HomeMy WebLinkAbout86-596 WatsonMr. Richard L. Watson
R.D. #2, 210 Oak Road
New Bloomfield, PA 17068
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
August 28, 1986
ADVICE OF COUNSEL
86 - 596
Re: Public Employee, Outside Employment
Dear Mr. Watson:
This responds to your letter of July 15, 1986, wherein you requested the
advice of the State Ethics Commission.
Issue: Whether an employee of the Pennsylvania Public Utility Commission
may engage in an outside accounting and consulting business.
Facts: You advise that you are currently employed by the Pennsylvania Public
Utility Commission as a Fixed Utility Financial Analyst. You have been
employed in this capacity since May of 1984. Prior to your employment with
the Pennsylvania Public Utility Commission you were employed by the
Pennsylvania Department of Revenue as a field auditor. You indicate that you
are interested in performing part -time accounting and consulting work and
have, therefore, requested the advice of the State Ethics Commission regarding
any possible conflict of interest under the State Ethics Act.
In your position with the Public Utility Commission you are responsible
for the analysis and review of financial data, exhibits, direct testimony,
reports, interrogatories, and briefs which present the Utility position in a
case. You assist in preparing of these items and may be required to testify
about findings of fact, codes or regulations and areas of compliance and
non - compliance with Utility rules and regulations. Work in this capacity
requires the preparation of comparison rate studies, exhibits or analyses of
financial segments of utility companies' corporate accounts in order to
determine equitable rates or acceptible corporate transactions in assigned
areas of interest. In this respect, you were required to recommend positions
in various cases. Generally, work regarded the review and analyses of fiscal
data submitted by fixed public utilities to justify service rates or other
financial transactions contemplated by said utilities.
Mr. Richard L. Watson
August 28, 1986
Page 2
Prior to your employment with the Public Utility Commission, you were
employed by the Pennsylvania Department of Revenue. In that position, you
were assigned as a field auditor. You were responsible for advanced and
complex auditing work in the Department of Revenue regarding the review,
examination and analysis of books and financial records of large multifaceted
business entities in order to determine taxpayer compliance with the sales,
use, corporation, and gasoline tax laws as well as the regulations of the
Commonwealth. In this position you were responsible for contacting the
taxpayer -or their representatives to inform them of the audit and set to up an
appointment for a pre -audit conference. You analyzed accounting systems
employed by the taxpayer and reviewed all of the books and records of the
taxpayer in order to determine compliance with the Commonwealth Tax Laws. You
terminated your employment with the Pennsylvania Department of Revenue in May
of 1984.
In relation to your part -time employment, you advise that you will be
working with companies in two primary areas:
1. Writing computer programs and assisting businesses to change from a
manual to computer based accounting system.
2. Reviewing a business accounting system and making recommendations as
to possible changes in the system.
You advise, that in relation to this second function, you will be
examining paid bills of companies in order to determine if any Pennsylvania
Sales Taxes have been paid in error. You will', thereafter, assist in
preparing a petition that is filed with the Pennsylvania Department of Revenue
to obtain a refund of the sales tax monies. This petition would be reviewed
by the Revenue Board of Appeals which would render an opinion as to whether a
refund should be granted. In this respect, it is possible that you would have
to make an appearance before the board, although it is not always necessary to
do so.
Discussion: At the outset, it should be noted that the State Ethics
Commission may address your question only within the purview of the State
Ethics Act. As such, the Commission will not address your question under
other codes of conduct, such as the State Adverse Interest Act or any other
code of conduct adopted by the particular agency by which you are employed.
As a Fixed Utility Financial Analyst, employed by the Pennsylvania Public
Utility Commission, you are a public employee as that term is defined in the
State Ethics Act. 65 P.S. §402. As such, your conduct must conform to the
requirements of the State Ethics Act. Miller, 85 -530. Additionally, we note
that as a field auditor, in the Pennsylvania Department of Revenue, you were
also a public employee within the purview of the State Ethics Act. O'Brien,
83 -558.
Mr. Richard L. Watson
August 28, 1986
Page 3
Generally, the State Ethics Act provides as follows:
Section 3. Restricted activities.
(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).
Within the above provision of law, no public employee may use his public
position in order to obtain a financial gain for himself or for a business
with which he is associated. A public employee may not use confidential
information obtained in his public position for similar purposes. In addition
to the above provisions of law, the State Ethics Commission is also authorized
to address other areas of possible conflict. 65 P.S. §403(d). The parameters
of the types of activity encompassed by this provision of law are generally
determined through a review of the intent and spirit of the State Ethics Act.
Generally, the State Ethics Act was promulgated in order to ensure the public
that the financial interests of their public officials and employees do not
conflict with the public trust. 65 P.S. §401. In this respect, a conflict of
interest would be occasioned any time a public official attempts to serve one
or more interest that are adverse. See, Alfano, 80 -007.
In the instant situation, we must review your request under the two
provisions of law set forth above. Initially, it is noted, that the State
Ethics Act contains no absolute prohibition which would prevent a public
employee from engaging in private outside employment. See, Hershock, 85 -016.
The Ethics Act, however, would prevent you from performing your part -time
services during time for which you were being paid by the Commonwealth of
Pennsylvania. Additionally, you may not use any of the facilities of your
public employer,„ the Pennsylvania Public Utility Commission, in order to
advance your private business. This would include utilization of the
facilities, personnel, or other materials of the Commission in order to
advance your private employment. See, Miller, 85 -530. Additionally, if you
have had access to confidential information either as an employee of the
Pennsylvania Department of Revenue or as an employee of the Pennsylvania
Public Utility Commission, such confidential information could not be used to
assist you in your representation of your private clients.
In addition to the foregoing, we note that in order to avoid an actual
conflict of interest, which this Commission is authorized to address pursuant
to Section 403(d) of the State Ethics Act, you should not perform the services
as indicated in your letter for any public utility company that has been or
could be subject to the jurisdiction of the Public Utility Commission. This is
so, particularly in light of your position in which you are responsible as a
Commonwealth employee for the review of public utilities financial
Mr. Richard L. Watson
August 28, 1986
Page 4
transactions and the authority that you have for making recommendations in
relation thereto. If, as a private accountant, you were to engage in
assisting public utilities in structuring their financial systems, such would
present an actual conflict of interest between your private position and your
public position. Thus, you should not engage in private services for any
public utility company in the Commonwealth of Pennsylvania.
In relation to your services, as provided to other business, we note that
the State Ethics Act provides as follows:
Section 3. Restricted activities.
(e) No former official or public employee shall represent
a person, with or without compensation, on any matter
before the governmental body with which he has been
associated for one year after he leaves that body.
65 P.S. 403(e).
Had you terminated your employment with the Department of Revenue within
the last year, the State Ethics Act would have prevented you from representing
any individual before your governmental body, i.e., the Department of Revenue
and its component parts. As we review your request, however, we note that
your representation restriction would have terminated the year after you
terminated your service with the Department of Revenue. Thus, because it is
more than two years since you terminated your employment with the Department
of Revenue, this particular provision of law would not prevent you from
representing any particular individual before the Pennsylvania Department of
Revenue. See, Faber, 86 -544.
It is noted, however, that in the event that you are called upon in your
private position to perform any functions in relation to a matter over which
you had direct responsiblity as a public employee, you must abstain from
performing said work. Thus, for example, if as a field auditor, in the
Department of Revenue, you were responsible for auditing the sales tax
compliance of a particular company, in a particular year, you should not now
represent that, particular company in relation to contesting the audit findings
which you were responsible for compiling.
Finally, in an effort to be complete, we note that the State Ethics
Act provides as follows:
Section 3. Restricted activities.
(b) No person shall offer or give to a public official or
public employee or candidate 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
Mr. Richard L. Watson
August 28, 1986
Page 5
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).
We reference to the above provision of law, not to imply that there has
or will be any violation of this particular provision of the act but merely to
provide a complete response to your question.
Conclusion: While the State Ethics Act presents no absolute prohibition upon
a public employee engaging in outside private employment endeavors, the Act
would prohibit an official from using any of the facilities, personnel, or
other benefits of his public position to enhance his private work.
Additionally, a public official should not use any confidential information
obtained in any Commonwealth position to advance his private business
enterprises. As an employee of the Pennsylvania Public Utility Commission,
you should not represent any utility company in the Commonwealth of
Pennsylvania. Further, you should not represent any company in relation to
specific audits in which you were involved as an employee of the Pennsylvania
Department of Revenue.
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.
Si ncer
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Ge - al Counsel