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HomeMy WebLinkAbout97-627 RichardsonJohn J. Richardson, Jr. The Dillsburg Agency, Inc. PO Box 451 Dillsburg, PA 17019 Dear Mr. Richardson: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL November 25, 1997 Sections 3(a) and 3(j) of the Ethics Law provide as follows: 97 -627 Re: Conflict, Public Official /Public Employee, Contracting, Private Employment or Business, Borough, Insurance Broker, Mayor. This responds to your letter of October 23, 1997, by which you requested advice from the State Ethics Commission. Issue: Whether a Borough Mayor who is an insurance agent /broker is prohibited or restricted by the Public Official and Employe Ethics Law with regard to handling the Borough's insurance. Facts: You seek an advisory from the State Ethics Commission as to a potential conflict of interest. You are an insurance agent /broker for The Dillsburg Agency, Inc. and in that capacity, you handle all of the insurance for the Borough of Dillsburg. You have been asked by the Borough Council to fill the position of Mayor of Dillsburg. You ask whether you may serve as Mayor and also deal with the Borough regarding its insurance. Discussion: It is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Public Official and Employe Ethics Law ( "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 affords a defense to the extent the requestor has truthfully disclosed all of the material facts. If you would become the Mayor of Dillsburg, you would in that capacity be a public official as that term is defined under the Ethics Law, and hence you would be subject to the provisions of that law. Richardson, 97 -627 November 25, 1997 Page 2 Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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. The following terms that pertain to conflicts of interest under the Ethics Law are defined 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. Richardson, 97 -627 November 25, 1997 Page 3 "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." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "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. Section 3(f) of the Ethics Law, which pertains to contracting /subcontracting, 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. The following terms that pertain to Section 3(f) are defined in the Ethics Law as follows: Section 2. Definitions. "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 Richardson, 97 -627 November 25, 1997 Page 4 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. "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body, or other establishment in the Executive, Legislative or Judicial Branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. "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. In applying the above provisions of the Ethics Law to your inquiry, Section 3(a) shall be addressed first. Section 3(a) of the Ethics Law does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position — or confidential information obtained by being in that position — for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -01 1. Examples of conduct that would be prohibited under Section 3(a) would include: (1) the pursuit of a private business opportunity while acting in a public capacity, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. If the private employer or business with which the public official /public employee is associated would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, Opinion No. 89 -024. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 3(j). Under the facts which you have submitted, The Dillsburg Agency, Inc. would be considered a "business with which you are associated." Therefore, you could not use the authority of your public position as Mayor of Dillsburg, or confidential information obtained by being in that position, to solicit or promote business activity between the Borough of Dillsburg and The Dillsburg Agency, Inc. Furthermore, to the extent you would, in your public capacity, have involvement as to the Borough's insurance, a conflict of interest would exist. In each instance of a conflict of interest, Richardson, 97 -627 November 25, 1997 Page 5 you would be required to abstain and to satisfy the disclosure requirements of Section 3(j) set forth above. As for Section 3(f), you are advised that Section 3(f) of the Ethics Law does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the 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, Section 3(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 3(f), an "open and public process" includes: (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 /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Where Section 3(f) applies, its requirements must be strictly observed. Under the facts which you have submitted, contract(s) between the Borough of Dillsburg and The Dillsburg Agency, Inc. would be subject to the restrictions of Section 3(f). Parenthetically, 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 Richardson, 97 -627 November 25, 1997 Page 6 53 P.S. §46404. 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 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 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. Since such contracting may be prohibited by the above quoted provision, it is suggested that you seek legal advice in that regard. This Advice is limited to addressing the applicability of Sections 3(a) and 3(f) of the Ethics Law. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 3(a) of the Ethics Law. Further, you are advised that Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /public employee and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public 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. 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. Conclusion: If you would become the Mayor of Dillsburg, you would in that capacity be a public official subject to the provisions of the Ethics Law. The Dillsburg Agency, Inc. is a business with which you are associated. Although Section 3(a) of the Ethics Law would not preclude you, or a business with which you are associated, from handling the Borough's insurance matters, you could not use the authority of .office or confidential information obtained by being in the public position to obtain such business, and any private business activity could not be conducted using governmental facilities or personnel. The restrictions of Sections 3(a) and 3(j) of the Ethics Law as set forth above must be observed. The restrictions of Section 3(f) of the Ethics Law as set forth above must be observed as to any contract between the Borough of Dillsburg and The Dillsburg Agency, Inc. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. It is suggested that legal advice be obtained with regard to the possible applicability of the Borough Code in this matter. Richardson, 97 -627 November 25, 1997 Page 7 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. S erely, '.CILte Vincent J. opko Chief Counsel