HomeMy WebLinkAbout86-623 TompkinsDear Mr. Tompkins:
Mailing Address:
STATE ETHICS COMMISSION
P.O. Box 11470
HARRISBURG, PA 17108
TELEPHONE: (717) 783 -1610
November 10, 1QR6
An1IIr,E OF rfuNSFL
Edwin W. Tompkins, II, Esquire 86 - 623
P.fl. Rox 31
Emporium, Pennsylvania, 15R34
Re: Conflict of Interest, Manager, Governmental Rusiness Complex, Interest in
Corporation Seeking to Rent Space in Complex
This responds to your letter of nctoher 13, 1986, wherein you requested
the advice of the State Ethics Commission.
issue: whether the State Ethics Act presents any prohibitions upon the
manager of a municipal authority husiness complex from maintaining an interest
in a husiness entity seeking to rent space in the business complex owned by
the authority which he manages.
Facts: As Solicitor, for hoth the Mid- Cameron Municipal Authority and Cameron
County, you have requested the advice of the State Ethics Commission in
relation to the above issue. In this respect, you have asked a series of
questions relating to the factual situation set forth helow. In August of
1QR6, the Mid- Cameron Municipal Authority acquired ownership of a
manufacturing complex which is heing utilized as a multi- tenant facility for
existing and new industries. The Mid- Cameron Authority, hereinafter the
Authority, is a joint project of the Rorough of Emporium and Shippen Township.
The Authority, through procedures not relevant hereto, received grant funds
from the Pennsylvania Department of Community Affairs in order to purchase the
aforementioned manufacturing complex. The Municipal Authority purchased this
complex and assumed ownership in the name of the Authority. In order to
facilitate the operational aspects of the manufacturing complex, the Municipal
Authority appointed the Cameron County Director of Economic Development to
oversee, supervise, and manage the manufacturing complex on hehalf of the
Authority. In part, the director supervises the general supervision and
management of the project and reports directly to the Authority. In addition,
the director is responsible for hringing to the attention of the Authority,
any interested tenant for the project.
State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania
Edwin W. Tompkins, I I, Esquire
November 10, 1986
Page 2
You have advised that negotiations regarding the sale or lease of space
in the project is conducted by the Authority and the final decision regarding
the terms of the lease and /or sales are made by the majority vote of the
Authority. The director may, at times, serve to lead proposed tenants or
purchasers to the Authority but the actual negotiations and final decisions
are with the Authority members. You advise that the director is not a member
of that Authority.
The director receives his salary from the grant funds that have been
received by the county. He receives no funds from the Department of Community
Affairs grant.
You have advised that the director has recently submitted the name of a
proposed tenant. This tenant is a corporation that seeks to enter into the
complex and through a lease agreement with an option to purchase. The
director has disclosed that the corporation is one in which he, as well as his
two brothers, are stockholders. It appears, from your letter of request, that
these three individuals are the sole stockholders of this corporation. To
date, the corporation has not been accepted as a tenant in the complex. You
have advised that the director would not be involved in the decision making
process regarding whether this tenant is accepted by the Authority. You have
asked a series of questions in relation to the above factual situation. We
will attempt to address these questions through the following discussion but
we will not herein reiterate each question that you have posed.
Discussion: As the County Director of the Economic Development Office and as
the manager of the Municipal Authority's Manufacturing Complex, the individual
involved, in this situation, clearly appears to be a public employee as that
term is defined in the State Ethics Act. 65 P.S. §402. As such, his conduct
must conform to the requirements of that law. Generally, the Ethics Act does
not per se prohibit public officials and employees from engaging in private
enterprises or from having interest in certain types of matters that may come
before their governmental bodies. The Ethics Act, however, does have certain
restricted provisions which must be considered in each factual situation. The
consideration of such provisions of law could result, under certain
circumstances, in certain prohibtions being imposed within the purview of the
State Ethics Act.
Initially, 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).
Edwin W. Tompkins, II, Esquire
November 10, 1986
Page 3
Within the above provision of law, any individual, public official or
employee, may not use his position or confidential information obtained in his
position in order to obtain a financial gain for himself or for a business
with which he is associated. The Act defines business with which one is
associated as follows:
Section 2. Definitions.
"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.
Clearly, under the above circumstances, the director is associated with
the business that seeks to rent office space in the manufacturing complex
owned by the Authority. Thus, this individual could not use his public
position or any confidential information obtained in his position in order to
obtain a benefit for that entity. In this respect, this Commission has, in
the past held, that while this particular provision of law does not place
absolute prohibitions upon individual employees engaging in private
enterprises, such would require their abstention in relation to the specific
matters in which they are involved. Thus, the individual director, in this
situation, would be required under prior Commission opinions to abstain from
participating in any matter related to the leasing of office space to the
corporation in which he is involved. See, Sowers, 80 -050; Welz, 86 -001.
In addition to the foregoing, the Ethics Act provides that this
Commission may address other areas of conflict. 65 P.S. §403(d). The
parameters of the types of activities encompassed, by the above provision, are
generally determined through a review of the scope and intent of the State
Ethics Act. Generally, the Act was promulgated in order to ensure the public
that the interest of their officials and employees are not in conflict with
the public trust. 65 P.S. §401. As such, this Commission has determined that
public officials would be in a prohibited conflict in any situation wherein
they attempted to serve one or more interests that are adverse. See, Alfano,
80 -007; Fritzinger, 80 -008. Within this general conflict provision, it is
clear, that a public official should abstain from participating in any matter
wherein they have a direct interest. Under the current situation, it would
appear as though the individual involved in this situation must abstain from
participating in any matter related to the leasing of space to his
corporation. In addition, it would appear as though the individual should
also abstain from participating in the general and daily supervisory
activities and management activities in relation to the complex if, and when,
the corporation receives permission to lease space in this particular
facility. Furthermore, prior Commission opinions have determined that if a
public official or employee is involved in a particular matter that comes
before their governmental body wherein certain selections must be made between
Edwin W. Tompkins, II, Esquire
November 10, 1986
Page 4
different applicants or certain services provided to individuals or entities
dealing with the governmental body and, that individual has authority in
relation to such matters, the individual must abstain from participating not
only in the matter involving their own interest but in relation to matters
regarding entities or individuals who could be considered competitors or who
are otherwise similarly situated to the interest of the individual public
employee or official. Essentially, in this respect, the Commission has sought
to eliminate the possiblity that a public official or employee, who is seeking
specific benefits from the governmental body in which he is involved, would be
in a position to insure that the entity or project in which he is interested
is advanced prior to those of his competitors. Thus, this Commission has
determined that individuals, in such situations, should abstain from
participating in matters relating to those individuals. Toohey, 83 -003;
Balaban, 83 -004; Coploff /Hendricks, 83 -005.
There are a number of situations, which can be envisioned, wherein this
individual, as the manager of the manufacturing complex of the Authority,
could be placed into a conflict situation on a daily basis. For example, as
manager, it is assumed that he is responsible for insuring that the tenants of
the complex are accorded all of the rights, privileges and benefits of the
facility. With his own corporation, as a tenant, serious questions could be
raised as to whether he would be showing preferential or favorable treatment
to requests of his own entity. In this respect, a number of other situations
could develop that would place him in a conflict situation on a daily basis.
Questions regardi ng recommendations to the Authority regarding tenants, terms
and conditions of leases and sales, and other matters relating to tenants as
well as proposed tenants all could place this individual in a constant
conflict of interest. While it is acknowledged that the individual has no
final authority in relation to this matter, it appears from your request, that
he has substantial influence in relation to his recommendations to the
authority regarding the complex. As such, it would probably be the better
approach for this individual to relinquish his interest i n the corporation.
This would be so in order to comply with prior Commission precedents and the
general provisions of the State Ethics Act. It is difficult to perceive how
this individual would not be in a constant conflict of interest situation
under the circumstances as set forth in your letter of request.
You have indicated that the other individuals involved in this
corporation are the brothers of the director. As you may have noted, Section
3(a) of the State Ethics Act, would prohibit him from using his position to
obtain a financial gain for himself, a business with which is associated or a
member of his immediate family. A member of one's immediate family is defined
as follows:
Section 2. Definitions.
"Immediate family." A spouse residing in the person's
household and minor dependent children. 65 P.S. 402.
Edwin W. Tompkins, I I , Esquire
November 10, 1986
Page 5
The brothers of the director are outside of the above definition and,
therefore, the director could not be considered to be participating in a
matter regarding a member of his immediate family. If this individual were no
longer a stockholder in the corporation, he would also not be associated with
that particular entity. As such, 3(a) of the State Ethics Act would present
no per se prohibitions upon the corporation being accepted for the
manufacturing complex. Additionally, because this individual would have no
direct interest in this matter, there would appear to be no prohibitions or
considerations within the general conflict of interest provisions. It
probably, however, would be the better approach, that if this corporation is
accepted and he is no longer a stockholder in the corporation, that he,
nevertheless, disclose the fact that his brothers are associated with this
entity. Additionally, it would also be advisable for this individual to
abstain from any matter regarding that corporation that would be unique in
nature, such as terms and conditions of leases, recommendations of such terms
and conditions, or the renegotiations of leases regarding this corporatidn.
In response to an additional question, that you have asked, the State
Ethics Act provides, in relation to former public employees, 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).
From your letter of request, it is not quite clear as to whether this
individual would be a former public employee or would continue in a position
of public employment, should the Cameron County Office of Economic Development
be dissolved. In the event that this individual will continue as the manager
of the Authority and would still be considered a public employee, the above
provision of law would not be applicable as this Commission has determined
that such restrictions do not apply to public employees or officials who
transfer levels of public employment. See, Hagen, 84 -019; Pinto, 84 -021.
Thus, this individual would be considered to be representing another
governmental entity and the above restrictions would not apply. In the event
that this individual, however, would be considered in private employment, then
this provision of law would be applicable and the individual could not
represent any new employer before his governmental body. The Commission has
issued a number of opinions in relation to these restrictions. We will not,
however, in the context of this advice, enumerate at this time
all of the Commission's precedent and restrictions in relation to this matter.
Such may be requested of this Commission, at a point in time, when such is
necessary.
Edwin W. Tompkins, II, Esquire
November 10, 1986
Page 6
Conclusion: While the State Ethics Act, generally, presents no per se
prohibition upon a public employee or official being involved in private
business enterprises, the Act would prohibit an individual from participating
in matters in which they have a direct interest. In the instant situation,
based upon all of the foregoing facts, it would appear as though an inherent
and constant conflict of interest would develop if this individual were to be
involved in the particular business corporation that seeks to rent space from
the Authority. In the event that he is not involved with this particular
business entity, then the Ethics Act would place no restrictions upon the
execution of such an agreement or lease. The individual, however, should
abstain from participating in any matters relating to that corporation and his
reasons, therefore, should be appropriately noted and recorded.
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.
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