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HomeMy WebLinkAbout87-613 RhoadesHonorable James J. Rhoades State Senator 32 E. Centre Street Mahanoy City, PA 17948 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 September 10, 1987 ADVICE OF COUNSEL - Re: Public Official, State Senator, Private Business Dear Senator Rhoades: 87 -613 This responds to your letter of August 19, 1987, in which you requested advice from the State Ethics Commission. Issue: You ask what restrictions the Ethics Act would impose upon you as a State Senator relative to possible business ventures in which you might engage. Facts: As State Senator for the 29th Senatorial District, you ask whether there would be any conflict or appearance of conflict with the public trust if you would engage in different business ventures such as the owning /operating of a restaurant /tavern, car wash, sports shop, coal brokerage, or clothing store. In this regard, you note that is not your intention to obtain, sell, attempt to sell, influence or attempt to influence any state agency regarding a contract or bid relative to any of your possible business ventures. You further state that you do not intend to have any transactions involving the Commonwealth or to use or attempt to use your official position to secure unwarranted privileges or exemptions for yourself or others. You conclude by asking what restrictions the Ethics Act might impose upon your participation in the free enterprise business system in the Commonwealth of Pennsylvania. Discussion: As a State Senator you are a "public official" within the definition of that term under the Ethics Act. 65 P.S. 402. As such, you are subject to provisions of the Ethics Act and the restrictions therein are applicable to you. 65 P.S. 401 et seq. The Ethics Act does not per se prohibit a public official or his immediate family from engaging in private business activities or from contracting through a business with which he is associated. Honorable James J. Rhoades September 10, 1987 Page 2 Section 3(a) of the Ethics Act provides that no public official or public employee shall use his public office or any confidential information obtained through holding of a public office or position to acquire financial gain for himself, his immediate family, or a business with which he is associated. 65 P.S. 403(a). A "business with which he is associated" is defined in the Ethics Act as follows: "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. For purposes of this Advice, it is assumed that you would be a director, officer, owner, or employee or holder of stock of the business. As such, then you would be associated with this business and would be required to observe the prohibitions set forth in Section 3(a) of the Ethics Act. This means that you could not use your position as a State Senator to secure financial gain for your business and could not use any confidential information acquired through the holding of public office or employment to the benefit of that business. In this regard, it is noted that you have stated that you would not use your official position to secure any unwarranted privileges for yourself or others. Section 3(a) would not prohibit you from entering into private business ventures based upon the facts and circumstances outlined above. Section 3(b) of the Ethics Act also states that no person shall give to a public official or employee nor shall any public official or employee accept anything of value based on the understanding that the official's vote, action, or judgment would be influenced thereby. 65 P.S. 403(b). You must be cognizant of this requirement and observe this provision of the Ethics Act. Reference to this Section is made not to indicate that any violation or potential violation exists but merely to provide a complete review of the Sections of the Ethics Act which may be generally applicable to these circumstances. Although you indicate that you would not have any transactions involving a state agency, a discussion of Section 3(c) of the Ethics Act should be made so as to provide you with a background concerning the provisions relative to contracting by a public official with his governmental body. Section 3(c) of the Act states that no public official, member of his immediate family, or a business in which the person or member of his immediate family is an officer, director, or owner of greater than 5% of the equity at fair market value may contract in an amount in excess of $500 with a governmental body unless the contract has been awarded through an open and public process. See Howard, 79 -044. You have indicated that you may establish a business wherein it can be assumed that you or a member of your immediate family will be an officer, director, or owner of greater than 5% of Honorable James J. Rhoades September 10, 1987 Page 3 the equity at fair market value of the business in question. Given this, the previous Opinions of the Commission which have held that the term "governmental body" in Section 3(c) of the Ethics Act refers to the governmental body with which the individual public employee /official is "associated" must be reviewed. Bryan, 80 -014 and Lynch, 79 -047. The "governmental body" with which you associated is the State Senate. Therefore, the open and public process requirements of Section 3(c) of the Ethics Act would apply if and when your business would seek to contract with the Senate in an amount in excess of $500 or more. Therefore, the "open and public process" limitations of Section 3(c) of the Ethics Act apply only if you or your business contracts with the Senate in an amount of $500 or more. You - or your business could, however, contract with any governmental body, other than the Senate, with which you are not considered to be "associated" without undertaking the open and public process set forth in Section 3(c) of the Ethics Act. It should be emphasized, that even though Section 3(c) of the Ethics Act presents no absolute prohibition to the contract between the Senate and your business certain requirements as to the open and public process must be met. In its Opinions in Howard, 79 -044 and Fields, 82 -006, the Commission stated that an -open and public process is met by applying the following standards: 1. prior public notice of the employment or contracting possibility; 2. sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; 3. public disclosure of all applications or proposals considered; and 4. public disclosure of the contract awarded or offered and accepted. See also Cantor, 82 -004. In determining whether the requirements of Section 3(c) of the Ethics Act had been met, the Commission has adopted a "reasonableness test" which means that reasonable and prudent competitors of your business should be provided a sufficient time within which to submit their proposals and, of course, should have had prior notice of the opportunity to secure such a contract or employment. It is clear that the open and public process requirements of the Ethics Act would be satisfied as long as the above conditions are met. Therefore, the Ethics Act presents no per se prohibition upon your engaging, in business ventures. However, this advice should be considered general in nature since you have framed your request relative to the feasibility or possibility of a number of business ventures. Thus, it is Honorable James J. Rhoades September 10, 1987 Page 4 difficult to envision every possible scenario since the types of business and the business activities would vary depending upon the selection of a particular business enterprise. In the event that you start a particular business and have questions concerning the applicability of the Ethics Act relative to that particular business, you may seek further advice from the Commission. Lastly, it must be noted that the Commission may not and will not offer advice with respect to any duties or obligations under any codes, statutes, ordinances, regulations, etc., other than the Ethics Act. Conclusion: You, as State Senator, are a "public official" as that term is defined in the Ethics Act. You are advised that the Ethics Act presents no per se prohibition upon your entering into various private business projects subject to the various guidelines 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. Si ncerely, Vincent . Dopko General Counsel