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HomeMy WebLinkAbout97-546 ConfidentialSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL March 27, 1997 97 -546 Re: Conflict; Public Official /Employee; City Council Member; Former Employee, A, Pennsylvania General Assembly; Former Member of Minor Judiciary; Consulting Business, Subchapter S Corporation; Business Client, Computer Service Organization; Contract. This responds to your letter of February 25, 1997 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 City Council Member who is establishing a consulting business where one of his potential clients is a computer service organization which currently has contracts with an A of the Pennsylvania General Assembly, which formerly employed the Council Member, and with a branch of the minor judiciary where the Council Member previously served. Facts: You request a confidential advisory on behalf of a constituent. The constituent is a City Council Member who is considering going into the consulting business. When established, the business will take the form of a Subchapter S corporation. One of the constituent's potential clients is a computer service organization which provides consulting services to the public, under contract, for computers, computer systems, and software. The computer service organization approached the constituent and expressed an interest in retaining his services because of his background and experience. Prior to being elected as a City Council Member, the constituent served in the minor judiciary and was employed by an A of the Pennsylvania General Assembly. The computer service organization currently has contracts with the same branch of the minor judiciary and with the same A of the General Assembly which formerly employed the constituent. Discussion: It is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Ethics Law, 65 P.S. § §407(10), (11), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not Confidential Advice, 97 -546 March 27, 1997 Page 2 been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 P.S. §§407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. In his present capacity as a City Council Member, the constituent on whose behalf you have inquired is a public official as that term is defined under the Ethics Law, and hence, in that capacity, he is subject to the provisions of the Ethics Law. In his former capacity as a member of the minor judiciary, the City Council Member would be a judge and would be beyond the jurisdiction of the State Ethics Commission. Kremer v. State Ethics Commission, 503 Pa. 358, 469 A.2d 593 (1983). On the facts which have been provided, it cannot conclusively be determined whether, in his former capacity as an employee with an A of the Pennsylvania General Assembly, the constituent was a public official /public employee subject to the Ethics Law. That sort of determination requires specific information as to the position that was held, such as a job description, a job classification specification, and organizational chart. 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 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 Confidential Advice, 97 -546 March 27, 1997 Page 3 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. "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. 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 as follows: 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 making of the contract or subcontract. Confidential Advice, 97 -546 March 27, 1997 Page 4 Parenthetically, where contracting is otherwise allowed or where there appears to be no express prohibitions to such contracting, the above particular provision of the 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 responsibility as to the implementation or administration of the contract with the governmental body. Section 3(g) of the Ethics Law provides: 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. 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 Confidential Advice, 97 -546 March 27, 1997 Page 5 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) from conflict under the Ethics Law, then in that event voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -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. If the constituent establishes the Subchapter S corporation as planned, it will be a business with which he is associated as that term is defined in the Ethics Law. Thus, should matters come before the City Council which would result in a private pecuniary benefit to a business with which the City Council Member is associated — or a business client (Miller, Opinion No. 89 -024; Kannebecker, Opinion No. 92 -010) — he would have a conflict of interest in such a matter. In each instance of a conflict of interest, the Council Member would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 3(j). The restrictions of Section 3(f) would have to be observed when applicable, such as if the Subchapter S corporation would seek to contract with City Council or to subcontract with a contractor that was awarded a contract with City Council, with the value of the contract /subcontract being $500 or more. Turning now to the applicability of Section 3(g), it is initially noted that Section 3(g) would not operate to restrict this individual as to his capacity as a former member of the minor judiciary. Since, as noted above, judges are beyond the jurisdiction of the State Ethics Commission, this Commission would not have jurisdiction to review any matters involving the conduct of this individual as a judge or former judge. However, there is a possibility that Section 3(g) would apply as to the individual's former position with the A of the Pennsylvania General Assembly. As noted above, a conclusive determination as to the applicability of the Ethics Law and Section 3(g) in particular would require specific facts which have not been submitted. Essentially, if the duties and authority of the position would not bring this individual within the definition of "public official" or "public employee" as set forth in the Ethics Law at 65 Confidential Advice, 97 -546 March 27, 1997 Page 6 P.S. §402, Section 3(g) would have no applicability to this individual with regard to his conduct before the Pennsylvania General Assembly. On the other hand, if his position with the A of the Pennsylvania General Assembly was such that he would be within either of those definitions, Section 3(g) would apply. For purposes of this advice, in the interests of providing you with the most information possible, it shall be assumed that Section 3(g) would apply to this individual following termination of that particular position. Significant points to note are that the restrictions would apply for one year following termination of service in the position and that the governmental body with which the individual would have been associated while working with the A of the Pennsylvania General Assembly would be whichever chamber he served, in other words, either the House or the Senate. 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. 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. The Ethics Law must be construed to ascertain and effectuate the intent of the General Assembly under 1 Pa. C.S.A. §1901. 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. Confidential Advice, 97 -546 March 27, 1997 Page 7 Therefore, within the first year after termination of service with the A of the Pennsylvania General Assembly, Section 3(g) of the Ethics Law would apply and restrict representation of persons or new employers vis -a -vis whichever chamber of the Pennsylvania General Assembly this individual served. Turning now to the scope of the restrictions under Section 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. 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. Section 3(g) would also prohibit in general the inclusion Confidential Advice, 97 -546 March 27, 1997 Page 8 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 pertain to a contract which existed prior to termination of public service. Shay, Opinion 91 -012. However, in the event of work performed on a contract already awarded and not involving the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams /Webster, Opinion 95 -01 1. Therefore, within the first year after termination of service, the constituent on whose behalf you have inquired should not engage in any of the prohibited activities outlined above. This individual may assist in the preparation of any documents presented to his former governmental body. However, he may not be identified on documents submitted to the former governmental body. He may also counsel any person regarding that person's appearance before the former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. Of course, any ban under the Ethics Law would not prohibit or preclude the making of general informational inquiries of the former governmental body to secure information which is available to the general public. This must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body 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 applying the definition of "Person" quoted above, the Commission has held that the term includes a former public employee representing himself in providing consulting services to his former governmental body. Confidential Opinion 93 -005. Further, the term "Person" includes a new government employer which is represented by the former public employee before his former governmental employer. Ledebur, Opinion 95 -007. 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 Judicial Code of Conduct, the Rules that apply to the minor judiciary, or the respective municipal code. Conclusion: As a City Council Member, the constituent on whose behalf you have inquired is a public official subject to the provisions of the Ethics Law. If the City Council Member establishes a Subchapter S corporation, it will be a business with which he is associated as that term is defined in the Ethics Law. Pursuant to Section 3(a) of the Ethics Law, the City Council Member would have a conflict of interest in matters before City Council that would result in a private pecuniary benefit to the Subchapter S corporation or a business client, such as the computer service organization which is a potential client. In each instance of a conflict of interest, the Confidential Advice, 97 -546 March 27, 1997 Page 9 City Council Member would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 3(j). The requirements of Section 3(f) would have to be observed if and when applicable. Section 3(g) would not operate to restrict this individual as to his former capacity as a member of the minor judiciary. With regard to this individual's former position with an A of the Pennsylvania General Assembly, based upon the facts which have been submitted, it cannot conclusively be determined whether, in such former employment, this individual was a "public official" or "public employee" subject to the Ethics Law and consequently, whether he is subject to Section 3(g) as a "former" public official /public employee. Assuming Section 3(g) is applicable to this individual as to his former position with the A of the Pennsylvania General Assembly, the former government body would be whichever chamber the individual served, and the restrictions as to representation outlined above would have to be followed. 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 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 Commission. 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 § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX 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. Sincerely, f� ( 6) Vr.cy.,S _ T" D Vincent . Dopko Chief Counsel