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HomeMy WebLinkAbout92-532STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL February 12, 1992 • ". 92 -532 Re: Conflict, Public Official /Employee, Member, County Council, Use of Authority of Office, Vote, Attorney, Law Firm, Counsel to Bond Underwriter. This responds to your letter of December 23, 1991, in which you requested confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a member of a county council who is also an attorney, where the member's law firm proposes - act - as - legal -- counsel - - to- an - underwriter -in connection with its marketing of a bond issue expected to be issued by the county. Facts: As one of - the five elected members of the County A Council you seek confidential advice from the State Ethics Commission as to whether the law firm where you are an attorney in your private capacity would be permitted under the Public Official and Employee Ethics Law to act as legal counsel to an underwriter in connection with its marketing of a bond issue expected to be issued by County A. Although your firm has concluded that the Ethics Law would not prohibit such representation, you nevertheless believe it to be appropriate to request a written, confidential advice from this Commission. You -- have -- submitted the following material -- facts - relative to your inquiry: 1. County A plans to issue general obligation bonds amounting to approximately $67 million ( "bonds "), the proceeds of which will be used primarily to current - refund several one week floating rate loans made to County A by the B Regional Finance Authority for the Confidential Advice 92 -532 February 12, 1992 Page 2 period 1987 -1988 and to pay the costs of issuing the bonds. 2. Your law firm has been asked by the underwriter of the bonds to act as counsel to the underwriter in connection with its marketing of the bonds. The selection of underwriter's counsel is made solely by the underwriter and does not require approval by the County A Council. 3. The County A Council as the governing body of County A will be required to consider and act upon a resolution and ordinance approving the issuance of the bonds. You are one of the five elected members of the County A Council and you are also employed as counsel to the firm. 4. Before final adoption, the proposed ordinance approving the bonds must be duly advertised and considered by the County A Council at two of its consecutive regularly scheduled and duly advertised public meetings. 5. At the time the Resolution and Ordinance relating _. to the bonds comes before the County A Council for formal action and vote, you will i abstain from the . vote and publicly disclose your law role as counsel to the underwriter. 6. The action of the County A Council in approving or disapproving the issuance of the bonds, and your abstention and disclosure of the law firm's selection as counsel to the underwriter, will be recorded in the minutes of the public meeting. 7. You will not have any supervisory or other responsibility for the implementation or administration__ of any of the contracts or subcontracts related to the bond issue and will disqualify yourself from any involvement with it. Based upon all of the above, you request a confidential advice that there is not and would not be any violation of the Ethics Law if your law firm were to act as counsel to the underwriter, provided that you abstain from voting on any matters pertaining to the bond issue and publicly disclose your firm's role as underwriter's counsel at the duly authorized, regularly Confidential Advice 92 -532 February 12, 1992 Page 3 scheduled public meeting of the County A Council, that you refrain from any supervisory or other responsibility for the implementation or administration of any contract or subcontract related to the bond issue, and that you disqualify yourself from any involvement in the bond issue. • Discussion: As a Member of the CountyA Council, you are a public official as that term is defined under the Ethics Law, and hence you are 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 Z. 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 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 Confidential Advice 92 -532 February 12, 1992 Page 4 unique to a particular public office or position of public employment. "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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no - person shall offer to al public official /employee anything of monetary , value and no public official /employee' "sha1I 'solicit or accept anything 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 Confidential Advice 92 -532 February 12, 1992 Page 5 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 it 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 and to publicly disclose the - abstention and reasons - - for same; both ovally and by filing_ written memorandum to that effect with the person recording the minutes or supervisor. _ In applying the above provisions of the Ethics Law to your specific inquiry, it is initially noted that the focus of your inquiry is upon the conduct of your private law firm in prospectively acting as legal counsel to the underwriting firm which would be marketing the bond issue expected to be issued by County A. Insofar as your .inquiry relates to the proposed conduct of a private law firm, you are advised that Section 3(a). of the Ethics Law only applies to restrict the conduct of public officials /public employees and therefore would have 'no application to a private law firm. Furthermore, insofar as the proposed conduct constitutes the private practice of law, Section 3(a) of the Ethics Law cannot be app ;ied to restrict that proposed activity. gm, Pennsylvania Public Utility Commission Bar Association v. Thornburgh, 434 A.2d 1327, 62 Pa. Cmwlth. 88 (1981), aff'd. Der curiam, 450 A.2d 613, 498 Pa. 589 (1982) (interpreting former Section 3(e) of Act 170 of 1978). Thus, Section 3(a) of the Ethics Law would not operate to bar the proposed conduct of your law firm in representing the Confidential Advice 92 -532 February 12, 1992 Page 6 underwriting firm in connection with its' marketing of a bond issue expected to be issued by County A. However, Section 3(a) of the Ethics Law would apply to restrict you in your capacity as a public official. Section 3(a) prohibits a public official /public employee 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. Your law firm is a business with which you are associated. In the event that your law firm or any of its clients, such as this particular underwriting firm, would have a matter pending before you as a public official, or if you as part of your official duties would be required to participate, review or pass upon such matters in your official capacity, a conflict would exist. Miller, Opinion 89 -024. As noted in Miller, matters which come before a public official /public employee involving his private business or private clients place a public official public employee in a situation where he is faced with conflicting interests. In his private capacity, his duty is owed to the private firm and its clients, while in his capacity as a public official /public employee, his primary duty is to act in the best interests of the governmental body with the duty being owed to the public rather than to private clients. Id; See also, Brooks, Opinion 89 -023. It is clear that in your capacity as a public official, you would have a'conflict of interest as to any matters involving your law firm and /or its clients, and specifically this particular underwriting firm. In each instance of a conflict of interest, you must divest yourself from any participation of any nature whatsoever, including but not limited to participating in discussions, voting, lobbying for a particular result, or otherwise using the authority of your office. Furthermore, in each instance where a conflict of interest arises, you must observe the disclosure requirements of Section 3(j) set forth above. You have specifically represented that you will abstain from any participation in the bond issue matter. If you would also publicly disclose your abstention and the reasons for same, both orally and in a written memorandum filed with the secretary recording the minutes, your proposed conduct would not transgress Section 3(a) of the Ethics Law. The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other Confidential Advice 92 -532 February 12, 1992 Page 7 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 County Code or the Rules of Professional Conduct. Conclusion: As a Member of the County A Council, you are a public official subject to the provisions of the Ethics Law. Section 3(a) of the Ethics Law would not restrict your private law firm from representing an underwriter in connectionpwith its marketing of a bond issue expected to be issued by County A. In your capacity as a public official, you would have a conflict of interest as to matters pertaining to your law firm and /or its private clients, specifically including but not limited to the underwriting firm. In each instance of a conflict of interest, you would be required to abstain from any participation of any nature whatsoever in the matter, and the disclosure requirements of Section 3(j) of the Ethics Law as outlined above would have to 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. 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, V ot Vincent J. Dopko Chief Counsel (.At •,}.