HomeMy WebLinkAbout95-569 ArpeyMichael W. Arpey, Esquire
General Counsel
Commonwealth of Pennsylvania
Office of the Treasurer
Finance Building, Room 129
Harrisburg, PA 17120
Dear Mr. Arpey:
STATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
ADVICE OF COUNSEL
May 16, 1995
95 -569
Re: Former Public Employee; Section 3(g); Executive -Level State
Employee; Section 3(i); Deputy Treasurer of Commonwealth
Investments; Chief Financial Officer; Treasury Department.
This responds to your letter of April 27, 1995, in which you
requested advice from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Law
presents any restrictions upon employment of a Deputy Treasurer of
Commonwealth Investments following termination of service with the
Treasury Department.
Facts: Over the past six and a half years, Mr. Henry V. Sciortino
has served as a Deputy Treasurer of Commonwealth Investments and
Chief Financial Officer for the State Treasury Department. In this
capacity, Mr. Sciortino is responsible for investing the money of
three primary portfolios, which include the Treasury Department's
Short Term Investment Pool, the INVEST Portfolio for local
government operating revenue and bond proceeds, and the Tuition
Account Program. He also invests funds of several smaller
portfolios on behalf of a variety of different entities. In
addition to his responsibilities as the Chief Investment Officer,
Mr. Sciortino is Treasurer Knoll's representative to the State
Employees' Retirement System, Public School Employees' Retirement
System, and the State Workers' Insurance Fund. Mr. Sciortino
intends to terminate his Treasury Department employment to pursue
a career in asset management, public finance, and governmental
consulting. On behalf of Mr. Sciortino, you request advice from
the Commission under the Ethics Law concerning employment following
termination of his public service and ask four questions. First,
you ask whether he may be employed by a firm that has sold and /or
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 2
bought securities to or from the Treasury Department if he has not
used his office or any emoluments of his public position or
confidential information to advance his private employment.
Second, you ask whether Mr. Sciortino may represent himself before
a Commonwealth agency, department, board, or commission with which
he has not been employed nor a board member designee. Third, given
that he is responsible for directing all investments on behalf of
numerous local governments, state agencies, and other private and
public institutions through the Treasury Department's Investment
Center, you ask whether he can solicit and contract with these same
entities to perform asset management, public finance, and
governmental consulting. Finally, you note that the firm in which
he intends to be employed has recently expanded in Pennsylvania and
received loans, tax abatements, and /or grants to be attracted to
the state. You also state that none of the financial assistance
came from the Treasury Department nor any board or commission on
which Mr. Sciortino serves. You ask whether he has any ethical
considerations as a result of the financial assistance his
prospective employer received.
Discussion: As a Deputy Treasurer of Commonwealth Investments and
Chief Financial Officer for the State Treasury Department, Mr.
Sciortino is considered a "public employee" within the definition
of that term as set forth in the Public Official and Employee
Ethics Law and the Regulations of this Commission. 65 P.S. §402;
51 Pa. Code §11.1. This conclusion is based upon the job
description, which when reviewed on an objective basis, indicates
clearly that the power exists to take or recommend official action
of a non - ministerial nature with respect to contracting,
procurement, planning, inspecting, administering or monitoring
grants, leasing, regulating, auditing or other activities where the
economic impact is greater than de minimis on the interests of
another person.
In addition, he is an executive -level state employee as that
term is defined under the Ethics Law, and hence he is subject to
the requirements of Section 3(i) of the Ethics Law, infra.
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.
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 3
"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 unique to a
particular public office or position of public
employment.
"Executive -level State employee." The
Governor, Lieutenant Governor, cabinet
members, deputy secretaries, the Governor's
office staff, any State employee with
discretionary powers which may affect the
outcome of a State agency's decision in
relation to a private corporation or business
or any employee who by virtue of his job
function could influence the outcome of such a
decision.
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.
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 4
Section 3(i) of the Ethics Law provides:
Section 3. Restricted Activities
(i) No former executive -level State
employee may for a period of two years from
the time that he terminates his State
employment be employed by, receive
compensation from, assist or act in a
representative capacity for a business or
corporation that he actively participates in
recruiting to the Commonwealth of Pennsylvania
or that he actively participated in inducing
to open a new plant, facility or branch in the
Commonwealth or that he actively participated
in inducing to expand an existent plant or
facility within the Commonwealth, provided
that the above prohibition shall be invoked
only when the recruitment or inducement is
accomplished by a grant or loan of money or a
promise of a grant or loan of money from the
Commonwealth to the business or corporation
recruited or induced to expand.
Under Section 3(a) of the Ethics Law quoted above, a public
official /employee may not use the authority of public office/
employment or confidential information received by holding such a
public position for the private pecuniary benefit of himself, a
member of his immediate family, or business with which he or a
member of his immediate family is associated.
In applying Section 3(a) of the Ethics Law to the proffered
facts, Section 3(a) would prohibit Mr. Sciortino from using the
position or emoluments of his public position or confidential
information to advance an opportunity of private employment with
the investment firm referenced above. Once again, it is not
suggested that he has engaged in such conduct; the foregoing is
provided to give a complete response to your inquiry.
As to Section 3 (i) of the Ethics Law, Mr. Sciortino is subject
to that provision of law since he is an executive -level state
employee. However, Section 3(i) would not restrict him from the
position of employment with the investment firm provided he did not
actively participate in recruiting or inducing that firm to open a
new facility or branch in the Commonwealth or participate in
inducing it to expand an existing plant or facility that was
accomplished by a grant or loan of money or a promise of a grant or
loan of money from the Commonwealth of Pennsylvania to the firm.
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 5
Although the facts you provided state that the Commonwealth
financial incentives the firm received were not from the Treasury
Department nor any board or commission on which he serves, you do
not indicate whether Mr. Sciortino actively participated in
recruiting or inducing the investment firm to open a new facility
or branch or expand through a grant or loan of money or a promise
of a grant or loan of money from the Commonwealth. Conditioned
upon the assumption that there has been no active participation by
him in such recruitment or inducement of the firm to open or expand
a facility or branch through a grant or loan of money or a promise
of a grant or loan of money from the Commonwealth of Pennsylvania,
he would not be prohibited from accepting the position of
employment with the investment firm.
Upon termination of public service, Mr. Sciortino would become
a "former public employee" subject to Section 3(g) of the Public
Official and Employee Ethics Law. Section 3(g) of the Ethics Act
provides that:
Section 3. Restricted activities.
(g) No former public official or public
employee shall represent a person, with
promised or actual compensation, on any matter
before the governmental body with which he has
been associated for one year after he leaves
that body.
Initially, to answer your request the governmental body with
which Mr. Sciortino is associated while working with the Treasury
Department must be identified. Then, the scope of the
prohibitions associated with the concept and term of
"representation" must be reviewed.
The term "governmental body with which a public official or
public employee is or has been associated" is defined under the
Ethics Law as follows:
Section 2. Definitions.
"Governmental body with which a public
official or public employee is or has been
associated." The governmental body within
State government or a political subdivision
by which the public official or employee is or
has been employed or to which the public
official or employee is or has been appointed
or elected and subdivisions and offices within
that governmental body.
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 6
In applying the above definition to the instant matter, We
must conclude that the governmental bodies with which Mr. Sciortino
will have been associated upon termination of public service would
be the State Treasury Department, State Employees' Retirement
System, the Public School Employees' Retirement System and the
Pennsylvania Department of Labor and Industry, which administers
the State Workers' Insurance Fund hereinafter collectively referred
to as the Agencies. The above is based upon the language of the
Ethics Law, the legislative intent (Legislative Journal of House,
1989 Session, No. 15 at 290, 291) and the prior precedent of this
Commission. Thus, in Sirolli, Opinion 90 -006, the Commission found
that a former Division Director of the Department of Public Welfare
(DPW) was not merely restricted to the particular Division as was
contended but was in fact restricted to all of DPW regarding the
one year representation restriction. Similarly in Sharp, Opinion
90- 009 -R, it was determined that a former legislative assistant to
a state senator was not merely restricted to that particular
senator but to the entire Senate as his former governmental body.
Therefore, within the first year after termination of service
with the Treasury Department, Section 3(g) of the Ethics Law would
apply and restrict representation of persons or new employers vis-
a-vis the Agencies.
It is noted that Act 9 of 1989 significantly broadened the
definition of the term "governmental body with which a public
official or public employee is or has been associated." It was the
specific intent of the General Assembly to define the above term so
that it was not merely limited to the area where a public
official /employee had influence or control but extended to the
entire governmental body with which the public official /employee
was associated. The foregoing intent is reflected in the
legislative debate relative to the amendatory language for the
above term:
We sought to make particularly clear that
when we are prohibiting for 1 year that
revolving -door kind of conduct, we are dealing
not only with a particular subdivision of an
agency or a local government but the entire
unit..." Legislative Journal of House, 1989
Session, No. 15 at 290, 291.
Therefore, since the Ethics Law must be construed to ascertain
and effectuate the intent of the General Assembly under 1 Pa.
C.S.A. §1901, it is clear that the governmental bodies with which
Mr. Sciortino are associated are the Agencies.
Turning now to the scope of the restrictions under Section
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 7
3(g), the Ethics Law does not affect one's ability to appear before
agencies or entities other than with respect to the former
governmental body. Likewise, there is no general limitation on the
type of employment in which a person may engage, following
departure from their governmental body. It is noted, however, that
the conflicts of interest law is primarily concerned with financial
conflicts and violations of the public trust. The intent of the
law generally is that during the term of a person's public
employment he must act consistently with the public trust and upon
departure from the public sector, that individual should not be
allowed to utilize his association with the public sector,
officials or employees to secure for himself or a new employer,
treatment or benefits that may be obtainable only because of his
association with his former governmental body.
In respect to the one year restriction against such
"representation," the Ethics Law defines "Represent" as follows:
Section 2. Definitions.
"Represent." To act on behalf of any
other person in any activity which includes,
but is not limited to, the following:
personal appearances, negotiations, lobbying
and submitting bid or contract proposals which
are signed by or contain the name of a former
public official or public employee.
The Commission, in Popovich, Opinion 89 -005, has also
interpreted the term "representation" as used in Section 3(g) of
the Ethics Law to prohibit:
1. Personal appearances before the former governmental body
or bodies, including, but not limited to, negotiations or
renegotiations in general or as to contracts;
2. Attempts to influence;
3. Submission of bid or contract proposals which are signed
by or contain the name of the former public
official /employee;
4. Participating in any matters before the former
governmental body as to acting on behalf of a person;
5. Lobbying, that is representing the interests of any
person or employer before the former governmental body in
relation to legislation, regulations, etc.
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 8
The Commission has also held that listing one's name as the
person who will provide technical assistance on such proposal,
document, or bid, if submitted to or reviewed by the former
governmental body constitutes an attempt to influence the former
governmental body. In Shav, Opinion 91 -012, the Commission held
that Section 3(g) would prohibit the inclusion of the name of a
former public official /public employee on invoices submitted by his
new employer to the former governmental body, even though the
invoices pertained to a contract which existed prior to termination
of public service. Therefore, within the first year after
termination of service, Mr. Sciortino should not engage in the type
of activity outlined above.
Mr. Sciortino may assist in the preparation of any documents
presented to the Agencies. However, he may not be identified on
documents submitted to those Agencies. He may also counsel any
person regarding that person's appearance before the Agencies.
Once again, however, the activity in this respect should not be
revealed to the Agencies. Of course, any ban under the Ethics Law
would not prohibit or preclude the making of general informational
inquiries of the Agencies to secure information which is available
to the general public. This must not be done in an effort to
indirectly influence the former governmental bodies or to otherwise
make known to those bodies the representation of, or work for the
new employer.
In addition, the term "Person" is defined as follows under the
Ethics Law:
Section 2. Definitions.
"Person." A business, governmental body,
individual, corporation, union, association,
firm, partnership, committee, club or other
organization or group of persons.
In Confidential Opinion 93 -005, the Commission held that
Section 3(g) precludes a former public official /employee from
providing consulting services to his former governmental body for
a period of one year after termination of service in that the
prohibition against representing a person includes the former
public official /employee representing himself.
In your request for advice, you ask four questions on behalf
of Mr. Sciortino. First, you ask whether he may be employed by a
firm that has sold and /or bought securities to or from the Treasury
Department if he has not used his office or any emoluments of his
public position or confidential information to advance his private
employment. Mr. Sciortino may be employed by such a firm provided
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 9
he meets the requirements under Sections 3(a), 3 (g) , and 3(i) as
outlined above. Second, you ask whether Mr. Sciortino may
represent himself before a Commonwealth agency, department, board
or commission with which he has not been employed nor a boardmember
designee. As noted above, representing a "person" includes
representation of oneself. Therefore, although the Ethics Law
would prohibit Mr. Sciortino from representing himself before his
former governmental bodies, the Ethics Law would not prohibit him
from representing himself before a Commonwealth agency, department,
or board with which he has not been employed nor a boardmember.
Third, you ask whether Mr. Sciortino, after he leaves public
service, can solicit and contract with local governments, state
agencies, and other private and public institutions when he was
responsible for directing all investments on behalf of these
entities through the Treasury Department's Investment Center while
in public service. Because the Ethics Law only restricts behavior
of former public employees and former executive -level state
employees with respect to their former governmental bodies, the
Ethics Law would not restrict Mr. Sciortino's activities following
public service with respect to entities other than the Agencies.
Fourth, you note that Mr. Sciortino's prospective employer received
financial incentives from the Commonwealth to expand in
Pennsylvania. However, these incentives did not come from any of
the governmental bodies with which Mr. Sciortino is associated.
The focus of Section 3(i) of the Ethics Law is whether the former
executive -level state employee "actively participated" in
recruiting a business to expand in Pennsylvania through the use of
Commonwealth financial incentives. While the particular
Commonwealth agency from where the financial incentives flowed may
shed light on whether an executive -level state employee actively
participated in recruitment, it is not necessarily dispositive. As
outlined above, the Ethics Law would only prohibit Mr. Sciortino
from employment with the firm if he actively participated in
recruiting it to expand in Pennsylvania through the use of
Commonwealth financial incentives.
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 Act has not been considered in that they do not
involve an interpretation of the Ethics Law.
Conclusion: As a Deputy Treasurer of Commonwealth Investments for
the Treasury Department, Henry V. Sciortino is considered a "public
employee" and an executive -level state employee subject to the
provisions of the Ethics Law. Under Section 3(i) of the Ethics
Law, he would not be prohibited from accepting a position. of
employment with the investment firm referenced above based upon the
assumption that he did not actively participate in inducing or
Arpey, Michael W., Esquire, 95 -569
May 16, 1995
Page 10
recruiting said company to open or expand a facility or branch
through a grant or loan of money or a promise of a grant or loan of
money from the Commonwealth of Pennsylvania. Upon termination of
service with the Treasury Department, Mr. Sciortino would become a
"former public employee" subject to Section 3(g) of the Ethics
Law. The former governmental bodies are the Treasury Department,
State Employees' Retirement System, Public School Employees'
Retirement System and Department of Labor and Industry. The
restrictions as to representation outlined above must be followed.
The propriety of the proposed conduct has only been addressed under
the Ethics Law.
Further, should service.be terminated, as outlined above, the
Ethics Law also requires that a Statement of Financial Interests be
filed for the year following termination of service.
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.
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 appeal the Advice to the
full Commission. A personal appearance before the Commission
will be scheduled and a formal Opinion will be issued by the
Commissi
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date
of this Advice pursuant to 51 Pa .Code 513.2(h). The appeal may
be received at the Commission by hand delivery, United States
mall, delivery-service, or by FAS transmission (717- 787 - 0806).
Failure to file such an appeal at the Commission within thirty
(30) days may result in the dismissal of the appeal.
Vincent J."Dopko
Chief Counsel