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HomeMy WebLinkAbout97-002 ConfidentialL ISSUE: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Roy W. Wilt Rev. Joseph G. Quinn Boyd E. Wolff DATE DECIDED: 2/29/97 DATE MAILED: 3/7/97 Re: Conflict; Appointment; E of Department A. 97 -002 This Confidential Opinion is issued in response to your letter dated February 4, 1997 in which you requested a confidential advisory from the State Ethics Commission. Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions as to the appointment of the E of Department A where the prospective appointee holds various business and professional positions involving managed health care programs, risk - management services, communications /consulting services, financial and tax services, and the like, as well as university trusteeships and public positions on governmental boards, councils, and authorities. II. FACTUAL BASIS FOR DETERMINATION: As Counsel B in Office C, you request a confidential advisory from the State Ethics Commission regarding the prospective appointment of Mr. D to the position of E of Department A. Your request is authorized both by the appointing authority, F, and by the prospective appointee, Mr. D. Department A is a G agency responsible for H in I and J within K for all L within I. Mr. D does not intend to accept a salary from G for serving in this M position. Department A is responsible for the following: N. If appointed to this M post, Mr. D would like to retain all of his current business interests and professional positions which are: Confidential Opinion, 97 -002 March 7, 1997 Page 2 • Chief Executive Officer of a firm that provides strategic planning and consulting services in health -care markets and employee- benefit programs, including managed care health and prescription programs and workers' compensation plans, to clients that include City 0, City P, and School District Q; • Chief Executive Officer of a firm that provides risk- management services and provides full property and casualty insurance analysis and quotation services; • Chairman of the Board of a firm that provides communications - consulting services and that develops and resells communication packages; • Partner in a firm that provides financial consulting services and tax strategies to major corporations, small businesses, professionals, and wealthy individuals; and • General partner in a firm that owns and manages several commercial office buildings in Pennsylvania. In addition, Mr. D is Chairman of Authority R, Authority S, and Commission T. He is a Vice Chairman of Foundation U, a subsidiary of Authority V. Mr. D is also a member of the following: • Board W; Authority V; • Board X; • Board of Governors and Executive Committee of League Y; • Board of Trustees, University Z; • Board of Directors, Insurance Company AA; • Board of Trustees, University BB; • Council CC; • Executive Committee, Chamber of Commerce DD; • Board of Directors, Foundation EE; and • Board of Trustees, University FF. By letter dated February 12, 1997, you were notified of the date, time, and location of the executive session at which your request for an advisory was to be considered. It is noted that you and Mr. D did in fact appear at the executive session to address any concerns of the Commission. Confidential Opinion, 97 -002 March 7, 1997 Page 3 III. DISCUSSION: It is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Ethics Law, 65 P.S. §§407(10), (11), 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. If Mr. D were to be appointed to the M position of E of Department A, he would, in that position, be a public official and an executive level state employee as defined under the Ethics Law, and hence he would in that position be subject to the provisions of the Ethics Law. Some pertinent provisions of the Ethics Law shall initially be set forth. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined in the Ethics Law as follows: Section 2. 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. "Conflict" or "conflict of interest" 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. "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. "Immediate family." A parent, spouse, child, brother or sister. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, Confidential Ooinion, 97 -002 March 7, 1997 Page 4 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. "Contract" shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. Section 3(f) of the Ethics Law provides as follows: Section 3. Restricted activities (f) 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. Parenthetically, where contracting is otherwise allowed or where there appears to be no express prohibitions to such contracting, the above particular provision of the law would require that an open and public process must be used in all situations where Confidential Opinion, 97 -002 March 7, 1997 Page 5 a public official /employee is otherwise appropriately contracting with his own 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. This open and public process would require that the following be observed as to the contract with the governmental body: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted Section 3(f) of the Ethics Law also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 3(g) of the Ethics Law provides: Section 3. Restricted activities (g) No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. Section 3(i) of the Ethics Law provides: Section 3. Restricted Activities (i) No former executive -level State employee may for a period of two years from the time that he terminates his State employment be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participates in recruiting to the Commonwealth of Pennsylvania or that he actively participated in inducing to open a new plant, facility or branch in the Commonwealth or that he actively participated in inducing to expand an existent plant or facility within the Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. Section 3(j) of the Ethics Law provides as follows: Confidential Opinion, 97 -002 March 7, 1997 Page 6 Section 3. Restricted activities (j) 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. If a conflict exists, Section 3(j) requires the public official /employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In applying the above provisions of the Ethics Law to the facts which you have submitted, pursuant to Section 3(a) of the Ethics Law, a public official /public employee is prohibited 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. In applying Section 3(a) in contexts involving business interests, this Commission has held that a private pecuniary benefit to the business or to a business client may afford a basis for a conflict of interest. Miller, Opinion No. 89 -024; Kannebecker, Opinion No. 92 -010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion No. 89 -002; Garner, Opinion No. 93 -004; Snyder, Order No. 979 -2, affirmed Snyder v. SEC, Slip Opinion filed in Commonwealth Court on December 18, 1996 at 817 C.D. 1996, Petition for Allocatur pending. This Commission has determined that the term „ business, as it is defined in the Ethics Law, includes non- profit corporations. (See, Confidential Opinion, No. 89 -007; McConahy, Opinion No. 96 -606). Confidential Opinion, 97 -002 March 7, 1997 Page 7 It is noted that where a prohibited private pecuniary benefit is not actually received, a violation of Section 3(a) may nevertheless be found if the public official /public employee used the authority of office or confidential information obtained by being in that position in an attempt to obtain a prohibited private pecuniary benefit. Taylor, Order No. 983. Furthermore, we have also held that a conflict or other concern under the Ethics Law can arise even though the public official's involvement is with two governmental bodies on which he is serving or has served. Ledebur, Opinion No. 95 -007. Thus, it should never be assumed that concerns will not arise under the Ethics Law simply because the public official /public employee is acting on behalf of a governmental body as opposed to a private business. In each instance of a conflict of interest, the public official must abstain from participation. The abstention requirement is not limited to mere voting, but extends to any use of authority of office. In Juliante, Order No. 809, this Commission recognized that the use of authority of office as defined in the Ethics Law includes, for example, discussing, conferring with others, and lobbying for a particular result. In each instance of a conflict of interest, the public official must also satisfy the disclosure requirements of Section 3(j) set forth above. The aforementioned provisions, precedents, and principles have been set forth to provide guidance as to Mr. D's prospective appointment to this M position. Section 3(a) would not operate to preclude the appointment of Mr. D to that position, nor would it operate to preclude his acceptance of same. However, based upon Mr. D's extensive interests, it would appear that if Mr. D were to be appointed to this position, there would be many instances where conflicts of interest would exist for him. In each instance of a conflict of interest, Mr. D would be required to abstain fully and to satisfy the disclosure requirements of Section 3(j). As for Section 3(f), the restrictions of that provision would have to be observed if and when applicable. Sections 3(g) and 3(i) would apply to restrict Mr. D upon termination of his service as E of Department A. The restrictions of these particular provisions are discussed fully in Confidential Opinion, No. 94 -01 1; Singel, Opinion No. 94 -012; and Confidential Opinion, No. 95 -003. In providing this Opinion, we have not addressed every possible issue or potential pitfall that may arise for Mr. D. Rather, we have given the overall parameters of the applicable provisions of the Ethics Law. We would encourage Mr. D to seek further advice from this Commission as circumstances require. The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Confidential Opinion, 97 -002 March 7, 1997 Page 8 IV. CONCLUSION: If Mr. D were to be appointed to the M position of E of Department A, he would, in that position, be a public official and an executive level state employee subject to the provisions of the Ethics Law. Section 3(a) would not operate to preclude the appointment of Mr. D to the position of E of Department A, nor would it operate to preclude his acceptance of that post. The restrictions of the Ethics Law as set forth above must be observed. In each instance of a conflict of interest, Mr. D would be required to abstain fully and to satisfy the disclosure requirements of Section 3(j). Pursuant to Section 7(10), the person who acts in good faith on this opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, any person may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. By the Commission, 06 E � Daneen E. Reese Chair