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HomeMy WebLinkAbout99-571 ScottThomas W. Scott 639 Lindley Road Glenside, PA 19038 Re: Conflict; Public Official /Employee; Director; Bureau of Motor Fuel Taxes; Department of Revenue; Stock; Financial Interest. Dear Mr. Scott: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 - 932 -0936 ADVICE OF COUNSEL July 6, 1999 99 -571 This responds to your letter of May 27, 1999 by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 at seq., presents any prohibition or restrictions upon a director as to licensing and bonding activities of various motor fuels when he holds stock in certain corporations. Facts: You have been employed as Director in the Bureau of Motor Fuel Taxes (Bureau), Pennsylvania Department of Revenue since. January 11, 1999. Your responsibilities include the direction of a staff of seventy -seven employees responsible for the licensing and bonding activities of various motor fuels; collection activities associated with the motor carrier road tax; and the issuance and filing of citations for infractions of tax laws. You have common stock investments consisting of 643 shares in Sunoco, Inc (approximate market value: $20,000) and 755 shares of Crown Cork & Seal (approximate value: $24,000) in a 401(k) Plan. Due to the investigatory and auditing work performed by the Bureau, you are concerned about the possible appearance of impropriety regarding your stock holdings. Sunoco, Inc. is the largest fuel distributor in Pennsylvania which pays fuel and liquid fuel tax to your Bureau each year. Crown Cork & Seal has a fleet of forty -five trucks with IFTA decals, files quarterly returns, and pays IFTA road tax to your Bureau each year. You request advice on whether it is necessary for you to divest your 401(k) Plan of these holdings. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§1107(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 Pa.C.S. §§1107(10), (1 1). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. FAX: (717) 787 -0806 • Web Site: www.ethics.state.pa.us • e -mail: ethics@state.pa.us Scott, 99 -571 July 6, 1999 Page 2 As Director for Bureau of Motor Fuel Taxes, you are a public employee as that term is defined in the Ethics Act, and hence you are subject to the provisions of that Act. Section 1 103(a) of the Ethics Act provides: Section 1103. Restricted activities. (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. §1103(a). The following terms are defined in the Ethics Act as follows: Section 1102. 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. The term 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." 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. 65 Pa.C.S. §1102. "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. In addition, Sections 1 103(b) and 1 103(c) of the Ethics Act 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. Section 1 103(j) of the Ethics Act provides as follows: July y 6 1 999 Paw) 3 Section 1 103. Restricted activities. (j) Voting conflict. - -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. 65 Pa.C.S. §1103(j). In each instance of a conflict, Section 1103(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 the above provisions of the Ethics Act to the instant matter, pursuant to Section 1 103(a) of the Ethics Act, 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. In addressing the question you pose, you first are advised that the Ethics Act would not require your divestment of the common stocks, even assuming that you would have a conflict. When a person has a conflict under the Ethics Act, the appropriate course of action is abstention plus disclosure as per the requirements of Section 1103(j) as noted above. The determination of whether you have a conflict depends upon whether either corporation, that is, Sunoco, Inc. or Crown Cork & Seal, is a business with which you are associated as that term is defined under the Ethics Act. Since your interest in Sunoco is Tess than 5% (of the equity or economic interest in indebtedness) and assuming that your interest in Crown Cork & Seal is also less than 5 %, neither corporation would be a business with which you are associated under the Ethics Act. Consequently, you would not have a conflict of interest as to those two corporations under the Ethics Act. The propriety of the proposed conduct has only been addressed under the Ethics Act; 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 Act. Specifically not addressed herein is the applicability of the Governor's Code of Conduct. Scott, 99 -571 July 6, 1999 Page 4 Conclusion: As Director for Bureau of Motor Fuel Taxes, you are a public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et =. Assuming that your holdings in Sunoco, Inc. or Crown Cork & Seal are less than 5% as per the definition of "financial interest," then each corporation would not be a business with which you are associated under the Ethics Act and, consequently, you would not have a conflict of interest as to those two corporations. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1 107(1 1), an 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, provided 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. Vincent .1''Dopko Chief Counsel