HomeMy WebLinkAbout93-559 LowerySTATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -.1610
ADVICE OF COUNSEL
May 7, 1993
Raymond F. Lowery, Vice President
PNC Securities Corp.
201 Penn Avenue
Scranton, PA 18503
93 -559
Re: Conflict, Public Official /Employee, School Director, Use of
Authority of Office, Confidential Information, Vote, Business
with which Associated, Securities Corporation, Bank,
Subsidiaries of Bank Corporation, Bank as Depository for
School District.
Dear Mr. Lowery:
This responds to your letter of April 20, 1993, 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 to have a bank named as the depository for the school
district when that bank and the company which employs that school
director are subsidiaries of the same bank corporation.
Facts: You are a School Director for the Wyoming Valley West
School District, Luzerne County. You are also employed as Vice
President of PNC Securities Corp. PNC Securities Corp is a
subsidiary of PNC Bank Corp. PNC Bank Corp. also owns a bank in
northeastern Pennsylvania known as PNC Bank, Northeast. PNC Bank,
Northeast would like to be the depository for the Wyoming Valley
West School District.
You indicate that under the Federal Glass- Stegall Act, banks
operating in the securities area must maintain a "firewall" between
the securities and the bank operations. Accordingly, PNC
Securities Corp is a "wholly owned subsidiary" with its own capital
and other operating functions. You believe that because of the
required "firewall," PNC Securities and PNC Bank, Northeast have no
direct relationship, even though both are subsidiaries of PNC.Bank
Corp.
Raymond F. Lowery
May 7, 1993
Page 2
You further indicate that your compensation as Vice President
of PNC Securities Corp is not associated with PNC Bank, Northeast.
You have submitted a copy of an organizational chart, which
document is incorporated herein by reference.
Based upon the above, you request an advisory from the State
Ethics Commission as to your ability to vote on the question of PNC
Bank, Northeast serving as depository for Wyoming Valley West
School District.
Discussion: It is initially noted that your request for advice may
only be addressed with regard to prospective conduct. /treading of
Section 7(10) and 7(11) of the Ethics Law makes it clear that an
opinion or advice may be given only as to prospective (future)
conduct. If the activity in question has already occurred, the
Commission may not issue an opinion or advice but any person may
then submit a signed and sworn complaint which will be investigated
by the Commission if there are allegations of Ethics Law violations
by a person who is subject to the Ethics Law.
As a School Director for the Wyoming Valley West School
District, 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 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
Raymond F. Lowery
May 7, 1993
Page 3
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 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.
"Contract." An agreement or arrangement
for the acquisition, use or disposal by the
Commonwealth or a political subdivision of
consulting or other services or of supplies,
materials, equipment, land or other personal
or real property. "Contract" shall not mean
an agreement or arrangement between the State
or political subdivision as one party and a
public official or public employee as the
other party, concerning his expense,
reimbursement, salary, wage, retirement or
other benefit, tenure or other matters in
consideration of his current public employment
with the Commonwealth or a political
subdivision.
In addition, Sections 3(b) and 3(c) of the Ethics Law provide
in part that no person shall offer to a public official /employee
anything of monetary value and no public official /employee shall
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
been or will be any transgression thereof but merely to provide a
complete response to the question presented.
Section 3(f) of the Ethics Law provides:
Section 3. Restricted activities
(f) No public official or public
Raymond F. Lowery
May 7, 1993
Page 4
employee or his spouse or child or any
business in which the person or his spouse or
child is associated shall enter into any
contract valued at $500 or more with the
governmental body with which the public
official or public employee is associated or
any subcontract valued at $500 or more with
any person who has been awarded a contract
with the governmental body with which the
public official or public employee is
associated, unless the contract has been
awarded through an open and public process,
including prior public notice and subsequent
public disclosure of all proposals considered
and contracts awarded. In such a case, the
public official or public employee shall not
have any supervisory or overall responsibility
for the implementation or administration of
the contract. Any contract or subcontract
made in violation of this subsection shall be
voidable by a court of competent jurisdiction
if the suit is commenced within 90 days of the
making of the contract or subcontract.
Parenthetically, where contracting is otherwise allowed or
where there appears to be no expressed prohibitions to such
contracting, the above particular provision of law would require
that an open and public process must be used in all situations
where a public official /employee is otherwise appropriately
contracting with his own governmental body, or subcontracting with
any person who has been awarded a contract with the governmental
body, in an amount of $500.00 or more. This open and public
process would require that the following be observed as to the
contract with the governmental body:
(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.
Section 3(f) of the Ethics Law also requires that the public
official /employee may not have any supervisory or overall
Raymond F. Lowery
May 7, 1993
Page 5
responsibility as to the implementation or administration of the
contract with the governmental body.
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 theā¢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 orally and by filing a
written memorandum to that effect with the person recording the
minutes or supervisor.
In the event that the required abstention results in the
inability of the governmental body to take action because a
majority is unattainable due to the abstention(s), then in that
event participation is permissible provided the disclosure
requirements noted above are followed. ee, glakar, Advice 91 -523-
Raymond F. Lowery
May 7, 1993
Page 6
S.
In applying the above provisions of the Ethics Law to the
circumstances which you have submitted, pursuant to Section 3(a) of
the Ethics Law, 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 inquiry must focus upon the business with which you are
associated. Since you are employed by PNC Securities Corp, that is
a business with which you are associated. With PNC Bank Corp., as
the parent corporation, and PNC Bank, Northeast, as another
subsidiary corporation, neither of these other corporations would
be businesses with which you are associated provided they are de
facto separate corporate entities. See, Confidential Opinion, 92-
003, at p. 6.
Based upon the above factual assumptions, PNC Bank, Northeast
would not be a business with which you are associated and the
restrictions set forth in Sections 3(a) and 3(f) would not apply so
that you would not be prohibited from voting on the matter of using
PNC Bank, Northeast as the depository for the Wyoming Valley West
School District.
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 School Code.
Conclusion: As a School Director for the Wyoming Valley West
School District, you are a public official subject to the
provisions of the Ethics Law. Based upon the factual assumptions
and qualifications noted above, PNC Bank, Northeast would not be a
business with which you are associated and as such, Section 3(a) of
the Ethics Law would not prohibit you from voting on that bank to
serve as the depository for the Wyoming Valley West School
District. 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.
Raymond F. Lowery
May 7, 1993
Page 7
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 §13.2(h).
:' ncerely,
Vincent . Dopko
Chief Counsel