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HomeMy WebLinkAbout97-606 ConfidentialSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL September 17, 1997 97 -606 Re: Conflict, Public Official /Employee, School District, School Board Director, Corporation A, Vendor, Books, Book Fair, School District Property, Private Pecuniary Benefit, Consultant. This responds to your letters of August 4 and August 13, 1997 by which you requested confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a School Board Director regarding the use of School District property for the sale of books at a book fair. Facts: You have been authorized by Ms. B to request an advisory from the State Ethics Commission on her behalf. Ms. B is a School Board Director for School District C, a third class public school district comprised of the Borough of D, and Townships E, County F. In a private capacity, Ms. B is a direct seller for G, a subsidiary of Corporation A. Ms. B operates as an independent contractor for G, selling preschool to adult books. These books are designed to be entertaining as well as having educational value; however, they are not considered textbooks. The direct seller arrangement between Corporation A and its independent contractors operates like other direct seller companies, such as Tupperware. The direct sellers hold presentations for the sale of the books, typically through home parties and primarily to individuals. The PTA of the District has asked Ms. B to hold a book fair at the school where parents and other individuals in the community would have the opportunity to review the books and place orders. Pursuant to her contract with G /Corporation A, Ms. B would receive compensation for any orders. Ms. B has not sold any books to the District nor would she initiate any sales with the District at the book fair. Instead, the District would merely be the location where parents and other individuals could attend the book fair. The potential for other such fairs for other school - affiliated organizations also exists. Confidential Advice of Counsel, 97 -606 September 17, 1997 Page 2 In the analysis portion of your August 4th letter, you state that Ms. B does not propose to use the authority of her office for her private pecuniary benefit or the benefit of her business. Ms. B wishes to use a room on District property to hold the book fair. You state that it is not uncommon for the District to permit individuals and /or organizations to use District property for private activities. There is a District policy which would be followed for any such activity. You indicate that Ms. B's request to use District property for the book fair is something the District would consider, regardless of her position as School Director. You state that Ms. B is only considering holding the book fair because individuals in the community have asked her to do so. Ms. B is not attempting to gain business or other financial benefits from the District nor is she attempting to use her position to establish any sort of business relationship between herself or her company and the District. Individual members of the PTA and other individuals from the community would be purchasing the books, not the District itself. It is your belief that Ms. B's activities would only have a de minimis economic impact. You cite Section 324 of the Pennsylvania School Code to provide guidance even though the District recognizes that this Commission does not address questions arising under that statute. Section 324 states in pertinent part: No school director shall, during the term for which he was elected or appointed, as a private person engage in any business transaction with the school district in which he is elected or appointed. You state that the District believes that Ms. B is not acting as a "private person" engaging in business with the District. The District will not be purchasing any of the books or materials that Ms. B will be selling at the book fair. You further state that Section 324 recognizes that school board members may be associated with or hold stock in the corporations which will bid on and conduct business with the school district. The Code does not prohibit such dealings, it merely precludes activities which would lower public confidence and raise suspicions of impropriety. You also cite Section 401(b) of the Pennsylvania Conflicts of Interest Statute which provides that public officials ". . . should not be discouraged from maintaining their contacts with their community through their occupations and professions." The District requests that this Commission provide guidance as to Ms. B's proposed activity. In the event that it is determined that Ms. B's proposal would violate the Ethics Law, you submit an alternative proposal whereby a consultant other than Ms. B would hold the book fair and solicit sales of the books with Ms. B getting a small percentage of any resulting profits. You ask if Ms. B's use of District property would violate the Ethics Law, would her monetary gain from another's use of the property also be violative. 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 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 Confidential Advice of Counsel, 97 -606 September 17, 1997 Page 3 affords a defense to the extent the requestor has truthfully disclosed all of facts. As a School Director for School District C, Ms. B is a public official is defined under the Ethics Law, and hence she is subject to the provisions 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. "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. the material as that term of that law. 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(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 Confidential Advice of Counsel, 97 -606 September 17, 1997 Page 4 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. In each instance of a conflict, 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 applying Section 3(a) of Act 9 of 1989 to the instant matter, the facts reflect that Ms. B would be using the property of the School District, of which she is a Board Member, for the purpose of selling books at a profit at a book fair. In Guloien, Opinion No. 90 -01 1, the full Commission ruled that an insurance salesman, who was a school board member, would not be precluded from selling insurance to board members, administrators or teachers of that district provided such activity did not involve the use of school district property, personnel or supplies: . . . the Ethics Law does not prohibit your outside business activities. Smith, Opinion 89 -010. However, the Ethics Law would prohibit you from utilizing District property, personnel, supplies or equipment relative to carrying on your private business activities or advancing those interests. In your capacity as sole proprietor of your insurance business you would not be precluded from soliciting new clients or renewing contracts of existing clients who may be employees or officials of the District provided you do not, in whole or part, use your status as a board director in such solicitation. Shubeck, Order 663; Glova, Order 325. In particular, you must exercise diligence and care to insure that you do not convey or give an impression as to your status as a public official as District school director relative to the solicitation of clients for your insurance business. Guloien, at 3, 4. Confidential Advice of Counsel, 97 -606 September 17, 1997 Page 5 The Commission has found violations of Section 3(a) of the Ethics Law as to public officials /public employees who use government facilities, equipment or personnel for business activities. See, Rakowsky, Order 943; Freind, Order 800. The Ethics Law would prohibit Ms. B from using school district property for the sale of books at a book fair for which Ms. B would receive profits on such sales. The fact that other individuals may use school district property for similar activities does not create an exception to the restriction of Section 3(a) because such other individuals are presumably not school directors subject to the Ethics Law. As to the alternative proposal whereby Ms. B would use some "consultant" to hold the book fair with Ms. B receiving a portion of the profits, the Ethics Law would still prohibit Ms. B from engaging in the activity via the consultant. It appears that Ms. B is proposing to engage in the same activity indirectly through a consultant. The Commission has held that if a public official has a reasonable and legitimate anticipation that action on his part will result in a financial gain to him or a business with which he is associated, the individual would have a conflict. Amato, Opinion 89- 002. See also, Kannebecker, Opinion 92 -010. Since Ms. B knows that she would receive a profit on the sales of books via this consultant, she would have a reasonable and legitimate anticipation of a private pecuniary benefit from the sale of books at the book fair on the School District property. Accordingly, Ms. B would be prohibited by Section 3(a) of the Ethics Law from using school district property for a book sale where she would be receiving profit for the sales, either directly by herself or indirectly through a consultant. 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 respective municipal code. Conclusion: As a School Director for School District C, Ms. B is a public official subject to the provisions of the Ethics Law. Ms. B would be prohibited by Section 3(a) of the Ethics Law from using school district property for a book sale where she would be receiving profit for the sales, either directly by herself or indirectly through a consultant. 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. Confidential Advice of Counsel, 97 -606 September 17, 1997 Page 6 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. cerely, 1/ Y incept J opko Chief Counsel