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HomeMy WebLinkAbout90-591 PurselMr. Charles B. Pursel Derr, Pursel, Luschas & Norton 238 Market Street P.O. Box 539 Bloomsburg, PA 17815 Dear Mr. Pursel: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL September 18, 1990 90 -591 Re: Conflict, Public Official /Employee, School Director, Contract, School Buses, Advice 82 -599. This responds to your letter of August 7, 1990, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a school director from voting or participating as to matters involving a corporation which provides busing services to the school district when the school director has provided personal guarantees to the lenders of the corporation. Facts: After referencing a prior Advise of Counsel, 82 -599, regarding a school director who owned an interests in a business that provided busing services to the school district, you indicate that the business thereafter became a corporation with the school director being one of the three shareholders. The school director continued to abstain from all votes relating to busing decisions. In 1990 the school director sold his shares in the corporation to one of the other shareholders who is not related to the school director. The school director retained a one third interest in the building which. is used to service and maintain the school buses which building is leased to the corporation on a fixed monthly rental. The school director continues to be personally liable for certain of the corporation's debts because personal guarantees were required by the lenders of the corporation. Although the school director hopes to be released from the personal guarantees, it appears that such releases will not be obtained in the near future. The corporation continues to provide busing services to the school district in which the director serves as well as other area school districts. The awarding of the contracts for school busing continues to be handled by the school district in the same Mr. Charles B. Pursel Page 2 fashion since 1982. You conclude by requesting advise as to whether the school director should continue to abstain from all decisions and negotiations relating to busing contracts. Discussion: As school director, the individual is a public official as that term is defined under the Ethics Law, and hence he is subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined in the Ethics Law as follows: Section 2. 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. "Conflict" or "conflict of interest" 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 or 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. In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public Mr. Charles B. Pursel Page 3 official /employee anything of monetary value and no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has or will be any transgression thereof but merely to provide a complete response to the question presented. Section 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities. (j) 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. If a conflict exists, Section 3(j) requires the public official /employee to abstain as well as file a written memorandum to that effect with the person recording the minutes or supervisor. Mr. Charles B. Pursel Page 4 In applying the provisions of Section 3(a) of the Ethics Law quoted above to the instant matter, it appears that the school director would continue to have a conflict even though he has sold his interest in the corporation to another shareholder. Because the school director continues to be personally liable for certain of the corporations debts, any participation or voting on his part as to matters concerning that corporation could have a direct or indirect impact upon his personal liability vis -a -vis that corporation which could translate into a private pecuniary benefit to himself. A private pecuniary benefit would not be limited to a tangible financial gain but could also include the impact that his use of authority of office, consisting of voting or participation, could have on his personal liability as to certain of the corporation's debts. Accordingly, in light of the above conflict, the school director would have to continue to abstain from participation and voting and observe the disclosure requirements as required by Section 3(j) of the Ethics Law outlined above. The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed herein is the applicability of the Public School Code. Conclusion: As school director, the individual is a public official subject to the provisions of the Ethics Law. Section 3(a) of the Ethics Law would prohibit a school director from participating or voting on matters concerning a corporation which performs busing services to the school district when the school director is a personal guarantor for certain of the corporation's debts. The disclosure requirements of Section 3(j) of the Ethics Law outlined above must be satisfied. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), 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. Mr. Charles B. Pursel Page 5 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 in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code §2.12. Sincerely, (C-° Vincent 7. Dopko, Chief Counsel