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HomeMy WebLinkAbout88-506 AndressSTATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (7171 783-1610 February 8, 1988 ADVICE OF COUNSEL Mr. Spencer Andress 650 Market Street 88 -506 Oxford, PA 19363 Re: Conflict of Interest, Borough Councilmember, Consulting Services to the Borough • Dear Mr. Andress: This responds to your letter of January 8, 1988, wherein you requested advice from the State Ethics Commission. Issue: Whether the State Ethics Act presents any prohibitions or restrictions upon a member of a borough council regarding either his participation in awarding a consulting contract to a private company with which he is associated or regarding his providing consulting services for the borough as an employee of that consulting company with which he is associated. Facts: In you advice request, you state that you are both a member and president of the Borough Council of Oxford, Chester County. You state that you are an employee of Magnox Pulaski, Inc., which is a foreign corporation and the parent company of Magnox, Inc. D.E. state that although you do not hold an equity�interestyinwMagnoxbPulask i, You Inc., you are the corporate secretary. You also state that in your capacity as president of borough council, you participated in discussions with various federal and state officials as well as private individuals which resulted in a contract between the borough and a Pennsylvania business corporation whereby the borough would sell a portion of its land to the corporation for use as a soft drink bottling plant. It is also stated by of the agreement, must perform certain other b as a road construction work on the site prior to its conveyance, extending the borough's water and sewer lines to the plant site and constructing a side track from the existing Octarara railway line to the boundary of the premises. As to the execution of the provisions of the contract, you note that the borough will extend the sewer line to the property while the Chester Water Authority will employ a contractor to extend the water line; the cost of these • projects will be paid by a Business Infrastructure Development grant awarded to the borough by the Commonwealth of Pennsylvania. Further, you state that the side track construction will be paid by PennDot but the work will either be performed by a contractor employed by the railroad or by the borough. You then state that the borough manager has indicated that he is unable to perform Mr. Spencer Andress February 8, 1988 Page 2 his duties both as borough manager and as manager for the above has resulted in the borough contemplating employing Magnox (D.E.) t i n Ma nox Inc.. (D.E.) toich provide consulting services. In this regard, project management services would be provided bbtu oohe y ohat a dhe h h e rsulting and r individuals who are employees of Magnox Pulaski, Inc. actin on behalf of Magnox, Inc. (D.E.). You note that you would receive g an employee of Magnox Pulaski, Inc., and further that the award your an as consulting contract to them would not result in a change in your compensation. You note that the monies paid by the borough would be received by Magnox, Inc. (D.E.). You conclude by asking three questions concerning the applicability of the Ethics Act to the above factual situation. First public position would preclude qty employees engaged in providing the consulting services v you from being one of the Magnox Pulaski, Inc., your relative to this project. Secondly, 7a Magnox, Inc. (D.E.) preclude either Magnox Pulaski Inc. orruMagnoxhInc., (D .E.) o from o acting d as the consultant to the borough. Lastly, you inquire that if Magnox, Inc. (D.E.) is engaged to provide the consulting services, what restrictions would be imposed so as to comply with the Ethics Act. , Discussion: As counci l member and president of Oxford Borough, you are a "public official" 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 Ethics Act. Section 3(a) of the Ethics Act provides: 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). Section 3(a) basically provides that a public public office or confidential information to obtain o a f financial grin o ot u his than compensation as provided for by law for himself or a member of his immediate family or a business with which he is associated, gain provision, the Ethics Commission has determined that the use ofdofficesby a er public official to obtain a gain or benefit for himself or a member of his immediate family or a business with which he is associated which is not provided for in law constitutes a "financial provided for by law." These determinations been other than e to comoethetion h Commonwealth Court of Pennsylvania which has affirmed theOrdersofthe Commission. See Mc_ Cutcheon v. State Ethics Commission, 77 Pa. Commw. 529 (1983). See also Yocabet v. State Ethics Commission, Pa. Commw. A.2d 536 (1987). — — , 531 Mr. Spencer Andress February 8, 1988 Page 3 Within the above provision of law. no pub position or any confidential information obtai financial gain for himself or a member of his with which he is associated. The Act defines associated as follows: Section 2 "Business which the family is of stock. lic official may use his ned therein in order to obtain a immediate family or a business business with which one is _ Definitions. with which he is associated." Any business in person or a member of the person's immediate a director, officer, owner, employee or holder 65 P.S. 402. As corporate secretary and employee, Magnox Puloski Inc., is a business with which you are associated under the Ethics Act. The Ethics Commission has determined that Section 3(a) of the Ethics Act quoted above prohibits an individual from serving the interests of two persons, groups or entities whose interest may be adversed. See Alfano Opinion, 80 -007. In the instant situation, if you were to simultaneously serve as borough councilmember and president and also as an employee of Magnox nox Pulaski, Inc., in providing consulting services via Magnox, Inc. (D.E.) to the borough, you would be serving entities with interests which are adverse to each other because you would be simultaneously serving on the borough council and also representing the interest of your employer, Magnox Pulaski, Inc., which is the parent company of Magnox Inc (D.E.). 595, where the Ethics Commission found that a member ofeaKmunicipaleauthority violated Sections 3(a), 3(c) and 3(e) of the Ethics Act when he negotiated a contract for his firm which provided consulting services to the municipal authority. Therefore, under Section 3(a) of the Ethics Act, a conflict of interest would arise on your part by your simultaneous service as borough councilmember and president and as an employee of Magnox Pulaski Inc., which would be providing the consulting services for Magnox Inc., (D.E.). Section 3(b) of the Ethics Act provides: Sec t`� 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 candidate for public office shall solicit or accept, anything of value, including a gift, loan, political Mr. Spencer Andress February 8, 1988 Page 4 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). Reference to Section 3(b) of the Ethics Act is made in order to provide complete response to your inquiry. Under Section 3(b) of the Ethics Act cited above, which must be observed, a public official must neither offer nor accept anything of value on the understanding or with the intention that the public official's judgment would be influenced thereby. It is assumed such a situation does not exist here. Reference to this Section is added not to indicate that any such activity has been or will be undertaken but in an effort to provide a complete response to your inquiry. In addition to the foregoing, the State 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 notice and subsequent public disclosure l P sals e considered and contracts awarded. Any contract madein 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). In relation to the above provision of law, the State Ethics Commission has generally determined that this provision is a proceure to public official or employee contracts with his own governmental bbodyeinV ,excess of $500. Brya n 0 i nion, 80 -014; Winch Opinion, 79 -047. The Commission, however, has also determined that the above provision of law is not a general authorization for a public official to contract with his own governmental body where such is otherwise prohibited by law. The above is intended to be a procedure to be utilized where contractingnisfotherwiserly allowed by law. For example, if a particular business transaction was prohibited under the State Ethics Act, this particular provision of law would not authorize that transaction. Additionally, if a particular a public official from being interested in a contract, this provision would not allow that interest. Mr. Spencer Andress February 8, 1988 Page 5 Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibition to such contracting, the above particular provision of law would require that an additional procedure be utilized when such business is transacted. This procedure, the open and public process, must be used in all situations were a public official is otherwise appropriately contracting with his own governmental body in excess of $500. This open and public process would require: (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 and offered and accepted. See, Cantor Opinion, 82 -004. Thus, in the event that contracting would be allowed, the above process must be employed. As noted above, Section 3(c) of the Ethics Act does not preclude a public official or a business with which a public official is associated from contracting from his governmental body provided the contract is not prohibited in law and provided the requirements of Section 3(c) cited above are satisfied: namely, that if the contract is over $500 it must be awarded through an open and public process with prior public notice and subsequent public disclosure, as outlined above.. Therefore, as long as the above criteria of Section 3(c) of the Ethics Act are satisfied and the contract would not be prohibited under the Borough Code, Magnox Inc., (D.E.) could contract with the Borough of Oxford subject to the foregoing limitations and requirements. In addition to the foregoing provision of law, the State Ethics Commission may address other areas of possible conflicts of interest. 65 P.S. §403(d). The parameters of the types of activities encompassed by this provision of law may generally be determined by reviewing the purpose and intent of the Ethics Act. The Ethics Act was promulgated in order to ensure that the financial interests of public officials do not conflict with the public trust. In the event that Magnox Inc., (D.E.) is awarded the consulting management services contract, under Section 3(d) of the Ethics Act you could not participate in either the negotiation, the award, the administration or any aspect of the contract between the Borough of Oxford and Magnox Inc., (D.E.). Further, whenever any matter concerning Magnox Inc., (D.E.) would come before borough council, you would have to abstain and further note your abstention of public record together with the reasons for your abstention. Mr. Spencer Andress February 8, 1988 Page 6 Conclusion: As borough councilmember and president you are subject to the provisions of the Ethics Act. AlthoughMagnoxaInc.,i(D official ., the wholly -owned subsidiary Magnox Pulaski, Inc., may contract under Section 3(c) with the borough provided the criteria as outlined above are satisfied, you individually may not simultaneously serve as borough councilmember and president and as an employee of Magnox Pulaski Inc., whereby you would be providing consulting services to the borough via Magnox, Inc. (D.E.). Under Section 3(d) of the Ethics Act, if the borough awards the contract to Magnox, Inc. (D.E.), you must not participate in any matter involving Magnox Pulaski, or its wholly -owned subsidiary Magnox, Inc. (D. E.), before borough council and you must note your abstention of public record as well as the reason for your abstention. Lastly, the propriety of your conduct has only been addressed under the Ethics Act. 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 w i l l 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. Sincerely, Vincent . Dopko General Counsel