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HomeMy WebLinkAbout81-560 SciottoRE: Conflict of Interest Dear Mr. Sciotto: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 APRIL 24, 1981 ADVICE OF COUNSEL Charles T. Sciotto Director of Personnel Office of Budget & Administration 81 -560 This responds to your letter of September 9, 1980, in which you, as Director of Personnel in the Office of Budget and Administration, requested an opinion from the Ethics Commission. Issue: You requested advice as to whether it is a conflict of interest for the Director of Enforcement of the Pennsylvania Milk Marketing Board to hold 230 shares in the Kraft Corporation. Facts: You informed us that Edward R. Vees, is the Director of Enforcement for the Pennsylvania Milk Marketing Board. The Director acquired 230 shares of stock in the Kraft Corporation before the Director was employed by the Board. As of June 16, the Kraft Corporation, a licensee of the Pennsylvania Milk Marketing Board, had 28 million shares of stock outstanding. Discussion: The Director of Enforcement of the Milk Marketing Board is a public employee subject to the Ethics Act, 65 P.S. §401 et seq. Section 2 of the statute defines public employee as any individual employed by the Commonwealth who is respon- sible for taking or recommending official action of a non - ministerial nature with regard to regulating any person; or any other activity where the official action has a greater than de minimus economic impact on the interests of any person. 65 P.S. §402. The Director is responsible for enforcing milk marketing regulations and thus is within the group of those employees covered by the Ethics Act. The Ethics Act does not prohibit Director Vees from holding shares of stock in a licensee of the Board. Mr. Vees owns a minute fraction of the outstanding stock of the Kraft Corpora- tion and is not in a position to make corporate policy with regard to the Board or to represent Kraft in any way. Accor- dingly, there is no inherent conflict of interest in the Director holding stock in the Kraft Corporation. Charles T. Sciotto April 24, 1981 Page 2 The Act also empowers the Commission to address cases that present an appearance of a conflict of interest. 65 P.S. §401. To aovid even the appearance of a conflict of interest the Director should be advised that he may not use his official position or any confidential information received through his holding an official position to obtain financial gain. The Director could not, for example, pass confidential information regarding the Board or its policies to the Kraft Corporation. 65 P.S. §403(a). Nor could any person or the Kraft Corporation give the Director anything of value based on any understanding that the Director's official actions would be influenced thereby. 65 P.S. §403(b). The Ethics Act prohibits any public employee, his immediate family or any business in which the public employee or a member of his immediate family is a director, owner, officer or owner of stock exceeding 5% of the equity at fair market value of the business from entering into a contract valued at greater than $500 unless the contract is awarded in an open and public process. 65 P.S. §403(c). The Director is not an officer or director or owner of 5% of the fair market value equity of the Kraft Corporation. The Kraft Corporation may, if the occassion ever arose, contract with the Board without reference to the open and public process requirements of Section 3(c) of the Act. Conclusion: The Director of Enforcement of the Pennsylvania Milk Marketing Board is a public employee subject to the Ethics Act. It is not a conflict of interest for the Director to own stock in the Kraft Corporation, a licensee of the Board. The Director may not use confidential information received through his official position to benefit the Kraft Corporation. The Kraft Corporation may not give the Director anything of value based on any understanding that the Director's official actions would be influenced thereby. Because the Director is not a director or officer or owner of stock equal to 5% of the equity at fair market value of the Kraft Corporation, Kraft may contract with a governmental body without referencee to the requirements of Section 3(c) of the Ethics Act. We assume you will advise Mr. Vees of this determination. 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. Charles T. Sciotto April 24, 1981 Page 3 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. SW /rdp Sincerely, cZold Sandra S. C istianson General Co nsel