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HomeMy WebLinkAbout01-559 ConfidentialADVICE OF COUNSEL May 25, 2001 01 -559 Re: Conflict; Public Official /Public Employee; A; B Bureau; C Department; Private Employment or Business. This responds to your letter of April 23, 2001, by which you requested confidential advice from the State Ethics Commission. Issue: Whether an A in the B Bureau of the C Department is prohibited or restricted by the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq., from forming a private business in addition to public service. Facts: You are an A with the B Bureau in the C Department. You have submitted a copy of your job description and two organization charts, which documents are incorporated herein by reference. As an A, you review D documents submitted by outside E professionals retained to F for the Commonwealth. Your reviews are limited to E's. You have no responsibilities with respect to G's who may ultimately H the I's or otherwise enter into contracts with the Commonwealth with respect to the E's you review. You do occasionally become involved in disputes relating to I's where the G's have already been selected. In those disputes, your responsibility is to provide technical assistance. You do not make the ultimate decisions to settle the disputes. You state that you are a J, having been licensed in Pennsylvania since [date]. You further state that before you came to work for the Commonwealth, you were a K for over [number] years. You started in your current position in [date]. You would like to create an L for anyone serving the D industry. Your function would be that of M. You would oversee the L E and operation of the business. You would work on the business only during hours outside the normal work hours that you maintain for your position with the Commonwealth. You intend to take on a partner who will devote full time to the day -to -day running of the business, including all sales activities. You state that no potential partner has yet been identified. You state that the L would be available to anyone without charge. Businesses that would N in and 0 the L would have free unlimited access. Income would be generated only from the sale of P. P would be sold on a national level and only to Q's. No R would be accepted from E professionals or G's (although all E professionals and G's would be free to N in the L, and 0 the L without charge). You believe that the proposed business interest would not present a conflict of interest based upon the following reasons: Confidential Advice, 01 -559 May 25, 2001 Page 2 1. Your responsibilities with the Commonwealth are limited to reviewing E's by E professionals. The review is conducted before G's are selected and before any S's or T's are selected. The U's include generic V's for W's that could be provided by several different T's /S's. This is because Commonwealth law requires that V's be non -X. Only in rare circumstances are items specified as X, in which case a letter from the Y and Z must be submitted to the Secretary for his approval. You are not involved in the process of approving X V's. 2. Disputes in which you may become involved typically deal with AA E issues that arise after the G has been selected. Again, the E issues on which you are consulted involve W's or BB's that could be provided by many T's /S's. 3. In the rare instance where your review of an E or dispute would involve consideration of W's specified to be provided by a CC, you state that you would disclose your potential conflict, and request to be excused from reviewing the E or dispute. You further state that because of the stage at which you are involved, any such recusal would be extremely rare. You note that you would also refuse to accept DD from any S or T whose product was a material element of any dispute on which you would be consulted, for at least one year after the conclusion of your involvement in the matter. 4. You intend to select a business partner who is available to devote his or her efforts to the enterprise on a full time basis. You expect that such person would have no dealings with the Commonwealth that would be within the scope of your responsibilities. In the highly unlikely event that your partner would have a business interest in an entity that would be associated with a dispute in which you would be involved, you would disclose the potential conflict and ask to be excused from providing consulting services on such matter. Given the above stated facts, you request the State Ethics Commission to conclude that you would not have a conflict of interest if you would pursue the business interest as described above. Discussion: It is initially noted that pursuant to Sections 1107(10) and (11) of the Ethics Act, 65 Pa.C.S. § §1107(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. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. § §1107(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As an A with the B Bureau in the C Department, you are a public employee as that term is defined under the Ethics Act, and hence you are subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: $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 following terms are defined in the Ethics Act as follows: Confidential Advice, 01 -559 May 25, 2001 Page 3 $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. "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. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, 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. 65 Pa.C.S. §1102. Section 1103(j) of the Ethics Act provides as follows: $1103. Restricted activities. (j) Voting conflict. - -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 Confidential Advice, 01 -559 May 25, 2001 Page 4 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. 65 Pa.C.S. §1103(j). In applying the above provisions of the Ethics Act to your inquiry, you are advised that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89- 011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. Having established the above, your specific inquiry shall now be addressed. It is initially noted that the proposed business described above would be a business with which you, as M, would be associated. It is further noted that a business relationship would exist as to the T's /S's who would pay you /your business to EE on the L. If a matter involving the business, any future business partner, or the T's /S's would come before you in your official capacity as an A, you would have a conflict of interest as to such matter. Miller, Opinion No. 89 -024. This should not become a problem in that you have stated that you would 1) abstain from participating in any matter involving a CC; 2) refuse to accept DD from any T's /S's whose product was a material element of any dispute on which you would be consulted; 3) abstain from participating in any dispute that would involve a business partner who would have a business interest in any entity that would be involved in such a dispute; and 4) structure the business to ensure that you could not use the authority of your office or confidential information for a private pecuniary benefit. However, should a conflict arise, you would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j). Under the facts which you have submitted, Section 1103(a) of the Ethics Act would not preclude you from the business activity described above subject to the restrictions and qualifications as noted above. This Advice is limited to addressing the applicability of Section 1103(a) of the Ethics Act. It is expressly assumed that there has been no use of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /public employee and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public 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. Confidential Advice, 01 -559 May 25, 2001 Page 5 The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the EE. Conclusion: As an A with the B Bureau in the C Department, you are a public employee subject to the provisions of the Ethics Act. Section 1103(a) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq., would not preclude you from outside business activity subject to the restrictions and qualifications as noted above. In the event that the business, any future business partner, or business client(s) would have matter(s) pending before your governmental body, you would be required to abstain and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act set forth above. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code §13.2(h ). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 -787- 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Vincent J. Dopko Chief Counsel