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HomeMy WebLinkAbout99-643 DunnGeorge K. Dunn 180 North Franklin Street Cochranton, PA 16314 Dear Mr. Dunn: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 - 932 -0936 ADVICE OF COUNSEL December 22, 1999 Walter L. Dunn, President 50% William L. Dunn, Vice President 27% George K. Dunn, Treasurer 23% FAX: (717) 787 - 0806 • Web Site: www.ethics.state.pa.us • e - mail: ethics @state.pa.us 99 -643 Re: Conflict; Public Official /Public Employee; Contracting; Councilman; Borough; Bids This responds to your letters of December 21, 1998 and November 19, 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 et seg., presents any prohibition or restrictions upon a borough councilman in bidding on borough projects through a business with which he is associated. Facts: You are currently a Member of the Cochranton Borough Council ( "Council "), having been elected to a second term in 1997. You are also a minority shareholder in W.L. Dunn Construction Company ( "W.L. Dunn "), a family -owned general and highway contractor. W.L. Dunn has been in business since 1919. The company supplies ready -mix concrete, sand, gravel, and limestone and produces and lays paving materials. In your December 21, 1998 letter, you state that ownership of the business is as follows: W.L. Dunn has done business with the Borough of Cochranton ( "Borough ") and other surrounding municipalities for over 79 years. You now are writing for an advisory because another Council Member has questioned whether it is ethical for W.L. Dunn to carry on business with the Borough when you, a Council Member, have a partial ownership interest in that company. You state that the Borough Manager has ceased calling W.L. Dunn for competitive quotes on aggregate and ready - mix concrete. Thus, the company felt compelled not to submit a signed bid on a paving project bid in the summer of 1998. Dunn, 99 -643 December 22, 1999 Page 2 You ask for an advisory as to whether you, as a minority shareholder in a company, may bid on Borough projects when you are also a Member of Borough Council. 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. §§1107110), (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 a Councilman for the Borough of Cochranton, you are a "public official" as that term is defined in the Ethics Act and hence you are subject to the provisions of that Act. 65 Pa.C.S. §1102; 51 Pa. Code § 1 1.1. Sections 1 103(a) and 1103(j) of the Ethics Act provide as follows: Section 1 103. Restricted activities. (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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 Dunn, 99 -643 December 22, 1999 Page 3 65 Pa.C.S. §§1103(a), (j). The following terms that pertain to conflicts of interest under the Ethics Act are defined as follows: Section 1 102. Definitions. 65 Pa.C.S. §1102. 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. "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. "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. Dunn, 99 -643 December 22, 1999 Page 4 65 Pa.C.S. §1102. Section 1 103(f) of the Ethics Act, which pertains to contracting /subcontracting, provides as follows: 65 Pa.C.S. §1103(f). Section 1103. Restricted activities. (f) Contract. - -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 1 103(f) 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. "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. Dunn, 99 -643 December 22, 1999 Page 5 65 Pa.C.S. §1102. "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 Act to your inquiry, Section 1 103(a) shall be addressed first. In this regard, this Advice may only address your conduct as a public official, but not your conduct as a shareholder of a private business. Section 1103(a) of the Ethics Act 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 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). Under the facts which you have submitted, W.L. Dunn Construction Company would be considered a "business with which you are associated." Therefore, you could not use the authority of your public position as Councilman, or confidential information obtained by being in that position, to solicit or promote business activity between W.L. Dunn Construction Company and the Borough of Cochranton. Furthermore, to the extent you would, in your public capacity, have involvement as to reviewing or selecting bids or proposals, a conflict of interest would exist. In each instance of a conflict of interest, you would be required to abstain and to satisfy the disclosure requirements of Section 1 103(j) set forth above. As for Section 1 103(f), you are advised that Section 1103(f) of the Ethics Act 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 1103(f) requires that an "open and public process" be Dunn, 99 -643 December 22, 1999 Page 6 observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) (2) (3) (4) prior public notice of the employment or contracting possibility; sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; public disclosure of all applications or proposals considered; and public disclosure of the contract awarded and offered and accepted. Section 1 103(f) of the Ethics Act 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 1103(f) applies, its requirements must be strictly observed. Under the facts which you have submitted, the governmental body with which you are associated would include the Borough of Cochranton. Accordingly, the contract between W.L. Dunn Construction Company and the Borough of Cochranton would be subject to the restrictions of Section 1 103(f). Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1 103(a), 1 103(f), and 1 103(j) are satisfied, a problem may exist as to such contracting under the respective 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 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 Dunn, 99 -643 December 22, 1999 Page 7 53 P.S. §46404. 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 1 103(a) and 1103(f) 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 1 103(a) of the Ethics Act. Further, you are advised that Sections 1 103(b) and 1 103(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. Lastly, 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 a Councilman for the Borough of Cochranton, you are a public official subject to the provisions of the Ethics Act. Although Section 1 103(a) of the Ethics Act would not preclude you, or a business with which you are /is associated, from bidding on Borough projects, 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 1103(a) and 1103(j) of the Ethics. Act as set forth above must be observed. The restrictions of Section 1103(f) of the Ethics Act as set forth above must be observed as to any contract between W.L. Dunn Construction Company and the Borough of Cochranton. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. It is suggested that legal advice be obtained with regard to the possible applicability of the Borough Code. 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. 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. Dunn, 99 -643 December 22, 1999 Page 8 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, 9/k Vincent . Dopko Chief Counsel