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HomeMy WebLinkAbout1142 RowleyIn Re: Arthur Rowley STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 File Docket: X -ref: Date Decided: Date Mailed: Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Julius Uehlein John J. Bolger Frank M. Brown Susan Mosites Bicket 98- 080 -C2 Order No. 1 142 11/22/99 12/7/99 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 sew., by the above - named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegations. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was filed and a hearing was waived. The record is complete. A Consent Agreement was submitted by the parties to the Commission for consideration which was subsequently approved. Effective December 15, 1998, Act 9 of 1989 was replaced by the Public Official and Employee Ethics Act ( "Ethics Act "), Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101 QI seq., which essentially repeats Act 9 of 1989 and provides for the completion of pending matters under that Act. This adjudication of the State Ethics Commission is issued under Act 93 of 1998 and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with the Ethics Act. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $ 1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Rowley, 98- 080 -C2 Page 2 I. ALLEGATION: That Arthur Rowley, a public official /public employee, in his capacity as a Chairman and Member of the Wilkinsburg Penn Water Authority, Allegheny County, violated Sections 1103(a) and 1103(f) of the Public Official and Employee Ethics Law (Act 93 of 1998) when he used the authority of his office to obtain a private pecuniary benefit for himself and /or a member of his immediate family and /or a business with which a member of his immediate family is associated by participating in discussions, actions and decisions of the board to award contracts and subsequently issue payments to Challenge Printing Company, a business owned by his son; and when the contracts which were issued to Challenge Printing Company were entered into without an open and public process including prior public notice and disclosure of all bids received. IL FINDINGS: 1. Arthur Rowley has served as a member of the Wilkinsburg -Penn Joint Water Authority (WPJWA) Board of Directors since 1988. 2. The WPJWA board is made up of twelve directors, each appointed as a representative of one of the nine participating municipalities. a. Rowley is one of two appointed representatives for the municipality of Penn Hills. 3. Rowley served as chairman of the WPJWA board each year from 1994 through 1998. 4. The WPJWA regularly makes purchases for printing including but not limited to letterhead, invoices, envelopes, business cards and service orders. 5. The WPJWA has utilized Challenge Printing Service for printing services since at least 1963. a. Other vendors, including Office Depot, K &K Krohmaly's Printing were utilized for the various printing requirements of WPJWA during time relevant to this action. 6. Challenge Printing was incorporated in 1955 by Frank Sapienza and purchased by Gary and Linda Rowley in 1979. 7. Gary Rowley is the son of Arthur Rowley. 8. At the March 28, 1989 WPJWA board meeting, questions were raised about the potential conflict of interest of Arthur Rowley voting to approve payment of the bills which included Challenge Printing Service, a business owned by his son. a. The matter was referred to Solicitor Stephen Zappala for research into the ethics concerning these transactions and to report the findings with an opinion. 9. Zappala issued an opinion to the WPJWA dated March 30, 1989, regarding board members participation in approving payments to companies owned by members of their immediate family. a. Zappala's opinion noted as follows: In this case, although there appears to be no "financial gain" in violation of the Act, the purposes of the Act, Rowley, 98- 080 -C2 Page 3 specifically the elimination of the appearance of impropriety may be better served if the following policy was adopted. Invoices and /or bills received from businesses and /or persons who have any type of family relationship with a board member could be considered separately from the rest of the invoices and /or bills. This provides the affected board member the opportunity to identify the family relationship; to indicate that no personal financial gain would result; and, to abstain from consideration of payment, if appropriate. 10. At the April 25, 1989 WPJWA board meeting, Solicitor Zappala reported to the board on the issue of board members contracting with family members to accomplish Authority work in response to the Challenge Printing question raised at the March meeting. a. Zappala reported that the Ethics Act was in the process of being revised and that it would have some impact on board members contracting with family members to accomplish Authority work. b. Zappala's report included a review of his March 30, 1989 opinion. 11. During the April 25, 1989 WPJWA board meeting, a letter from Board Member Arthur Rowley was presented to the board in response to the question of Rowley participating in the payment of the bills to Challenge Printing Service, a business owned by his son. The letter is reflected in the minutes as follows: "To: General Manager and all Board Members From Arthur L. Rowley In Re: Arthur Rowley /Challenge Printing Gentlemen: A question has been raised regarding a possible ethics violation with respect to the above named entities. In order to apprise you of the relationship between the two I present the following: - My son is the owner of Challenge Printing. - I have no financial interest in nor do I receive any compensation from Challenge Printing. - I voluntarily spend time at that place of business, doing what I can to be helpful to my son. - I have never solicited work from WPJWA for Challenge Printing. - I have, upon occasions, delivered previously prepared purchase orders to Challenge Printing. - My wife and I have delivered printed matter from Challenge Printing to the Storekeeper. Hereafter, as a Board Member, I shall abstain from voting on any matter involving Challenge Printing. Respectfully, /s/ Arthur L. Rowley Arthur L. Rowley" Rowley, 98- 080 -C2 Page 4 12. Rowley did not participate in votes of the WPJWA to approve payments to Challenge Printing from April, 1989 until March 27, 1990. a. During the March 27, 1990 WPJWA board meeting, Rowley abstained on the vote to approve payment of Challenge Printing bills. b. Following Mr. Rowley's abstention, the minutes reflect an individual as saying the following. 1) "Mr. Rowley was reminded that the above exception is already on record and that he needn't repeat it for future voucher distribution approval." 2) The minutes do not reflect who made the statement. c. Rowley did not abstain on any subsequent vote to approve payments to Challenge Printing Service until January, 1999. d. General manager Anthony Russo has averred that the statement in the March 27, 1990 minutes was made by the solicitor, Stephen A. Zappela, Jr. 13. Rowley did not make any public disclosures regarding his relationship to the owner of Challenge Printing Service after March 27, 1990, and no further abstentions were recorded for Rowley regarding Challenge Printing. 14. Prior to 1997, all purchases under $1,000 were made by the WPJWA administrative staff. a. This included all printing related purchases. b. The WPJWA General Manager authorized such purchases. c. Board members did not participate in the selection of a vendor. d. Purchases were made without a bid process being utilized. 15. Purchases under $1,000 were regularly made by WPJWA from Challenge Printing between 1994 and 1998. a. Purchases were authorized by the WPJWA general manager without bids or prior public notice. 16. Purchases of printed items from Challenge Printing Service between January 1994 and December 1998 totaled $77,662.88. 1994 - $18,055.10 1995 - $16,165.80 1996 - $20,080.00 1997 - $11,182.36 1998 - $ 12,179.62 17. From 1994 through 1998, Challenge Printing Service submitted 176 invoices for payment to the WPJWA, of which sixty -eight exceeded $500.00. Rowley, 98- 080 -C2 Page 5 18. In accordance with authority policy, the Manager requires a minimum of three (3) qualified contractors to provide telephone price quotations for any contract for individual items which cost between $ 1,000.00 and $4,000.00. a. None of these purchases were publicly advertized. 19. The WPJWA's approval procedure for approving payment of bills includes a list of Voucher Disbursements (bill list) provided to the board members prior to the regular meeting of the Authority board. 20. At the regular monthly board meeting, a motion is made and vote taken to ratify expenditures incurred during the previous month. 21. Between 1994 and 1998, Rowley participated in actions of the WPJWA to ratify payments to Challenge Printing. a. Rowley did not make or second motions to pay bills which included payments to Challenge Printing. b. Votes to approve bill lists were usually unanimous. c. Rowley's abstentions in 1989 and 1990 were not in the Ethics Commission's opinion valid for the subsequent time period in question. 22. Rowley participated in approving bills which included payments to Challenge Printing on twenty -eight (28) occasions. a. Rowley's abstentions in 1989 and 1990 were not in the Ethics Commission's opinion valid for the subsequent time period in question. 23. Between 1994 and 1998, the WPJWA issued 108 checks to Challenge Printing Service. a. Sixty -eight of those checks were for purchases in excess of $500.00. b. Eight additional payments consisting of multiple invoices exceeded $500.00. 24. The check signing process of the WPJWA requires two signatures, that of the board treasurer and assistant treasurer. a. In the absence of the treasurer or assistant treasurer, the chairman and /or vice chairman are authorized to sign checks. 25. Rowley signs checks in his capacity as chairman of the board in the absence of the treasurer or assistant treasurer. 26. Rowley signed twenty -seven checks payable to Challenge Printing Service between 1994 and 1998. 27. In January 1997, the WPJWA manager formalized the purchasing procedures used by the WPJWA and directed the solicitation of proposals for printed items exceeding $1,000.00 per year, which included the following items: #10 regular envelopes - approximately 10,000 per year. #10 window envelopes - approximately 80,000 per year. Row 98- 080 -C2 Page 6 Continuous letterhead - approximately 60,000 per year. Rules and Regulations booklets - approximately 3,000 per year. Utility bills - approximately 150,000 per year. 28. In January 1997 the WPJWA general manager notified Challenge Printing Service that it would continue to purchase other printed items that did not require proposals. 29. Rowley voted to approve payments to Challenge Printing Service in excess of $500.00 after January 1997. a. Rowley's abstentions in 1989 and 1990 were not in the Ethics Commission's opinion valid for the subsequent time period in question. 30. In January 1999, Rowley stated at a WPJWA meeting that he removed himself from approving vouchers for payment to Challenge Printing .Service. 31. Rowley submitted a Memorandum of Abstention to the WPJWA dated February 26, 1999, advising that pursuant to Section 3(j) of the State Ethics Act, he was abstaining from voting at anytime on any matter involving Challenge Printing for the reason that the owner of Challenge Printing was his son. a. The memorandum noted that the abstention is effective automatically for all future votes unless Rowley expressly directs otherwise and that any vote cast with respect to multiple invoices, bills or payments shall not extend to invoices or payments relating to Challenge Printing. 32. Rowley is not an owner or shareholder of Challenge Printing. a. He has no financial interest in Challenge Printing and has not received any payments from Challenge Printing. b. Rowley voluntarily performs small tasks for Challenge Printing for which he is not paid. 33. Challenge Printing's profit margin on all sales, including those made to the WPJWA, varied between 29% and 41 % for the years 1994 through 1998 resulting in the following: Year Gross Receipts 1994 $131,101.00 1995 137,552.00 1996 116,824.00 1997 100,153.00 1998 102,348.00 Net Profit $ 41,891.00 40,501.00 48,416.00 37,653.00 37,051.00 % of WPJWA Profit Purchases .31 $ 18,055.10 .29 16,165.80 .41 20,080.00 .37 11,182.36 .36 12.179.62 $77,662.88 % of Profit on WPJWA Purchases $ 5,597.08 4,688.08 8,232.80 4,137.47 4,384.66 $ 27,040.09 34. There are no written guidelines or criteria as to what specific factors constitute an open and public process under the provisions of the Ethics Law. I11. DISCUSSION: At all times relevant to this matter, the Respondent, Arthur Rowley, hereinafter Rowley, has been a public official subject to the provisions of the Public Official and Rowley, 98- 080 -C2 Page 7 Employee Ethics Act ( "Ethics Act "), Act 9 of 1989, Pamphlet Law 26, 65 P.S. §401, as codified by Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101, e seq. The allegations are that Rowley violated Sections 1 103(a) and 1 103(f) of the Ethics Law when he used the authority of his office to obtain a private pecuniary benefit for a business with which a member of his immediate family is associated by participating in actions of the Board to award contracts and subsequently issue payments to Challenge Printing Company, a business owned by his son; and when the Authority awarded contracts to Challenge Printing Company without an open and public process. 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 term "conflict of interest" is defined under 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. 65 Pa.C.S. §1102. Section 1103(a) of the Ethics Act prohibits a public official /public employee 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. Section 1 103(f) of the Ethics Act imposes certain restrictions as to contracting. Section 1 103. 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 Rowlev, 98- 080 -C2 Page 8 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. 65 Pa.C.S. §1103(f). Section 1103(f) specifically provides in part that no public official /public employee or spouse or child or business with which he or the spouse or child is associated may enter into a contract with his governmental body valued at five hundred dollars or more or any subcontract valued at five hundred dollars or more with any person who has been awarded a contract with the governmental body with which the public official /public employee is associated unless the contract is awarded through an open and public process including prior public notice and subsequent public disclosure. Having noted the issues and applicable law, we shall now summarize the relevant facts. Rowley has served as a member of the Wilkinsburg -Penn Joint Water Authority (WPJWA) since 1988 and as Board Chairman from 1994 through 1998. WPJWA has utilized printing services from various vendors including Challenge Printing Service since at least 1963. Challenge Printing is owned by Linda and Gary Rowley, the latter being Rowley's son. Rowley has no financial interest in Challenge Printing Service and has not received any payments from it. At a March 1989 WPJWA Board Meeting, questions arose about a possible conflict by Rowley in voting to approve payments of bills which included Challenge Printing Service. The matter was referred to the Solicitor who subsequently issued an opinion that there was no element of financial gain but the affected board member should abstain from the consideration of the payment of invoices from businesses where there is a connection through a familial relationship. During an April 1989 WPJWA Board Meeting, Rowley presented to the Board a letter wherein he advised that his son owned Challenge Printing Service, that he had no financial interest in that business and that he would abstain from voting on any matter involving Challenge Printing Service. Rowley abstained in approving payments to Challenge Printing Service from April 1989 until March of 1990. However, at the Board Meeting in March of 1990, the minutes reflect that some individual made a statement to Rowley that his exception was on record so that he was not required to "repeat it for future voucher distribution approval." Although uncertain, it appears that the statement may have been made by the Solicitor. Thereafter, Rowley did not make any public disclosures about his son's ownership of Challenge Printing Service. No further abstentions were recorded for Rowley regarding Challenge Printing Service. Rowley, 98- 080 -C2 Page 9 Regarding purchases by WPJWA from vendors prior to 1997, all purchase under $1000 were made by administrative staff. Thus, as to Challenge Printing Service, purchases under $1000 were regularly made by WPJWA with the authorization of its general manager without bids or prior public notice. Fact Finding 16 reflects the purchases made from Challenge Printing Service from 1994 through 1998. As to the process which WPJWA utilizes to approve invoices or bills, Board Members receive a bills list prior to a regular meeting at which the Board approves payment. Between 1994 and 1998, Rowley participated in actions of WPJWA to ratify payments to Challenge Printing. Although Rowley did not make or second any motions to pay bills which included those of Challenge Printing, the votes were usually unanimous. Rowley participated in approving bills which included payments to Challenge Printing Service on twenty -eight (28) occasions. Rowley, as Board Chairman, also co- signed twenty -seven (27) checks payable to Challenge Printing Service between 1994 and 1998. In January 1999, Rowley stated at a Board Meeting that he would remove himself from approving bills for payment as to Challenge Printing Service. Rowley submitted a memorandum of abstention to WPJWA in February of 1999 advising that pursuant to Section 1103(j) of the Ethics Act he was abstaining from voting on any matter involving Challenge Printing Service for the reason that it was owned by his son. Having summarized the above relevant facts, we must now determine whether the actions of Rowley violated Sections 1103(a) and 1 103(f) of the Ethics Law. The parties have submitted a Consent Agreement together with a Stipulation of Findings wherein it is proposed to resolve the case as follows: technical violations of Section 1103(a) of the Ethics Law as to Rowley's participation in Board actions to award contracts and to issue payments to Challenge Printing Service, a business owned by his son; a technical violation of Section 1103(f) as to the contracts which were issued to Challenge Printing Service without an open and public process; Rowley abstaining from all decisions, votes or other actions related to any dealings between Challenge Printing Service and WPJWA including the issuance of payments; Rowley ensuring that his abstentions will be recorded in the minutes; Rowley disclosing on an annual basis his conflict and the specific nature thereof at a public meeting of WPJWA and filing as part of the public record a written memorandum detailing the nature of his conflict; and Rowley agreeing to ensure that the open and public process requirements of the Ethics Law are met and in the event of any question as to how such process can be met, obtaining an Advice of the Commission's Chief Counsel for such purpose. We approve the Consent Agreement based upon our review of the stipulated findings. As to Section 1103(a), Rowley used the authority of office when he participated in actions of the Board as well as co- signed checks in payment to Challenge Printing Service. See, Juliante, Order 809. The uses of authority of office resulted in private pecuniary benefits consisting of the profits that Challenge Printing Service made on such contracts. Lastly, the private pecuniary benefits inured to Challenge Printing Service which is a business that is owned by Rowley's son, who is a member of his immediate family as that term is defined under the Ethics Law. Accordingly, technical violations of Section 1103(a) occurred as to Rowley's use of authority of office in relation to his participation in actions and decisions of the Board to award contracts and to issue payments to Challenge Printing Company, a business owned by his son. As to Section 1103(f) of the Ethics Law, the findings reflect that Challenge Printing Service, a business with which a member of Rowley's immediate family is associated, entered into WPJWA contracts which were $500 or more and were not Rowley, 98- 080 -C2 Page 10 awarded through a bid process. Hence, a technical violation of Section 1103(f) occurred when WPJWA awarded contracts to Challenge Printing Company, a business owned by Rowley's son, which contracts were $500 or more and were entered into without an open and public process. As per the Consent Agreement, Rowley must abstain as to matters involving the Challenge Printing Service and observe the disclosure requirements of Section 1103(j) of the Ethics Law as detailed above as well as take the necessary steps to ensure that any contracts with that company, which are $500 or more, be awarded through an open and public process in conformity with the requirements of Section 1103(j) of the Ethics Law. Lastly, as to the Stipulation of Findings and Consent Agreement, we believe that the Consent Agreement is the proper disposition for this case based upon our review as reflected in the above analysis and the totality of the facts and circumstances. IV. CONCLUSIONS OF LAW: 1. Arthur Rowley, as a Chairman and Member of the Wilkinsburg Penn Water Authority, is a public official subject to the provisions of Act 9 of 1989 as codified by Act 93 of 1998. 2. Technical violations of Section 1103(a) of the Ethics Law occurred when Rowley participated in actions of the Board to award contracts and to issue payments to Challenge Printing Service, a business owned by his son. 3. A technical violation of Section 1103(f) occurred when the Authority awarded contracts valued at $500 or more without an open and public process to Challenge Printing Service, a business owned by Rowley's son. In Re: Arthur Rowley ORDER NO. 1142 File Docket: 98- 080 -C2 Date Decided: 11/22/99 Date Mailed: 12/7/99 1. Arthur Rowley, as a Chairman and Member of the Wilkinsburg Penn Water Authority, technically violated Section 1103(a) of the Ethics Law when he participated in actions of the Board to award contracts and to issue payments to Challenge Printing Service, a business owned by his son. 2. A technical violation of Section 1 103(f) of the Ethics Act occurred by Rowley when the Authority awarded contracts valued at $500 or more without an open and public process to Challenge Printing Service, a business owned by Rowley's son. 3. As per the Consent Agreement of the parties, Rowley must abstain and comply with the disclosure requirements of Section 1103(j) of the Ethics Law as well as take the necessary steps to ensure that any contracts with Challenge Printing Service, which are $500 or more, must be awarded through an open and public process in conformity with the requirements of Section 1103(j) of the Ethics Law. BY THE COMMISSION, ottimuE eta, DANEEN E. REESE, CHAIR