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HomeMy WebLinkAbout83-511 ShuffGeoffrey S. Shuff Chief Counsel Commonwealth of Pennsylvania` Department of Commerce South Office Building Harrisburg, PA 17120 Dear Mr. Shuff: Meiling Address: STATE ETHICS COMMISSION P.O. BOX 1179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 February 16, 1983 • ADVICE OF COUNSEL 83 -511 State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania RE: Pennsylvania Minority Business Development Authority, Executive Director; Myers Associates This responds to your letter of January 25, 1983, in which you requested advice from the State Ethics Commission. Issue: You ask whether the Pennsylvania Minority Business Development Authority (PMBDA) would violate the provisions of the Ethics Law by recommending approval of a certain loan application. Facts: The Loan Evaluation Committee of PMBDA held a meeting on January 12, 1983, tentatively recommended approval of a loan application for $98,000 submitted by Larry T. Myers, t/a Myers Associates, hereinafter Myers. This loan application was for the operation of a business with manufactures visual identification systems. The Loan Committee decided to withold final review on this loan application pending the review of the State Ethics Commission of the questions you present as to whether this application or the process by which it was reviewed creates any conflict of interest or an appearance of a conflict of interest under the State Ethics Act on the part of any of the members of the Loan Evaluation Committee or PMBDA. The loan applicant in this matter, Myers, is related to William F. Peterson. The relationship of Myers to Peterson is that Myers' mother and Peterson are second cousins, making the loan applicant (Myers) and Peterson third cousins. Peterson also serves as Executive Director of PMBDA. As Executive Director Peterson serves on the Loan Evaluation Committee and has one vote on that Committee. The other members of the Loan Evaluation Committee are the program coordinator (one vote); three regional representatives (each of whom are allowed one vote relative to those loans from his respective region); two individuals from the Office of Financial Analysis (the Office has one Committee vote); two individuals from the Legal Office (similarly this Office has one vote); and one PMBDA Board member (one vote). Typically, the Committee meets before all scheduled meetings of PMBDA Geoffrey S. Shuff February 16, 1983 Page 2 for the purpose of evaluating, analyzing, and recommending approval and disapproval of each loan application. In most instances the decisions of the Board are predicated upon the recommendation made to it by the Loan Evaluation Committee. Notably, Mr. Peterson as Executive Director of PMBDA and as a member of the Loan-Evaluation Committee did not participate in the discussion or voting on the application of Myers. Furthermore, Mr. Peterson has no interest, pecuniary or otherwise, in Myers Associates. Discussion: Assuming that Mr. Peterson as Executive Director of PMBDA is considered a "public employee" or "public official" within the purview of the Ethics Act, his conduct, of course, must conform to the requirements of the Ethics Act. The Ethics Act requires that no public official may use his public office or confidential information received through the holding of public office to obtain financial gain for himself, for a member of his immediate family or a business with which he is associated. See Section 3(a) of the Ethics Act, 65 P.S. 403(a). In the situation that you present Mr. Peterson and Mr. Myers are not of such a relationship (third cousins) that Mr. Myers falls within the definition of Mr. Peterson's "immediate family." See the definition of "immediate family ", Section 2 of the Ethics Act, 65 P.S. 402. Thus, the requirements of Section 3(a) of the Ethics Act would not inhibit Mr. Peterson, PMBDA,or the Loan Evaluation Committee, in general, from reviewing or recommeding approval of Mr. Myers' loan application. While, the provisions of Section 3(c) of the Ethics Act restrict contracts between an official's governmental body and a member of the official's immediate family or a business with which he is associated these provisions and restrictions would be inapplicable. As stated above, Mr. Myers i§ not within the scope of "immediate family" of Mr. Peterson. In addition, as you have indicated, Mr. Peterson has no office, ownership or economic interest in Myers Associates. Therefore, there would be no violation of Section 3(c) of the Ethics Act, 65 P.S. 403(c) in the situation you present. Finally, you indicate that Mr. Peterson did not participate in the discussion on the application, evaluation of the application or recommendation of the approval of the loan for Myers. Although this is a commendable cautionary action on the part of Mr. Peterson, it would not necessarily be required by the Ethics Act. To date, the State Ethics Commission has applied the provisions of Section 1 of the Ethics Act, 65 P.S. 401, which requires that officials avoid even the "appearance of a conflict with the public trust" only to the extent of removing oneself as a public official from decisions which might affect the official's brother. See Leete, 82 -005. As such, the third cousin relationship of Mr. Peterson and Mr. Myers would not necessarily require, under the Commission's prior precedent, that Mr. Peterson abstain from participation in the loan application of Myers. Geoffrey S. Shuff February 16, 1983 Page 3 Thus, I see no conflict of interest or violation of the Ethics Act on the part of the PMBDA Board of Directors were a loan to be made or approved to Larry Myers or Myers Associates. I note in closing that our review of this question is limited to the applicability of and the questions raised under the Ethics Act. We are not empowered to nor would we be able to render a determination of the applicability of or requirements of the Pennsylvania Minority Business Development Authority Act, the State Adverse Interest Act, or the Governor's Code of Conduct. Conclusion: Mr. Peterson and the PMBDA Loan Evaluation Committee would not violate the provisions of the Ethics Act by recommending approval to the PMBDA Board of a loan application in the situation outlined above. While Mr. Peterson would not necessarily be required to remove himself from participating in the discussion and decisions relating to the loan application of his third cousin, his actions in so removing himself have clearly obviated any possibility that an appearance of a conflict with the public trust would exist if he did not so remove himself. We reiterate, however, that such a removal would not necessarily be required to comply with Section 1 of the Ethics Act, under the existing Ethics Commission precedent. Finally, the PMBDA Board members would not violate the Ethics Law by making a loan to Myers under the situation and circumstances outlined 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 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. SSC /rdp cc: Trevor Edwards, Esquire Sincerely, Safidra S. Christianson General Coun -1