HomeMy WebLinkAbout18-543 ConfidentialPHONE: 717 - 783 -1610
TOLL FREE: 1 -800- 932 -0936
To the Requester:
N 1'
l f
STATE ETHICS COMMISSION
FINANCE BUILDING
613 NORTH STREET, ROOM 309
HARRISBURG, PA 17120 -0400
ADVICE OF COUNSEL
July 12, 2018
FACSIMILE: 717- 787 -0806
WEBSITE: www,ethics.pa.gov
18 -543
This responds to your letter dated June 8, 2018, by which You requested a
confidential advisory from the Pennsylvania State Ethics Commission ("Commission").
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa.C.S. § 1101 et sew , would impose prohibitions or restrictions upon an individual with
regard to erforming the duties of his position as an A of the B of Political Subdivision C,
where: (1) the individual in a private capacity is a D, E, and part owner of a firm that
may provide [type of services] to F clients for the purpose of G and H the I of the Js that
such clients provide to the K of the L or M in Pennsylvania, as well as to other Ks and
stakeholders; and (2) the F clients may choose to utilize the firm's work product to
propose Ns to requests to enter into Os with the L for Ps.
Facts: You request a confidential advisory from the Commission based upon
suEmitted facts, the material portion of which may be fairly summarized as follows.
In [month, year) you were appointed as an A of the B of Political Subdivision C.
As an A of the Political Subdivision C B, you will be provided with confidential
information with regard to, and in a position to make decisions on, [various matters
pertaining to Political Subdivision C].
In a private capacity, you are a D and an E of a firm named [name of firm] (the
"Firm "), in which you hold [a percentage] ownership interest. The Firm provides [type of
services] to [various types of entities] with regard to [various matters].
The Firm may perform work for Qs, Rs, and other types of F entities ( "F Clients'
for the purpose of G and H the I of the Js that such clients provide to the K of the L or M
in Pennsylvania, as well as to other Ks and stakeholders. In performing such work, the
Firm may [perform certain activities] and provide the F Client with [certain work]
(hereinafter referred to as "the Firm's Work Product "). An F Client may choose to
directly or indirectly use the Firm's Work Product to propose Ns to requests to enter into
Os with the L for Ps. You state that previous P Ss resulted in significant funding for
Political Subdivision C, with [percentage] of P Ts directly funding Political Subdivision C.
Based upon the above submitted facts, the question that is presented is whether
the Ethics Act would impose prohibitions or restrictions upon you with regard to
Confidential Advice, 18 -543
July 12, 2018
Page 2
performin the duties of your position as an A of the Political Subdivision C B if you /the
Firm would enter into a contract with an F Client to provide [type of services] for the
purpose of establishing (1 the I of the Js that the F Client provides to the K of the L; or
(2) the I of the Js that the Client provides M in Pennsylvania and to a variety of Ks and
stakeholders beneficially impacted by the F Client.
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, the 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 disc osed all of the material facts.
As an A of the Political Subdivision C B, you are a public official subject to the
provisions of 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
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), (j).
The following terms related to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
Confidential Advice, 18 -543
Jul Page 3'
"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
he 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.
65 Pa.C.S. § 1102.
Subject to the statutory exclusions to the Ethics Act's definition of the term
"conflict" or "conflict of interest," 65 Pa.C.S. § 1102, 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.
In each instance of a conflict of interest, the public official /public employee would
be required to abstain from participation. The abstention requirement would not be
limited merely to voting, but would extend to any use of authority of office including, but
not limited to, discussing, conferring with others, and lobbying fora particular result.
Juliante, Order 809. Subject to certain statutory exceptions, in each instance of a voting
comet, Section 11030) of the Ethics Act would require the public official/public
employee to abstain and to publicly disclose the abstention and reasons for same, both
orally and by filing a written memorandum to that effect with the person recording the
minutes.
Per the Pennsylvania Supreme Court's decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
... must act in such a way as to put his office /public position]
to the purpose of obtaining for himself a private pecuniary
benefit. Such directed action implies awareness on the part
of the [public official/public employee] of the potential
Confidential Advice, 18 -543
July Page 4�
pecuniary benefit as well as the motivation to obtain that
benefit for himself.
Kistler, ssuura 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics
Act, a public officialpublic employee "must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then must take action in the form of
one or more specific steps to attain that benefit." Id., 610 Pa. at 528, 22 A.3d at 231.
Sections 1103(b) and 1103(c) of the Ethics Act, 65 Pa.C.S. §§ 1103(b), (c),
provide in part that no person shall offer or give to a public official /public employee
anything of monetary value and no public official/public employee shall solicit or accept
anything of monetary value based upon the understanding that the vote, official action,
or judgment of the public official/public employee would be influenced thereby.
Having established the above general principles, you are advised as follows.
The Firm is a business with which you are associated in your capacities as a D,
an officer (E), and an owner.
Section 1103(a) of the Ethics Act, pertaining to conflict of interest, would impose
restrictions upon you in your capacity as a public official, rather than upon you in your
private capacity. In your public capacity as an A of the Political Subdivision C B, you
would have a conflict of interest under Section 1103(a) of the Ethics Act as to
discussions }, vote(s), and /or other official action(s) if: (11) you would be consciously
aware of a private pecuniary benefit for yourself, a member of your immediate family, or
a business with which you or a member of your immediate family is associated such as
the Firm; (2) your action(s) would constitute one or more specific steps to attain that
benefit; and (3) neither the de minimis exclusion nor the class /subclass exclusion set
forth within the Ethics Act's definition of the term "conflict" or "conflict of interest," 65
Pa.C.S. § 1102, would be applicable. Cf. Kistler, supra.
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.
Pursuant to Section 1103 c) of the Ethics Act, you would be prohibited from
soliciting or accepting anything o' monetary value based upon an understanding that
your vote, official action or judgment would be influenced thereby. Absent some
improper understanding violative of Section(s) 1103(b)I1103(c) of the Ethics Act,
contracting between you /the Firm and private F entity(ies) would occur in a private
capacity and would not be governed by the Ethics Act.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the U.
Conclusion: Based upon the submitted facts that: (1)) in [month, year] you were
appointed as an A of the B of Political Subdivision C; (2) as an A of the Political
Subdivision C B, you will be provided with confidential information with regard to, and in
a osition to make decisions on, [various matters pertaining to Political Subdivision C];
43) in a private capacity, you are a D and an E of a firm named (name of firm] (the
' Firm "),, in which you hold [a percentage ownership interest; (4) the Firm provides [type
of services] to [various types of entities with regard to [various matters Oe the Firm
may perform work for Qs, Rs, and other types of F entities ("F Clients" for purppose
of G and H the I of the Js that such clients provide to the K of the L or M in
Confidential Advice, 18 -543
July 12, 2018
Page 5
Pennsylvania, as well as to other Ks and stakeholders; (6) in performing such work, the
Firm may [perform certain activities] and provide the F Client with [certain work]
(hereinafter referred to as "the Firm's Work Product "); (7) An F Client may choose to
directly or indirectly use the Firm's Work Product to propose Ns to requests to enter into
Os with the L for Ps; and (8) previous P Ss resulted in significant funding for Political
Subdivision C, with [percentage] of P Ts directly funding Political Subdivision C, you are
advised as follows.
As an A of the Political Subdivision C B, you area public official subject to the
provisions of the Public Official and Employee Ethics Act Ethics Act "), 65 Pa.C.S. §
1101 et seq. The Firm is a business with which you are associated in your capacities
as a [5 an officer (E), and an owner.
Section 1103(a) of the Ethics Act, pertaining to conflict of interest, would impose
restrictions upon you in your capacity as a public official, rather than upon you in your
private capacity. In your public capacity as an A of the Political Subdivision C B, you
would have a conflict of interest under Section 1103(a) of the Ethics Act as to
discussion(s), vote(s), and/or other official action(s) if: () you would be consciously
aware of a private pecuniary benefit for yourself, a member of your immediate family, or
a business with which you or a member of your immediate family is associated such as
the Firm; (2) our action(s) would constitute one or more specific steps to attain that
benefit; and (3) neither the de minimis exclusion nor the class /subclass exclusion set
forth within the Ethics Act's definition of the term "conflict" or "conflict of interest," 65
Pa.C.S. § 1102, would be applicable.
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.
Pursuant to Section 1103(c) of the Ethics Act, you would be rohibited from
soliciting or accepting anything of monetary value based upon an understanding that
your vote, official action or judgment would be influenced thereby. Absent some
improper understanding violative of Section(s) 1103(b)11103(c) of the Ethics Act,
contracting between youlthe Firm and private F entity(ies) would occur in a private
capacity and would not be governed by the Ethics Act.
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Act.
Pursuant to Section 1107(11) of the Ethics Act, an 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, provided the requester 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 appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actual)
received at the Commission within thirty (30) days of the date—o;! &
Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
Confidential Advice, 18 -543
Jul 12, 2018
Page 6
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717-787-0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Robin M. Hittie
Chief Counsel