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HomeMy WebLinkAbout81-615 FlahertyRobert D. Flaherty, Esquire Box 398 N. Church Street Extension Mount Pleasant, PA 15666 Dear Mr. Flaherty: Mailing Address . STATE ETHICS COMMISSION P.O. BOX 1179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 September 2, 1981 ADVICE OF COUNSEL RE: Section 3(c), School Building Authority 81 -615 This responds to your letter of June 18, 1981, in which you, the Solicitor of the Mt. Pleasant Area School District, requested an opinon from the Ethics Commission. Issue: You requested advice as to whether a member of a School District Building Authority can submit bids to supply insurance to the School District. Facts: You informed us that James Murtha is a member of the Mount Pleasant Area School Building Authority. Mr. Murtha is also a vendor of insurance for the I.N.A. Insurance Company. The School District would like to obtain a bid from I.N.A. in an effort to obtain the best possible insurance - coverage. You did not advise whether Mr. Murtha is anything other than an agent /employee of I.N.A. Discussion: The Ethics Act, 65 P.S. §401 et seq., does not absolutely forbid public servants from doing business with governmental bodies. If the restrictions imposed by the Act are honored a public official may contract with a govern- mental body. Mr. Murtha may retain his post on the Building Authority and submit bids to obtain an insurance contract with the School District if the principles discussed below are followed. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Robert D. Flaherty, Esquire September 2, 1981 Page 2 The Act provides that no public official shall use his position or confidential information received as a public official to obtain financial gain for himself or a business with which he is associated. 65 P.S. §403(a). Thus, Mr. Murtha cannot use his position on the Authority or confi- dential information received as an Authority member to obtain the insurance contract between the School District and I.N.A. Likewise, Mr. Murtha, as an Authority member, should take no part in deliberations, discussions or votes leading to the award of this contract. Further, Section 3(b) of the statute states that no one shall offer nor a public official accept anything of value based on any understanding that his official actions will be influenced thereby. 65 P.S. E403(b). Mr. Murtha may not accept anything' of value, including a contract between the District and the insurance company he represents, based on any under- standing that his actions on the Building Authority would be influenced thereby. Section 3(c) of the Act states that no public official or a member of his immediate fammily or any business in which the person or his immediate family is a director, officer or owner 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 is awarded in an open and public process. If Mr. Murtha or his family enjoy one of these relationships with I.N.A., Mr. Murtha may not become vendor for a contract between the District and I.N.A. Insurance Company unless the insurance contract is let in an open and public process that allows for: (1) Prior public notice; and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. Howard, 79 -044. The Commission has normally applied the restrictions of Section 3(c) to any contract between the official who enjoys such a status and the governmental body with which the official is associated. Here, the Authority is assumed to be a separate and distinct legal entity from the School District so that the application of Section 3(c) is not required. However, if an open and public process is used, even the appearance of impropriety will be avoided. Robert D. Flaherty, Esquire September 2, 1981 Page 3 Conclusion: A member of a School District Building Authority may act as vendor of insurance to the School District if the member does not use his position or confidential information received as a Building Authority member to obtain financial gain for himself or a business with which he is associated. The member may not accept anything of value, including an opportunity to bid on a contract, based on any understanding that his official actions would be influenced thereby. If the contract of insurance is valued at more than $500 and the member enjoys the status vis -a -vis I.N.A. described in Section 3(c) of the Ethics Act (assuming the Authority and School District are not separate legal entities) the contract must be awarded in an open and public process meeting the following criteria: (1)'' Prior public notice; and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. These restrictions would apply if the School District and the Authority are one legal entity so that Mr. Murtha must be deemed associated with the School District. If not, the restrictions of Section 3(c) would not apply per se, but would be best observed to avoid the appearance of a conflict of interest. Of course, Mr. Murtha may not participate in deliberations, discussions or votes leading to the award of this contract. 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 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 S'ncerely, andra S. Christianson General ounsel