Loading...
HomeMy WebLinkAbout97-012 ConfidentialI. ISSUE: s . 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 Allan M. Kluger Rev. Joseph G. Quinn Boyd E. Wolff Julius Uehlein DATE DECIDED: 8/14/97 DATE MAILED: 8/26/97 97 -012 Re: Commission A; Former Public Employee; Executive Director; Association B; Expenses; Reimbursement; Payment; Confidential Opinion 97 -007. This Confidential Opinion is issued in response to your letters dated June 30 and July 2, 1997. Whether the Public Official and Employee Ethics Law imposes any prohibition or restrictions upon a former Executive Director in receiving payments from his former governmental body for expenses incurred in attending meetings of an association of which his former governmental body is a member. II. FACTUAL BASIS FOR DETERMINATION: An opinion is requested from this Commission as to whether the former Executive Director of Commission A may obtain expense reimbursements from his former governmental body under the Ethics Law. This advisory request has its genesis in Confidential Opinion 97 -007 wherein we concluded that the former Executive Director would be precluded by Section 3(g) of Act 9 of 1989 from entering into a contract with his former governmental body within one year of termination of service to provide services for compensation. Confidential Opinion, 97 -012 August 26, 1997 Page 2 The facts from the cited Opinion reflect that Mr. C prior to his retirement as the Executive Director of Commission A was involved in the formation of a national association which encourages more effective D. Mr. C is the current Chair of Association B with his term expiring in December, 1997. Commission A approves of Mr. C's association with Association B and wishes to take action, if legal under the Ethics Law, to enable Mr. C to fulfill his commitment. Commission A and Mr. C sought to enter into a contract whereby he would be paid a stipend to enable him to complete his term with Association B by attending two meetings. The proposed contract for consulting services would allow Mr. C as a consultant to continue to perform the functions and duties associated with Commission A's membership in Association B which he performed while Executive Director. The consultant would perform and file written reports with the current Executive Director of Commission A. Compensation would be set not to exceed $400 per month. Although the consultant would be responsible for his own expenses, he might receive an office, supplies, telephone service, postage and photocopy services from Commission A. The consulting agreement would place the consultant in the status of an independent contractor. A dispute clause in the agreement would allow Commission A to make the final decision subject to the right of the consultant to file a claim with the Board of Claims of the Commonwealth of Pennsylvania. In ruling that Section 3(g) of the Ethics Law prohibited such an arrangement, we noted: ... The service Mr. C would perform is one of the functions he performed as Executive Director. Mr. C would also be submitting "periodic reports" under his signature to Commission A, his former governmental body. The compensation of $400 per month is hardly a "nominal stipend," not to mention the office and services he may receive from Commission A. Mr. C would be representing himself as is evidenced by the description in the contract which designates him as a consultant acting in the capacity of an independent contractor. In such capacity, Mr. C would no longer be representing Commission A as an employee subject to all the strictures and controls of Commonwealth employment. Mr. C would be representing himself and his own interests which may not align with those of Commission A as is evidenced by the "Dispute" clause in the proposed contract. Confidential Opinion 97 -007 at 6. Although the above decision is not challenged, it is now proposed that the arrangement be modified so as to conform with the requirements of the Ethics Law. Confidential Opinion 97 -007 is interpreted to mean that Mr. C is not prohibited from serving as Commission A's representative at Association B provided he did not receive promised or actual compensation as a monthly stipend and did not utilize Commission A's office space, staff support, equipment or supplies. It is now contemplated that Commission A will not enter into a consulting contract with Mr. C and will not pay him a stipend nor permit him to use its facilities. Confidential Opinion, 97 -012 August 26, 1997 Page 3 Instead, Mr. C will be appointed as an unpaid delegate which will allow him to continue to serve as the Association B representative if he chooses. Mr. C may submit a request for reimbursement of his reasonable expenses which the Commissioners in the exercise of their discretion may pay to him. The decision of Commission A would be final and not subject to challenge in any forum. Mr. C attended Association B's planning meeting and has not received any reimbursement for incurred expenses. If permissible under the Ethics Law, Commission A will allow Mr. C to submit for its consideration a request for reimbursement of expenses. At the hearing on this case, Commission A's current Executive Director, Mr. G and the Chief Counsel, Ms. H provided the following information and arguments. As restated, the original proposed contract between Commission A and Mr. C was to provide a monthly stipend so that Mr. C could represent Commission A before Association B with Mr. C being responsible for his own expenses. Based upon our Opinion that such conduct was prohibited by Section 3(g), the plan was revised so that Mr. C would submit expenses to Commission A which has absolute discretion to make whole, partial, or no expense reimbursement to Mr. C. The intent of the agreement was to cover Mr. C's expenses and nothing else. The proposed agreement was submitted to the Retirement Board which opined that such an arrangement was consistent with the State retirement law. After noting that Opinion 97 -007 contained dicta that Section 3(g) would not prohibit such conduct provided there was no actual or promised compensation, it is asserted that the reimbursement for Mr. C's expenses would merely make him whole and could not be compensation since it is not equivalent to a salary or stipend. The stipend was simply an estimate of expenses to reimburse Mr. C for his actual expenses without any intent to provide compensation. III. DISCUSSION: In his former capacity as Executive Director of Commission A, Mr. C would be considered a "public employee" within the definition of that term as set forth in the Public Official and Employee Ethics Law and the Regulations of this Commission. 65 P.S. §402; 51 Pa.Code §11.1. Confidential Opinion 97 -007. Section 3(g) 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. 65 P.S. §403(g). The term "represent" is defined as follows under the Ethics Law: Confidential Opinion, 97 -012 August 26, 1997 Page 4 Section 2. Definitions "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. 65 P.S. §402. Under the submitted facts, there is no contract between Commission A and Mr. C nor is there any service to be provided by Mr. C to Commission A. Likewise, Commission A will not provide any office equipment, personnel, or supplies to Mr. C. All that Mr. C will do is submit expense invoices to Commission A which has absolute discretion in paying or not paying such expenses. These unique facts in our view do not constitute representation under Section 2 of the Ethics Law. There is no operative interaction between Mr. C and Commission A so that representation cannot occur. Stephens v. State Ethics Commission, 571 A.2d 1120 (1990). These facts constitute an activity which is not the type of conduct that Section 3(g) of the Ethics Law proscribes. Accordingly, the activity would not be prohibited by Section 3(g) of Act 9 of 1989. In Tight of our holding, we need not address the issue of whether a payment of a former employee's expenses is compensation. However, we question whether a reimbursement of expenses (to a former employee) is not compensation but merely a "wash" transaction making a person whole as to expenses. See, Synoski v. Hazle Township, 500 A.2d 1282 (1985). We conclude that Section 3(g) does not apply to these facts because there is no representation. Since one of the requisite elements (represent) of Section 3(g) is not present, the Section does not apply. McGuire and Marchitello v. SEC, 657 A.2d 1346 (1995). This Opinion has addressed the applicability of the Ethics Law based upon the facts which have been submitted. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 3(a) of the Ethics Law. Further, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /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 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 -012 August 26, 1997 Page 5 IV. CONCLUSION: An Executive Director of an administrative agency of the Commonwealth of Pennsylvania is a public employee subject to the Ethics Law. The former Executive Director may receive payments from his former governmental body for expenses incurred in attending meetings of an association of which his former governmental body is a member. 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 party 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 party requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. B the Commission, 6 Daneen E. Reese Chair