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HomeMy WebLinkAbout18-003 ConfidentialPHONE: 717 -783 -1610 STATE ETHICS COMMISSION FACSIMILE: 717- 787 -0806 TOLL FREE: 1- 800 -932 -0936 FINANCE BUILDING WEBSITE: www.e €hics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120 -0400 OPINION OF THE COMMISSION Before: Nicholas A. Colafelia, Chair Mark R. Corrigan, Vice Chair Roger Nick Melanie DePalma Monique Myatt - Galloway DATE DECIDED: 2120118 DATE MAILED: 2122118 18 -003 To the Requester: This Opinion is issued in response to your communications dated Jdate], by which you requested a confidential advisory opinion from the Pennsylvania State Ethics Commission ( "Commission "). L ISSUE: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. 1101 et seq., would impose restrictions upon ou with regard to serving as an A where: (1) in a private capacity, you are employed by B the "Firm ") as its C -1 and C -2; (2) the Firm is a D firm that provides [type of serviced to [type of clients]; and (3) Firm clients include Es, one of which is an F, and others of which are not Fs and may be G. IL FACTUAL BASIS FOR DETERMINATION: You request a confidential advisory opinion from this Commission based upon the following submitted facts. In a public capacity, you are an A, having recently been appointed to that position. In a private capacity, you are employed by the Firm as its C -1 and C -2. The Firm is a D firm that provides [type of services] to type of clients]. Firm clients include Es, one of which is an F, and others of which are not Fs and may be G. Your duties and responsibilities as C -1 of the Firm include negotiating contracts between the Firm and its clients. As C -1 and C -2 of the Firm, you are both an employee receiving H and an I receiving Js based upon the Firm's Ks. You state that while you do not provide any [particular types of services] for the Firm and therefore do not receive Ls based upon Ms awarded to the Firm from any particular client, your compensation is impacted by the Ks of Confidential Opinion, 18 -003 February 22, 2018 Page 2 the Firm, and the Ns received from all clients are a fundamental component in the calculation of the Firm's Ks. You state that your annual compensation does not fluctuate based upon the gain or loss of any particular client's M during the course of that annual period and that it is not practical to disaggregate your compensation into segments attributable to the M(s) from any specific client. The Firm was recently awarded an M to [provide certain services ] on behalf of O. O is a new Firm client, and it apparently is the only Firm client that is both an E and an F. Based upon the above submitted facts, you pose the following specific questions to be addressed by this Commission: (1) Whether negotiating a contract between the Firm and O in your capacity as C -1 of the Firm while serving as an A would cause you to transgress the Ethics Act given the Ps, and in particular, [statutory provision]; (2) If the answer to the foregoing question would be in the affirmative, whether such a transgression would be avoided if another employee of the Firm would perform such duties instead of you; (3) Whether negotiating contracts between the Firm and Es which are not Fs (whether G), while serving as an A, would cause you to transgress the Ethics Act given the Ps, and in particular, [statutory provision]; and (4) Whether your receipt of compensation from the Firm will ppose a conflict after the O contract has been executed and the Firm begins to receive payment pursuant to that contract. You state that once a contract has been executed in relation to the services to be provided by the Firm on behalf of O and for the duration of your affiliation with the Firm, you would abstain from participation in your public capacity in any matter involving a Q of O who was involved in the award of the D contract to the Firm. By letter dated February 12, 2018, you were notified of the date, time and location of the executive meeting at which your request would be considered. III. DISCUSSION: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based Upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, this Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As an A, you would be considered a "public official" subject to the Ethics Act. Sections 1103(a) and 11030) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 0) Voting conflict.- -Where voting conflicts are not Confidential Opinion, 15 -003 e ruary Page 3 otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed with the person responsible for recording the minutes of the meeting at which the vote Is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally, required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise provided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining two members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), 0). The following terms are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "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 has a financial interest. Confidential Opinion, 18 -003 February 22, 2018 Page 4 65 Pa.C.S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting, but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11 030) of the Ethics Act would have to be satisfied in the event of a voting conflict. The following additional statutory and regulatory provisions and definitions are also relevant to your request: [statutory provision and cite/. rstatutory definition and cif. Regulatory definition and cite]. [regulatory provisions and cif. You are advised that the Firm is a business with which you are associated. Depending upon the particular facts and circumstances that may anse, you could have a conflict of interest under the Ethics Act in Rs involving the Firm, Firm clients, and/or Qs of same. It is recommended that you consult the S applicable to As, [cite], and seek further advice from this Commission should a potential conflict arise. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. In app lying the Ethics Act to your first and second specific questions, you are advised as follows. During such times as you are an A, statutory provision, cite generally would prohibit you from [engaging in certain conduct] uniMs either [exception 1. Negotiating a contract between the Firm and O in your capacity as C -1 of the Firm while serving as an A would cause you to traness [statutory provision] because such negotiations would constitute [certain conduct]. ?Co T avoid transgressing [statutory. provision] while serving as an A, you must remove yourself from any involvement with [certain conduct O, including but not limited to contract negotiations. You would avoid running afoul of statutory provision] as to contract negotiations between the Firm and O if another employee of the Firm wound perform such duties without any involvement by you. Cf., [cite]. You are further advised that during such times as you are an A, [statutory provision, cite] would prohibit you from having any involvement or taking any action as to O as a Firm client to the extent such involvement/act�on would constitute [certain conduct]. [Cites]. Confidential Opinion, 18 -003 February 22, 2018 Page 5 In response to your third question, we determine that negotiating contracts between the Firm and Es which are not Fs (whether G), while serving as an A, would not cause you to transgress the Ethics Act. Although on its face, [statutory definition] may include such clients, it is a fundamental principle of statutory construction that "the General Assembly does not intend a result that is absurd, impossible of execution or unreasonable." 1 Pa.C.S. § 1922. Cf., [cite]. We conclude that it would be an absurd or unreasonable interpretation to apply [statutory provision, cite] with regard to Firm clients or prospective Firm clients which are not Fs. In response to your fourth question, we determine that your receipt of compensation from the Firm after the O contract has been executed and the Firm begins to receive payment pursuant to that contract would not, in and of itself, cause you to transgress the Ethics Act. However, as noted above, during such times as you are an A, [statutorryy provision, cite] would prohibit you from having any involvement or taking any action as to O as a Firm client to the extent such involvementlaction would constitute [certain conduct]. [Cites]. Lastly, the propriety of the proposed course of conduct has only been addressed under the Ethics Act. IV. CONCLUSION: As an A, you would be considered a "public official" subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. � 1101 et se q., and the Regulations of the Pennsylvania State Ethics Commission ( "Commission "), 51 Pa. Code § 11.1 et sseeg Based upon the submitted facts that: (1) in a private capacity, you are employed by B (the "Firm ") as its C -1 and C -2; (2) the Firm is a D firm that provides [type of services] to [type of clients]; (3) Firm clients include Es, one of which is an F, and others of which are not Fs and ma be G; (4) your duties and responsibilities as C-1 of the Firm include negotiating contrac s between the Firm and its clients; (5) as C-1 and C-2 of the Firm, you are both an employee receiving H and an I receiving Js based upon the Firm's Ks; (6) while you do not provide any [particular types of services] far the Firm and therefore do not receive Ls based upon Ms awarded to the Firm from any particular client, your compensation is impacted by the Ks of the Firm, and the Ns received #rom all clients are a fundamental component in the calculation of the Firm's Ks; (7) your annual compensation does not fluctuate based upon the gain or loss of any particular client`s M during the course of that annual period; (8) it is not practical to disaggregate your compensation into segments attributable to the M(s) from any specific client; (9) the Firm was recently awarded an M to (provide certain services] on be a f of O; and (100) O is a new Firm client, and it apparently is the only Firm client that is both an E and an F, you are advised as follows. The Firm is a business with which you are associated. Depending upon the particular facts and circumstances that may arise, you could have a conflict of interest under the Ethics Act in Rs involving the Firm, Firm clients, and/or Qs of same. It is recommended that you consult the S applicable to As, [cite], and seek further advice from this Commission should a potential conflict arise. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. During such times as you are an A, (statutory provision, cite generally would prohibit you from [engaging in certain conduct] unless either [exception 1. Negotiating a contract between the Firm and O in your capacity as C -1 of the Firm while serving as an A would cause you to transggress [statutory provision] because such negotiations would constitute [certain conduct]. To avoid transgressing [statutory provision] while serving as an A, you must remove yourself from any involvement with [certain conduct] O, including but not limited to contract negotiations. You would avoid running Confidential Opinion, 18003 e ruary Page 6 afoul of [statutory provision] as to contract negotiations between the Firm and O if another employee of the Firm would perform such duties without any involvement by you. You are further advised that during such times as you are an A, [statutory provision, cite] would prohibit you from having any involvement or taking any action as to O as a Firm client to the extent such involvement/action would constitute [certain conduct]. [Cites]. Negotiating contracts between the Firm and Es which are not Fs (whether G), while serving as an A, would not cause you to transgress the Ethics Act. Your receipt of compensation from the Firm after the O contract has been executed and the Firm begins to receive payment pursuant to that contract would not, in and of itself, cause you to transgress the Ethics Act. The propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section. 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. By t e Commission, Ni olas A. Colafella Chair A1 Commissioner Michael A. Schwartz and Commissioner Shelley Y. Simms recused themselves from this matter.