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HomeMy WebLinkAbout93-579 TuranoSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA.17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL July 8, 1993 Robert G. Turano, President Robert G. Turano Insurance Agency, Inc. 955 Main Street Honesdale, PA 18431 Re: 93 -579 Conflict of Interest, Public Official, Borough Council Member, Private Employment, Contracting with Governmental Body, Insurance Broker, Use of Authority of Office or Confidential Information, Voting, Insurance for Borough. Dear Mr. Turano: This responds to your letter of June 24, 1993, in.wh ch you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a borough-council member who is also a licensed Pennsylvania insurance broker, with regard to serving as the borough's insurance broker Facts: You are the owner of Robert G. Turano Insurance Agency, Inc. For the past twelve years, you have been the insurance broker for the Borough. Recently, you were appointed to Borough Council to fill a vacancy. You were then elected to serve a full four -year term. You are concerned that a possible conflict of interest may exist if you continue to be the insurance broker -for the Borough while serving as Council Member. You state that yours -re the only one who has a broker's license to handle the account. Based upon the above, you request an advisory from the State Ethics Commission regarding your ability to continue to handle the Borough's insurance. Further, you ask whether the Borough must bid their insurance and, if so, how often. Discussion: It is initially noted that your request for advice may only be addressed with regard to prospective conduct. A reading of Sections 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 Robert G. Turano, President July 8, 1993 Page 2 by the Commission if there are allegations of Ethics Law violations by a person who is subject to the Ethics Law. As a Council Member for the Borough, you are a "public official" as that term is defined in the Ethics Law. 65 P.S. 5402; 51 Pa. Code 511.1. As such, you are subject to the provisions of the Ethics Law and the restrictions therein are applicable to you. Section 3(a) of the Ethics Law provides: Restricted Activities No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined under the Ethics Law: "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. "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. Robert G. Turano, President July 8, 1993 Page 3 65 P.S. §402. "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. "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. Section 3. Restricted activities. (f) No public official or public 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 Robert G. Turano, President July 8, 1993 Page 4 making of the contract or subcontract. In relation to the above provision of law, the State Ethics Commission has generally determined that this provision is a procedure to be used when a public official or employee contracts with his own governmental body in an amount of $500 or more. The process must be open and public with prior public notice and subsequent public disclosure. In addition, the public official/ employee may not have any supervisory or overall responsibility for the implementation or administration of the contract. Thus, the open and public process, must be used in all situations where a public official is otherwise appropriately contracting with his own governmental body in an amount of $500 or more. This open and public process would require: (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. Further, Section 3(f) requires that the public official could not have supervisory or overall responsibility as to the implementation or administration of the contract. 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 Robert G. Turano, President July 8, 1993 Page 5 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 P.S. 5403(j). 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. 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 judgment 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. Under Section 3(a) of the Ethics Law quoted above, a public . official may not use the authority of office or confidential information to obtain a private pecuniary benefit for himself, a member of his immediate family or a business with which he is or a member of his immediate family is associated. Generally, the Ethics Law places no per se prohibition upon a public official or business with which he is associated from contracting with his governmental body. Pancoe, Opinion 89 -011. As owner of the Robert G. Turano Insurance Agency, Inc., it is clear that the foregoing entity is a "business with which you are associated" as that term is defined under the Ethics Law. Robert G. Turano, President July 8, 1993 Page 6 Under Section 3(a), you or the "business with which you are associated" are not precluded from contracting with your governmental body, but you could not participate or vote on matters involving the contract between the governmental body and Robert G. Turano Insurance Agency, Inc. In addition, the disclosure requirements of Section 3(j) of the Ethics Law must be followed whereby the reasons for the abstention must be publicly noted as well as a written memorandum to that effect must be filed with the secretary recording the minutes. Under Section 3(a), you would have a conflict of interest as to insurance matters before the Borough involving you as owner of the insurance agency, a business with which you are associated. Miller Opinion No. 89 -024. In such instances, it will be necessary that you remove yourself from any participation of any nature whatsoever. As noted in Miller, matters which come before a public official /public employee involving his private business/ employer 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 a private employer as well as to the private clients, while in his capacity as a public official /public employee, his primary duty is to act in the best interest of the governmental body with the duty being owed to the public rather than to private clients. Id.; see also, Brooks, Opinion No. 89 -023. In each instance of a conflict of interest, you would be required to abstain 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. Similarly, you could not use any confidential information received by holding your public office to advance an opportunity for a contract between the Borough and yourself, any business with which you are associated, or an insurance company for which you serve as a broker and /or agent. In each instance of a conflict of interest, the disclosure requirements of Section 3(j) of the Ethics Law must be satisfied, whereby the abstention and the reasons for same must be publicly disclosed both orally and by filing a written memorandum to that effect with the secretary recording the minutes. Contracting between the Borough and you or any business with which you are associated would be subject to the restrictions of Section 3(f) of the Ethics Law set forth above, for contracts in the amount of $500 or more. Turning now to your specific inquiries, you ask whether a conflict of interest would exist if you continued to serve as the Borough's insurance broker while serving a Borough Council Member, whether the Borough had to bid its insurance, and if so, how often. Robert G. Turano, President July 8, 1993 Page 7 Although you would be required to observe the restrictions and qualifications of the Ethics Law noted above, the fact that the Borough voted to contract with your insurance agency would not in and of itself constitute a violation of the Ethics Law. As for the Borough's requirement of bidding its insurance, the only requirements as to bidding under the Ethics Law are set forth in Section 3(f) above. The Ethics Commission does not have jurisdiction over such other codes, laws, or regulations. It is recommended that the Borough Solicitor or private legal counsel be consulted as to the question which you present concerning the bidding of insurance. Parenthetically, as a final note, although the contracting in question would not be prohibited under the Ethics Law provided the requirements of Sections 3(a), (f) and (j) are satisfied, a problem may exist as to such contracting under the Borough Code. In the instant situation, the Borough Code provides as follows: §46404. Penalty for personal interest in contracts or purchases Except as otherwise provided in this act, no borough official either elected or appointed, who knows or who by the exercise of reasonable diligence could know, shall be interested to any appreciable degree either directly or indirectly in any purchase made or contract entered into or expenditure of money made by the borough or relating to the business of the borough, involving the expenditure by the borough of more than one thousand dollars ($1000) in any calendar year, but this limitation shall not apply to cases where such officer or appointee of the borough is an employe of the person, firm or corporation to which the money is to be paid in a capacity with no possible influence on the transaction, and in which he cannot be possibly benefited thereby either financially or otherwise. But in the case of a councilman or mayor, if he knows that he is within the exception just mentioned he shall so inform council and shall refrain from voting on the expenditure or any expenditure or any ordinance relating thereto, and shall in no manner participate therein. Any official or appointee who shall knowingly violate the provisions of this section shall be subject to surcharge to the extent of the Robert G. Turano, President July 8, 1993 Page 8 damage shown to be thereby sustained by the borough and to ouster from office, and shall be guilty of a misdemeanor, and upon conviction thereof shall be sentenced to pay a fine not exceeding one thousand dollars ($1000), or not exceeding one hundred eighty days' imprisonment, or both. 1966, Feb. 1, P.L. (1965) , No. 581, 51404. 53 P.S. 546404. Since such contracting may be prohibited by the above quoted provision of the Code, it is suggested that advice in that regard be sought from the municipal solicitor or from private counsel. Lastly, 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 in this advice is the applicability of the Borough Code. Conclusion: As a Borough Council Member, you are a public official subject to the provisions of the Ethics Law. Any business in which you are a director, officer, owner, employee or have a financial interest is a business with which you are associated. Under Section 3(a) of the Ethics Law, you may not use the authority of your office or confidential information received by holding your public position for your private pecuniary benefit. You would have a conflict of interest as to insurance matters before the Borough involving you (as a broker or agent) and a business with which you are associated. In each instance of a conflict of interest, you would be required to abstain from any participation of any nature whatsoever and the disclosure requirements of Section 3(j) outlined above would have to be observed. Finally, if the contract is $500 or more, the open and public process as outlined in Section 3(f) above must be accomplished. You, as a public official /employee, could not have any supervisory or overall responsibilities as to the contract. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Due to the possible application of the Borough Code in this matter, it is suggested that you obtain the advice of legal counsel as to whether such contracting may be prohibited by the Code. 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. Robert G. Turano, President July 8, 1993 Page 9 such. This letter is a public record and will be made available as 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. ' Aim 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). � cerely, Vincent r. Dopko Chief Counsel