HomeMy WebLinkAbout86-619 IsraelDear Mr. Israel:
Stephen Israel, Esquire
1109 Grant Ruilding
Pittshurgh, PA 152.19
Maihng Address
State Ethics Commission
308 Finance Building
P. 0. Box 11470
Harrisburg, Pa. 17108 -1470
November 5, 1986
AmIICE nF COUNSEL
86 -619
Re: Conflict of Interest, Township Commissioner, Interest in Township
Insurance Program
This responds to your letter of October 15, 1986, wherein you requested
the advice of the State Ethics Commission.
Issue: Whether any conflict of interest would he occasioned where a township
commissioner is the servicing agent for a township insurance program.
Facts: You have requested the advice of the State Ethics Commission as
Solicitor for Leete Township. Leete Township is a township of the first class -
and governed hy five township commissioners. fine of the Township
Commissioners, Carolyn Verszyla, is also an employee of the Prudential
Insurance Company. In 1RRO, Leete Township entered into a hospitalization
group insurance program with the Prudential Company. Ms. Verszyla announced
at that time, and it was known hy all of the commissioners at that time, that
she was an employee of Prudential. The salesmen for the Prudential Insurance
Company at that time was an individual named Larry Maseth. Mr. Maseth placed
this insurance policy and received commissions in relation thereto.
Subsequent to the placement of this insurance policy, Mr. Maseth was
transferred hy his company and the servicing responsibility for the policy was
assigned to Ms. Verszyla. She continued to he the servicing representative
for several years thereafter and her name did, in fact, appear on several of
the invoices sent to Leete Township. You have advised that Ms. Verszyla did,
in fact, receive commissions for acting as service representative after she
assumed that position. You advise that this money was received from
Prudential Insurance Company and not from Leete Township. Ms. Verszyla has
removed herself as servicing representative from this program. You have
requested the advice of the State Ethics Commission regarding the ahove
situation. You have also advised and this Commission has received a request
from Ms. Verszyla in relation to this matter.
State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania
Stephen Israel, Esquire
Novemher 5, 1986
Page 2
Discussion: At the outset, it should he noted that this Advice of Counsel
will only address the general interpretation of the State Ethics Act as
previously set forth hy prior Commission opinions and advices. This Advice of
Counsel will in no way attempt to adjudicate whether a violation of the State
Ethics Act has, in fact, occurred. That type of decision must he made hy the
Commission after all appropriate procedures have heen met. However, in light
of the fact that hoth the township commissioners as well as Ms. Verszyla have
requested information regarding this situation, an attempt will he made to
generally outline the parameters of the State Ethics Act in relation to such
situations.
Township commissioners are clearly pubic officials within the purview of
the State Ethics Act and, therefore, their conduct must conform to the
requirements of that law. 65 P.S. 6402; Mlakar, 84 -011.
The State Ethics Act provides as follows:
Section 3. Restricted activities.
(a) No puhlic official or puhlic employee shall use his
puhlic office or any confidential information received
through his holding puhlic office to ohtain financial gain
other than compensation provided hy law for himself, a
memher of his immediate family, or a husiness with which
he is associated. 65 P.S. 403(a).
Within the ahove provision of law, this Commission has determined, in the .
past, that a puhlic official could not use their puhlic position in order to
ohtain any financial gain for themselves or for the business with which they
are associated. The Act further defines business with which one is associated
as follows:
Section 2. Definitions.
"Business with which he is associated." Any husiness in
which the person or a memher of the person's immediate
family is a director, officer, owner, employee or holder
of stock. 65 P.S. 402.
In reviewing situations, such as the present one, this Commission has
determined that a puhlic official may not vote or otherwise participate in
matters relating to the award of a contract or other business hy the
official's governmental hody to a husiness with which the official is
associated. Thus, this Commission would view the surrounding facts in order
to determine if an individual did, in fact, participate in decisions such as
outlined ahove. See, (1ova, No. 325.
Stephen Israel, Esquire
November 5, 1986
Page 3
In addition to the foregoing, even if a public official were to abstain
from participating in decisions relating to a business with which they are
associated, this Commission, generally, would still review the situation to
determine if the individual were receiving, in and through their public
position, a financial gain other than the compensation provided for bylaw.
In this respect, this Commission has, generally, determined that where a
public official has received a financial gain in and through their public
position, which is not part of the compensation provided for by law or the
receipt of which is strictly prohibited by law, then Ethics Act considerations
arise. See, Allen, 86 -518. This Commission, for example, has reviewed
certain provisions of both the Borough Code and Second Class Township Code
that prohibit an official's personal interest in contracts awarded by the
official's governmental body. This Commission has noted, that where such
interest is prohibited and where a governmental official is by law, restricted
in receiving a financial gain as a result of being interested in a contract in
which the governmental body is involved, then the receipt of such a prohibited
gain, even though they did not participate in awarding it to themself, could
result in certain Ethics Act considerations. See, Martzall, No. 528. In
relation to townships of the first class, such considerations would also be
pertinent. See, 53 P.S. §56811; §56802(f). Thus, this Commission has
reviewed similar situations under a variety of provisions of the State Ethics
Act and has, based upon particular facts, made appropriate determinations in
relation thereto. It should also be noted that the Ethics Act provides as
follows:
Section 3. Restricted activities.
(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).
Where a public official stands in the relationship as noted above, and if
a particular contract is otherwise permitted by law, the procedure, above,
must be employed when a public official was involved. In this repsect, it
should be noted that the above provision of law is not a general authorization
which permits a public official to contract with his own governmental body
where such is otherwise prohibited. The above provision of law is only
applicable insofar as contracting is otherwise permitted. Any public
Stephen Israel , Esqui re
November 5, 1986
Page 4
official, however, who is otherwise permitted to be interested in a contract
with his own governmental body and who stands in the realtionship as noted
above, must, prior to the transaction being executed, have such contract
awarded through the process indicated in Section 3(c) of the State Ethics Act.
The above would require, however, that the individual abstain from all
participation in relation to that particular situation.
The Ethics Act - inally provides that this Commission may address other
areas of possible conflict. 65 P.S. §403(d). Within that provision of law,
the Commission can address questions wherein an individual attempts to serve
one or more interest that are adverse. See, Alfano, 80 -007. In certain
situations, the Commission has required the individual who they have found to
be in conflict with the public trust and who receive a financial gain as a
result thereof, to remove themself from such conflict without receiving such
financial gain or by divesting themselves of the gain received.
Conclusion: The State Ethics Act provides for certain restrictions upon
publi c official s and their financial dealings i n relation to their own
governmental bodies. The aforementioned information has been provided as
guidance and so that appropriate determinations can be made in the future as
to official conduct. Because of the nature of your request, only the
Commission can address a question as to whether someone has violated the State
Ethics Act and this advice no way attempts to make that determination.
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.
Sint'
i .
/-
John )4-1onti no
General Counsel