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HomeMy WebLinkAbout99-596 ConfidentialSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 - 932 -0936 ADVICE OF COUNSEL August 31, 1999 FAX: (717) 787 -0806 • Web Site: www.ethics.state.pa.us • e -mail: ethics @state.pa.us 99 -596 Re: Conflict; Public Official /Public Employee; Officer A; Authority B; Private Employment or Business; Authority Vendors. This responds to your letter of July 30, 1999, by which you requested confidential advice from the State Ethics Commission. Issue: Whether the Officer A for Authority B is prohibited or restricted by the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 at agq., from working with, being employed by, or having business dealings involving a current or potential Authority B vendor in a private capacity in addition to public service. Facts: As the Officer A for Authority B, you request an advisory from the State Ethics Commission regarding the following three opportunities. You first ask whether, as a part -time endeavor, you can accept or solicit consulting engagements in your field from a current or potential Authority B vendor. Specifically, you have been asked by D vendors to do occasional consulting work or speaking engagements. These vendors, at some time in the past or future, may be involved with bids at Authority B. You state that to date, you have not accepted any such assignments or received any payment for any services. Payment is usually discussed as fixed fees but could also be hourly rated. You would not do this work on Authority B time, but rather on your personal or vacation time. Your second question is whether you can submit proposals for funding a start- up business to a current or potential Authority B vendor. You state that this opportunity arose as the result of discussions with two different vendors. You state that the conversations changed from discussing part -time employment to start -up businesses that, with an acceptable business proposal, could generate start -up funds from the vendor. Noting that there would be no payment to you for submitting a proposal, you believe that it would be proper for you to send these companies a proposal. Both submissions to these E companies center upon your being a marketer /salesman /promoter for their products even though F, rather than sales, is your field. Both companies would require the start -up firm to promote their products in the G Industry. Finally, you ask whether you may be involved in any way, for a fee, with mergers or acquisitions as to a current or potential Authority B vendor. You state that at a gathering, you introduced a current Authority B vendor to a friend of yours who handles merger and acquisitions for a large conglomerate. Later, your friend asked you Confidential Advice, 99 -596 August 31, 1999 Page 2 to introduce him to the president of the Authority B vendor because he was interested in acquiring the vendor. Your friend also suggested that it is not uncommon that the "introducer," that is, broker, of such meetings receive a "finder's fee" from the seller, in this case the Authority B vendor, if a merger or acquisition actually occurs. Based upon all of the above, you request advice as to whether any or all of the above three opportunities would be prohibited by the Ethics Act given your employment by Authority B. Discussion: It is initially noted that pursuant to Sections 1107(10) and (1 1) of the Ethics Act, 65 Pa.C.S. §§1107(10), (1 1), 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. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct which has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. As the Officer A for Authority B, you are a public employee as that term is defined under 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 Confidential Advice, 99 -596 August 31, 1999 Page 3 65 Pa.C.S. §1102. 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." 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 1 103(j) of the Ethics Act provides as follows: 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). Confidential Advice, 99 -596 August 31, 1999 Page 4 In applying the above provisions of the Ethics Act to your inquiry, you are advised that Section 1103(a) of the Ethics Act does not expressly 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 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, 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 1 103(j). In reviewing the first opportunity which you have submitted, you are advised that as a general rule, Section 1103(a) of the Ethics Act would not prohibit you from doing consulting work or speaking engagements on your own time subject to the above restrictions and conditioned upon the assumptions that you would not be using the authority of your position at Authority B or confidential information obtained by being in that position to obtain or perform such work. However, as to any current or prospective Authority B vendors for whom you would perform such work in your private capacity, you would have a conflict of interest in your public capacity at Authority B. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1 103(j). In reviewing the second opportunity which you have submitted, you are advised that as a general rule, Section 1103(a) of the Ethics Act would not prohibit you from having a business in your private capacity subject to the above restrictions and conditioned upon the assumptions that you would not be using the authority of your position at Authority B or confidential information obtained by being in that position to secure such a business /business arrangement. Conflicts would arise under Section 1103(a) of the Ethics Act, for example, if you would use the authority of your position at Authority B to pressure vendors to go into business with you. You would have a conflict of interest in your public capacity at Authority B as to any current or prospective Authority B vendors with whom you would have business dealings in your private capacity. As noted above, in each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j). In reviewing the third opportunity which you have submitted, you are advised that Section 1 103(a) of the Ethics Act would prohibit you from having involvement for a pecuniary benefit ( "finder's fee" or otherwise) with regard to mergers or acquisitions of Authority B vendors. "But for" your capacity at Authority B, you would not be in a position to have involvement in such matters, for example, by providing Confidential Advice, 99 -596 August 31, 1999 Page 5 introductions of Authority B vendors to your friend who handles mergers and acquisitions. The proposed conduct would inherently constitute a use of the authority of your public position. The fee which you would obtain for your involvement would constitute a prohibited private pecuniary benefit, completing the elements for a conflict of interest under Section 1103(a). This Advice is limited to addressing the applicability of Section 1 103(a) of the Ethics Act. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act 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. 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. Conclusion: As the Officer A for Authority B, you are a public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 fig. Section 1103(a) of the Ethics Act would not prohibit you from doing consulting work or speaking engagements on your own time subject to the above restrictions and conditioned upon the assumptions that you would not be using the authority of your position at Authority B or confidential information obtained by being in that position to obtain or perform such work. However, as to any current or prospective Authority B vendors for whom you would perform such work in your private capacity, you would have a conflict of interest in your public capacity at Authority B. Section 1103(a) of the Ethics Act would not prohibit you from having a business in your private capacity subject to the above restrictions and conditioned upon the assumptions that you would not be using the authority of your position at Authority B or confidential information obtained by being in that position to secure such a business /business arrangement. You would have a conflict of interest in your public capacity as to any current or prospective Authority B vendors with whom you would have business dealings in your private capacity. In each instance of a conflict of interest, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1 103(j). Section 1103(a) of the Ethics Act would prohibit you from having involvement for a pecuniary benefit with regard to mergers or acquisitions of Authority B vendors. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), 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. Confidential Advice, 99 -596 August 31, 1999 Page 6 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, Vincent J. Dopko Chief Counsel