Loading...
HomeMy WebLinkAbout84-014 AustSTATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION July 31, 1984 Mr. Robert A. Aust, Jr., Director Bureau of Domestic & International Commerce Department of Commerce 454 Forum Building Harrisburg, Pennsylvania 17120 84 -014 RE: Commerce Director; Marketing and Sales Company; Section 3(a); Section 3(b) Dear Mr. Aust: I. Issue: You would like to know whether you may establish a marketing and sales company to merchandise a product manufactured by a Pennsylvania corporation which you became aware of as a result of your public employment. II. Factual Basis for Determination: You are the Director of the Bureau of Domestic and International Commerce in the Department of Commerce. As such, you are responsible for directing a departmental program designed to attract both domestic and foreign investors to Pennsylvania. Ycu also develop programs designed to promote increased trade and investment relationships between the Commonwealth and foreign entrepreneurs and investors. You provide professional representation for local economic development organizations in stimulating industrial and commercial businesses in locating or expanding facilities in Pennsylvania in an effort to show to businesses the advantages of locating or expanding in Pennsylvania, and you coordinate state and federal resources with local agencies whose programs interact with the Department of Commerce. You state that you would like to establish a marketing and sales company to merchandise an electric hot water heater by -pass system manufactured by the Safe -Guard Company. The company would be established by you as a sole proprietorship, and if a fictitious name were used, it would be registered with the Secretary of State. You indicate that you would not actively engage in the marketing and sales of the merchandise, but would have your father act as a sales representative on a commission basis but you would retain revenues generated in excess of commissions. Mr. Robert A. Aust, Jr., Director July 31, 1984 Page 2 You indicate that you became aware of the Safe -Guard Manufacturing Company of Kulpmont, Pennsylvania, hereinafter Safe- Guard, who manufactures the device you would like to market, through a realtor from Danville who called on you to discuss several companies which he was attempting to assist in the purchase of real estate and any state financial assistance available. After your initial contact with the realtor, to whom you provided guidelines for various state financing programs and to venture capital sources, he contacted you again for various leads in state government where a presentation might be made by the owners of Safe -Guard in an attempt to make sales to governments. You state that you provided him with several names in the Department of General Services. You further indicate that he contacted you again to ask if you were willing to meet with the principals of Safe -Guard for a demonstration of this piece of equipment and you agreed to meet. You were later contacted and asked to attend a media event at a facility in Kulpmont to announce the new patent on technology used in this piece of equipment, which you agreed to do. In conversation of May 1, 1984, you indicated that the patent approval in question was obtained in 1983, but that even prior to 1983 this equipment was available, sold, and installed in various locations. The purpose of the event was to publicize this piece of equipment as applicable to many households, as well as to engage it a "thank you" to government for taking the time to provide information and encouragement to this new company. This device has no industrial or commercial application at this time, however. You forsee marketing of this device through the company you wish to establish to the residential market. Particular emphasis as to the residential market would be upon sales to large - quantity purchasers, rather than to individual residences /owners. Large - quantity customers could include apartment complexes, nursing /hospital facilities, for example. You state that you have no reason to believe that the firm or its principals will apply for or use any of the state incentive programs in the near future, and that your involvement as Director would be and has been only from an informational standpoint. As Director, your job is to assist potential and expanding Pennsylvania businesses, but this role does not require or extend to dealing with residential expansions, acquisitions, etc. You further state that you feel that potential sales for the device on the residential front will be quite favorable both domestically and abroad, thus, your interest in establishing a company and the relationship with your father to market the device. You are, however, concerned that because you became aware of the device and the corporation which manufactures it as a result of your public employment, a conflict of interest may exist. You have, therefore, requested advice from the State Ethics Commission. Mr. Robert A. Aust, Jr., Director July 31, 1984 Page 3 III. Applicable Law: The law to be applied to this question is as follows: Section 3. Restricted activities. IV. Discussion: (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). (b) No person shall offer or give to a public official or public employee or candidate for public office or a member of his immediate family or a business with which he is associated, and no public official or public employee or candidate for public office shall solicit or accept, anything of value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding that the vote, official action, or judgment of the public official or public employee or candidate for public office would be influenced thereby. 65 P.S. 403(b). Section 1. Purpose. The Legislature hereby declares that public office is a public trust and that any effort to realize personal financial gain through public office other than compensation provided by law is a violation of that trust. In order to strengthen the faith and confidence of the people of the State in their government, the Legislature further declares that the people have a right to be assured that the financial interests of holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this act shall be liberally construed to promote complete disclosure. 65 P.S. 401. As Director of the Bureau of Domestic and International Commerce in the Department of Commerce, you are a "public employee" as that term is defined in the State Ethics Act, 65 P.S. 402. As such, your conduct must conform to the requirements of the State Ethics Act. Mr. Robert A. Aust, Jr., Director July 31, 1984 Page 4 Initially, the Ethics Commission notes that you became aware of the product you planned to market as well as its manufacturer as a result of your public employment. In light of Section 3(a) of the Ethics Act as set forth in Part III above, you are correct to question whether your proposed business venture constitutes an appearance of a conflict with the public trust or a violation of Section 3(a) in that you might be viewed as having used information received through your holding public office to obtain financial gain for yourself, a member of your family, or a business with which you would be associated. See definition of "business with which he is associated ", 65 P.S. 402. The question, however, is whether this information is "confidential." As a result of the "media event" and the fact that the technology used in this device has been patented and the device used for several years, it is unlikely that this device or its technology can be said to be "confidential ". Thus, your entry into this business venture would not, under these circumstances, amount to a use of confidential information as restricted under Section 3(a) of the Ethics Act. We must also review your question in light of Section 1 of the Ethics Act. This Section of the Ethics Act states that "the people have a right to be assured that the financial interests of holders of ... public office present neither a conflict nor the appearance of a conflict with the public trust." In your case, as Director of this Bureau, you are paid by the Commonwealth to promote and support the location and expansion of businesses in the Commonwealth. If you were to augment your salary as a public employee /official by virtue of your association with one particular business, such as the corporation you would form, a conflict of these financial interests with the public trust would arise. We are not stating that any actual bias would arise or that your ability to perform your job as Director would be affected by a part -time job or business venture other than the one proposed. However, in your capacity as Director of the Bureau of Domestic and International Commerce you could be in a position, in your capacity as Director, to assist or aid Safe -Guard or a competitor of Safe- Guard. If you were to become a marketing agent for or establish a company to market this device you would have to assure the public that your financial interests in this venture do not conflict or appear to conflict with the position of public trust which you hold as Director. We recognize that you state that you have reason to believe that neither your firm nor Safe -Guard will use any state subsidy programs in the near future, and that your involvement would, as you indicate it has been to date with respect to Safe- Guard, be strictly informational. However, we believe it would be difficult to assure the public that, as Director, you would be able to render impartial information or decisions with respect to Safe- Guard, your company, this device, or competitors thereof given your proposed financial interest in this venture. Mr. Robert A. Aust, Jr., Director July 31, 1984 Page 5 Accordingly, because you must assure the public that your financial interests present neither a conflict nor the appearance of a conflict with the public trust, given your position of public trust as Director, we recommend that you decline to engage in this conduct while still serving as Director of the Bureau of Domestic and International Commerce. Finally, you must also be aware of and comply with Section 3(b) of the Ethics Act as outlined above. We make reference to this Section of the Ethics Act not to indicate that there has been any conduct which would be contrary to this provision of tha Act, but in an effort to provide a complete review of this situation. Likewise, should you decide not to take our recommendation and to form this company to act as marketing or sales representative for this device while remaining as Director, you should recognize that your actions as Director may be viewed as affecting Safe- Guard, your company, this device, or competitors thereof. Complaints of violation of the Ethics Act and may require our further review. Further advice from the Commission may be sought as needed. V. Conclusion: Because of Mr. Aust's position as Director of the Bureau of Domestic and International Commerce, the Commission recommendsthat in order to avoid an obvious financial conflict of interests, that Mr. Aust refrain from establishing this company, acting as a marketing or sales representative for this device, or further pursuing this opportunity while he continues as Director of the Bureau of Domestic and International Commerce for the Department of Commerce of the Commonwealth of Pennsylvania. Pursuant to Section 7(9)(i), this opinion is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance of the advice given. CW /rdp This letter is a public record and will be made available as such. Finally, any person may request within 15 days of service of the opinion that the Commission reconsider its opinion. The person requesting reconside- ration should present a detailed explanation setting forth the reasons why the opinion requires reconsideration. By the Com s ion, HERBE B. ONNER Chairman