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HomeMy WebLinkAbout83-595 PalumboMr. Louis F. Palumbo, Executive Director Lawrence County Board of Assistance 108 East South Street New Castle, PA 16101 MaOnny Address. STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 September 28, 1983 ADVICE OF COUNSEL RE: Board Member, Non - Profit Corporation Dear Mr. Palumbo: 83 -595 This responds to your letter of August 17, 1983, in which you request advice from the State Ethics Commission. Issue: You ask whether given your current status as an employee with the Lawrence County Board of Assistance you may serve as a member of a non - profit corporation board without violating the Ethics Act. Facts: You currently serve as the Executive Director of the Lawrence County Board of Assistance. In your letter of August 17 and our telephone conversation of September 2, 1983, you indicate that in your capacity as Executive Director you have responsibility over cash public assistance programs only. You are not involved as Director or otherwise with public welfare grants or monies except in the categories of cash public assistance. Originally, in 1974 a non - profit corporation was formed called Allied Human Services Association, hereinafter Allied. This corporation was dormant until August, 1983. At this time an attempt was made to "resurrect" Allied to seek to become the "conduit agency" for social service block grants. Essentially, Allied, if it becomes active, would seek to contract with the County for the purposes of coordinating community block grants and other social services within Lawrence County. Under this proposal Allied would apply for block grant funds from the County and would be responsible for dispensing funds and coordinating programs within the County. You indicate that although public welfare monies may be administered by Allied in the performance of this contract, these would not be the same funds that are within your purview as Director of the Lawrence County Board of Assistance. You also indicate that you would not evaluate Allied as a contractor nor would you be in a position to decide or recommend that Allied get the contract with the County. State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Mr. Louis F. Palumbo September 28, 1983 Page 2 Additionally, you indicate that all monitoring and evaluation of public welfare grants-monies which Allied might administer, assuming that Allied would be selected as the contractor, is currently performed by Harrisburg Offices of the Depar rnent of Public Welfare and the Lawrence County Board of Assistance does not have jurisdiction in thie respect. The Lawrence County Board of Assistance would not be a recipient of funds that Allied would be handling nor would the Lawrence County Board of Assistance be responsible for evaluating or monitoring this contract or the performance of Allied under the contract, if same were awarded. Essentially, the main objectives of this re- organized non - profit organization would be to seek to contract to perform comprehensive assessment of human services to establish a centralized human services planning office; to consolidate financial management /contracts offices; to consolidate intake and referral units of major programs into one location to reduce needed staff; and to consolidate required paper work. The Board of Allied, in addition, has been restructured in the "community action type format" where one -third of its members _are elected officials, one-third are representatives of the poor, and one -third are members at large. AG Director of the Lawrence County Board of Assistance, you have been asked to serve on this Board of Allied as a representative of the poor. You would not be pail! for this service, we assume. Discussion: As Executive Director of the Lawrence County Board of Assistance you are a "public employee" as that term is defined in the Ethics Act and therefore your conduct must conform to the requirements of the Ethics Act. The provisions of the Ethics Act, which we will address first include Section 3(a) and Section 3(b) which state that: (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a), (b) No person shall offer or give to a public official or public employee or candi d- to for public office or a member of his immediate family or a business with which he is associated, and no public official or public employee or candidate for public office shall solicit or accept, anything of value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding that the vote, official action, or judgment of the public official or public employee or candidate for public office would be influenced thereby. 65 P.S. 403(b). Mr. Louis F. Palumbo September 28, 1983 Page 3 Under these provisions of the Ethics Act it is clear that you may not, as Executive Director, use your public office to obtain financial gain for yourself or a business with which you are "Associated." The definition of a "business" within the Ethics Act refers primarily to an entity organized for profit and you are deemed to be "Associated" with such a business if you or a member of your family served as a director or officer of such a "business." Although Allied is organized as a non - profit corporation, you would be best advised to insure that you are insulated from any County decisions relating to the award of, the review of, the monitoring of, etc., any contract that Allied might have with the County. Upon the facts as you have stated them, which we must assume are correct for purposes of this Advice, there does not appear to be any connection between your role as Executive Director of the Lawrence County Board of Assistance and the award, monitoring, etc., of any contract that Allied might seek to secure or have with the County. Thus, even if Allied were to be deemed a "business" with which you are "associated" if you were to assume the position of Director with Allied, there would be little possibility that you could use your public office to secure gain for Allied. You must also be aware of the provisions of Section 3(b) which indicate that you may not accept any thing of value, including the position as Director, in this case, on the understanding that your official conduct would be influenced thereby. As indicated above, once again, there does not appear to be any instance in which your official judgment or vote would be called into operation vis -a -vis the contract which Allied might secure with the County. Thus, the possibility of violation of Section 3(b) of the Ethics Act is minimal. We must review the requirements of Section 3(c) of the Ethics Act as they would relate to the process by which Allied by seek to contract with the County. Section 3(c) of the Ethics Act requires that: (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). Mr. Louis F. Palumbo September 28, 1983 Page 4 Under Section 3(c) it is clear that if a business with which you would be associated as director or officer were to contract with the governmental body with which you were associated (in this case the County) in an amount over $500, an open and public process must be undertaken. It is possible to assert that Allied is not a "business" with which you might be associated because Allied is a non- profit corporation. However, to the degree possible, in order to avoid even the appearance of a conflict with the public trust as required by Section 1 of the Ethics Act, if you were to be appointed as a Director of Allied, end if Allied were to seek to contract with the County, there should be as mach public notice of the contract availability as possible su that other reasonable and prudent competitors of Allied could prepare and present proposals. In addition, there should be subsequent public disclosure of all proposals considered and the contracts awarded. Finally, we note that your letter of August 17, 1983, also requests a ruling as to whether county commissioners or state legislators would be able to serve as members of the Board of A11i e'`. The Ethics Act empowers us to render advice or opinion only to the person whose conduct is in question and whose conduct would be regulated by our response. Therefore, we cc,nnot respond to you with respect to a question concerning the conduct of other persons. Likewise, we also have assumed throughout this response that the County Board of Assistance for which you serve as Executive Director has no official relation to Allied and would not be in any sense competing with Allied for funds from the county, state or otherwise. Likewise, we assume that as a member of the Board of Allied, if you were to assume this post, you would not be in a position to use or transmit to Allied any "confidential" information which you may have acquired during your tenure as Executive Director. This would be prohibited under Section 3(a) of the Ethics Act set forth above. Conclusion: So long as the precautions set forth above are met, there is no inherent conflict if you were to ser ✓e as a member of the Board of Allied while retaining your post as Executive Director of the Lawrence County Board of Assistance. Of course, you should if you assume such as role as Director, also be alert to include this information on your Financial Interest Statement filed annually with the County. 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 o• criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. Mr. Louis F. Palumbo September 28, 1983 Page 5 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 This letter is a public record and will be made available as such. Sincerely, Sandra S. Christianson General Counsel