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HomeMy WebLinkAbout88-001 GoodmanJames A. Goodman, Chairman Commonwealth of Pennsylvania Liquor Control Board Harrisburg, Pennsylvania 17124 -0001 STATE ETHICS,COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION DATE DECIDED: 4 - - DATE MAILED: 4-71-R8 • 88 -00). Re: Liquor Control Board Chairman, Insurance Agency, Business with which he is Associated, Fire and Liability Policies as to Liquor Licensees Dear Mr. Goodman: This opinion is issued in response to your request of January 20, 1988. I. Issue: Whether the Ethics Act imposes any prohibitions or restrictions upon a business with which a public official is associated as to the underwriting of insurance policies by that business to individuals who are regulated by the public official. II. Factual Basis for Determination: You state that on December 15, 1987, you were sworn into office as a member of the Pennsylvania Liquor Control Board, hereinafter LCB, and were thereafter named Chairman by the Governor. You state that you are the owner /operator of an independent insurance agency for the past twenty -four years and during that time you have written bonds, fire, liability and workmen's compensation policies for restaurants, taverns, distributors and others, the policies of which are subject to renewal on an annual basis. You note that after you were nominated to the LCB, on October 19, 1987, you arranged for and finalized the transfer of all bonds that insureds were required to file with the LCB. You have also stated that James A. Goodman Insurance Agency, the business with which you are associated, will not write any new insurance policies for liquor licensees during the period of your service with the LCB. You have advised that you have written no new policies for liquor licensees since the time your name was first submitted by the James A. Goodman, Chairman Page 2 Governor to the Senate for confirmation. After noting that your business has approximately 1000 clients, you stale that only about 20 are liquor licensees. After advising that the total number of liquor licensees exceeds 20,000, you state that the LCB no longer has any enforcement powers as to licensees and does not play any role in establishing any standards for insurance coverage as to licensees. Finally, you assert tht the only possible involvement you might have with the 20 licensees for which your business renews policies would be in situations where there would be a sale of a licensee's business and transfer of the licnese. You have stated that you would not participate in those matters and would note that publicly. 1-- Under the Liquor Code of July 1, 1987, Act No. 14, P.L. , the three member board of the LCB is appointed by the Governor, subject to confirmation by the Senate. Under Section 203 of the Liquor Code, hereinafter Code, the Governor shall designate one of the three board members as Chairman. Section 206.1 specifically provides that all members and employees of the LCB are subject to the provisions of the Ethics Act as well as the State Adverse Interest Act. The powers of the LCB are enumerated in Section 207: To buy or import liquor and alcohol for sale; to control the manufacturer, sale, consumption of liquor, alcohol or brewed beverages; to fix the wholesale and retail prices for liquor and alcohol to be sold at Pennsylvania Liquor Stores; to grant permits to manufacturers of liquors, wines before the products can be purchased from these manufacturers; to determine the municipalities wherein Pennsylvania Liquor Stores may be established; to grant and issue lincenses and to perform additional micellaneous administrative duties. Article 4 of the Code specifically deals with the regulation of licensees by the LCB. Under these facts and circumstances, you have requested an opinion as to whether you, as member and Chairman of the LCB, may also, as owner /operator of the James A. Goodman Insurance Agency., continue to renew fire, liability and workmen's compensation policies of insureds who are also licensees of the LCB. III. Discussion: As Chairman and member of the LCB, you are to be considered a "public official" within the definition of that term as set forth in both the Ethics Act and the Regulations of this Comission. 65 P.S. §402; 51 Pa. Code §1.1; 10.1e, Order 205. Section 3(a) of the Ethics Act provides: Section 3. Restricted activities. (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 Ae is associated. 65 P.S. 403(a). James A. Goodman, Chairman Page 3 Section 3(a) basically provides that a public official may not use his public office or confidential information to obtain a financial gain other than compensation as provided for by law for himself or a member of his immediate family or a business with which he is associated. Under this provision of law this Commission has determined that the use of office by a public official to obtain a gain or benefit for himself or a member of his immediate family or a business with which he is associated which is not provided for in law constitutes a "financial gain other than compensation provided for by law." See P1cCutcheon v. State Ethics Commission, 77 Pa. Comm. 529 466 A.2d 283 (1983). See also Yocabet v. State Ethics Commission, _ _ Pa. Commw. , 531 A.2d 536 (1987). Thus, a public official nay not use his public position to secure any financial gain for him , ,elf or his immediate family or a business with which he is associated unless it is provided for by law. Domalakes, Opinion 85 -010. It is further provided in Section 3(b) of the Ethics Act: Section 3. Restricted activities. (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). Under Section 3(b) of the Ethics Act cited above, which you must observe, you must neither offer nor accept anything of value on the understanding or with the intention that your official judgment would be influenced thereby. It is assumed such a situation does not exist here. This Section is referenced not to indicate that any such activity has been or will be undertaken but in an effort to provide a complete response to your inquiry. -ction 3(d) of the Ethics Act provides: S -ction 3. Restricted activities. (d) Other areas of possible conflict shall be addressed by the commission pursuant to paragraph (9) of section 7. 65 P.S. 403(d). James A. Goodman, Cha i rma Page 4 This Commission has applied Section 3(d by r :rerencing the preamble of the Ethics Act, the stated purpose 01 which is to strengthen the faith and confidence of people in their goverrn ert by assuring the' public that the financial interests of the holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. 65 P.S. §401. The above quoted Sections of the Ethics Act must now be applied to determine whether the renewal of existing policies to liquor licensees would be prohibited or restricted when you serve as Chairman and member of the LCB. Since you have stated that your insurance company w i l l not write new policies to liquor l censees during your service with the LCB, that issue is not before this Commission and need not be addressed. Initially, it is noted that the James A. Goodman Insurance Company is a business with which you are associated. The term "business with which he is associated" is defined in the Ethics Act as follows: Section 2. Definitions. "Business with which he is associated." Any business in which the person or c member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. As owner /operator of the James A. Goodman Insurance Agency, it is clear that the agency is a business with which you are associated under the Ethics Act. In answering the question which you have posed, this Commission will be guided by its prior opinions and orders. The main prohibition under the Ethics Act and Opinions of the Ethics Commission is that you may not serve the interests of two persons, groups, or entities whose interests may be adverse. See Alfano, Opinion 80 -007. In this situation, the question is whether you would be serving entities with interests which are adverse to each other. This Commission has determined in We lz, Opinion 86 -001, that a confli t would arise in a situation where a public official would have an outside interest which could be characterized as indirect in nature. See also Yaw, Opinion 85 -011. In the instant matter, a situation exists where you as a member of a regulatory board have a business relationship with individuals whom you regulate. However, it appears that your contact with licensees is quite James A. Goodman, Chairman Page 5 limited in light of the fact that the LCB no longer has enforcement powers and in light of the fact that the administrative law judges adjudicate the cases. Further, it is noted that the LCB has no involvement in establi standards for insurance coverage of liquor licensees. It would seem that your only possible involvement with licensees would relate to the transfer of a license and you have indicated that you would not participate in such a matter when that licensee has a policy with your insurance agency. Under these circumstances, Section 3(a) would not prohibit the renewal of existing fire, liability and workmen's compensation policies by James A. Goodman Insurance Company. In order for you to serve as Chairman and member of the LCB with your insurance company renewing insurance policies to insureds/licensees, it is necessary under Section 3(d) of the Ethics Act for you to abstain in all matters which would relate to licensees who have insurance policies with the business with which you are associated, James A. Goodman Insurance Company. In these situations, you must abstain from participating and publicly note your abstention. Lastly, the propriety of your conduct has only been addressed under the Ethics Act. Specifically not addressed in this opinion is the applicability of the State Adverse Interest Act or Section 210 of the Code. IV. Conclusion: As a member and Chairman of the LCB, you are a public official subject to the provisions of the .Ethics Act. Under Section 3(a) of the Ethics Act, the business with which you are associated, James A. Goodman Insurance Agency, may renew fire, liability and workmen's compensation insurance policies for liquor licensees. Since you have indicated that you will not write new policies to liquor licensees, that issue is not before this Commission and need not be addressed. Under Section 3(d) of the Ethics Act, you should not participate in matters involving those particular licensees whose existing policies are renewed by James A. Goodman Insurance Agency and you should publicly note your abstention. Lastly, the propriety of your conduct has only been addressed under the Ethics Act. 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. James A. Goodman, Chairman Page 6 This letter is a public record and will -e 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 Commission, �.wa�wcerare G. Sieber Pancoast Chairman