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HomeMy WebLinkAbout83-508 ChimiclesMr. Nicho ras E..Chimicles Greenfield and Chimicles, P.C. 110 Montgomery Avenue Bala- Cynwyd, PA 19004 Mailing Address: STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 January 31, 1983 ADVICE OF COUNSEL RE: Supervisor, Employee of Bank, Abstention Dear Mr. Chimicles: State Ethics Commission • 308 FinanrA Building • Harrisburg, Pennsylvania 83 -508 This responds to your letter of November 24, 1982, in which you, in your capacity as personal counsel for Walter J. Alphin, a member of the Board of Supervisors of Amity Township in Berks County, requested advice from the State Ethics Commission. Issue: You request advice as to whether Mr. Alphin may vote as a member of the Board of Supervisors for Amity Township on matters (that may come before the Board) concerning a certain Bank. Facts: Mr. Alphin is a member of the Board of Supervisors of Amity Township, hereinafter the Township, in Berks County. He also holds 75 shares of the common stock of the National Bank of Boyertown in Boyertown, Pennsylvania. Occasions arise and are anticipated to arise, where resolutions involving the National Bank of Boyertown, hereinafter the Bank, come before the Board of Supervisors for consideration. These resolutions could include but are not limited to the appointment of the Bank as a depository for the Township. Mr. Alphin would like to vote on such issues as a Board member, but is concerned that his stock ownership in the Bank may constitute a conflict of interest which would prohibit such voting. Discussion: Under the Ethics Act, 65 P.S. 402, as an elected township supervisor, Mr. Alphin, is a public official and as such his conduct must conform to the requirements of the Ethics.Act. A public official, according to the Ethics Act, may not use his public office or confidential information received through his holding of public office to obtain financial gain for himself, his immediate family, or business with which he is associated. See 65 P.S. 403(a). A "business with which he is associated" is defined as: "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402 Mr. Nicholas E. Chimicles January 31, 1983 Page 2 Thus, the supervisor may not use his position or confidential information which he has received nor use his public office in general to obtain financial gain for himself or the Bank which is within the definition of a business with which he is associated by virtue of the fact that he is a holder stock in the Bank. For example, the supervisor is prohibited from using his public office or confidential information recieved as supervisor to benefit the Bank in an attempt to gain appointment or to vote on the appointment of the Bank as depository for the Townshjp. This is equally true when one reviews requirements of Section 1 of the Ethics Act which include the requirement that a public official must assure the public that his personal interests do not conflict with the public trust. Thus, it seems clear that the lupervisor should abstain from actions of the Board which would directly benefit the Bank in which he is a holder of stock. Compare Savage, 82 -539 and see Weist, 82 -543. We should also review the provisions of Section 3(c) of the Ethics Act, 65 P.S. 403(c) which impose certain restrictions upon contracts entered into between a business in which a public official or a member of his immediate family holds certain positions and the public official's governmental body. 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). With regard to any "contract" between the Bank and the Township for the Bank to serve the Township as depository, the Commission believes that Section 3(c) would not be applicable or require an open and public process to be followed on the assumption that the 75 shares of stock owned by Mr. Alphin do not constitute 5% of the equity of the Bank at fair market value and that he does not otherwise hold any of the enumerated positions set forth in Section 3(c). Given the above discussion it is also clear that Section 3(a) of the Ethics Act and Section 1 of the Ethics Act would require abstention by Mr. Alphin if questions were to come before the Board which would directly affect the Bank in which he holds stock. However, without questions as to the nature of specific resolutions which might be presented, a blanket answer is not feasible at this time. However, we should state that if there is l c Mr. Nicholas E. Chimicles January 31, 1983 Page 3 CW /rdp direct connection between the Township supervisor's vote and the Bank's interest, Mr. Alphin as a shareholder should abstain from voting on such resolutions or matters. The reasons for any abstentions should be placed on the public record. Conclusion: As a Township supervisor Mr. Alphin is a public official subject to the Ethics Act and may not use his office or confidential information received through his office to obtain financial benefit for himself, a member of his immediate family or a business with which he is associated, in this case the Bank. In matters which come before the Board of Supervisors which directly and uniquely affect the Bank such as the appointment o1 the Bank as Township depository he should abstain and the reasons for such abstention should be placed on the public record. If his ownership of the 75 shares of stock in the Bank constitute 5% of the equity at fair market value of the Bank or he is otherwise in the status of a director or officer of the Bank, any contracts made between the Township and the Bank would be subject to the requirements of the open and public process as contained in Section 3(c) of the Ethics Act. However, in the above discussion we have assumed that Section 3(c) of the Ethics Act is inapplicable to the fact situation you have presented. If there should be more specific information relating to individual resolutions which might come before the Bank it might be advisable for Mr. Alphin or you to write to us again, as needed, to obtain specific advice as to a particular resolution or matter presented. 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 be scheduled and a formal Opinion from the Commission will be 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. Sincerely, andra S. Christianson General Counsel