the Administrator in order to avoid the appearance of a conflict of interest. Mr. Ben Mader March 9, 1981 Page 4 Pursuant to Section 7(9)(ii), this Advice is a complete defense in any enforcement proceeding initiated by the Commis- sion, 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 may be scheduled and a formal Opinion from the Commission will be issued. You should make such a request or indicate your disapproval of this Advice within the next 30 days. SSC /rdp Sincerely, ndra S. Ch stianson General Cou sel