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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 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 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