HomeMy WebLinkAbout87-005-R MyersHonorable Donald F. Mazziotti
c/o Morey M. Myers
General Counsel
Commonwealth of Pennsylvania
Office of General Counsel
Room 225, Main Capitol Building
Harrisburg, PA 17120
Dear Mr. Mazziotti:
I. Issue:
STATE ETHICS COMMISSION
308 FINANCE BUILQING
HARRISBURG, PENNSYLVANIA 17120
OPINION OF THE COMMISSION
Date Decided : 8/31/87
Date Mailed: 10/5/87
II. Factual Basis for Determination:
87 -005 -R
Re: Acting Secretary of Commerce, Executive Director Of The Economic
Development Partnership, Termination Agreement, Severance Payment,
Reconsideration of Opinion 87 -005
This opinion is issued in response to your motion of August 5, 1987,
requesting reconsideration of Mazziotti Opinion, No. 87 -005.
Whether the State Ethics Act presents any restrictions upon the Acting
Secretary of Commerce and Executive Director of the Economic Development
Partnership resulting from the receipt of a severance payment provided for in
a termination agreement that was entered into with the previous employer
as a result of the nomination for the current positions.
The following is a summarization of your testimony before this Commission
on July 21, 1987.
From July 1981 you served as the Executive Director of the Pennsylvania
Business. Roundtable, formerly known as the Business Council of Pennsylvania.
Chonologically, on December 10, 1986, you briefed the governor on a
partnership program for Pennsylvania's economic development. On December 11,
1987, you were contacted by the Governor's designated Chief of Staff who urged
you to consider heading up the economic initiative. You responded by stating
that you were flattered but were not looking for another position. On
December 2.1, 1987, after you returned from an Oregon trip, you received
Honorable Donald F. Mazziotti
Page 2
numerous calls indicating that you had been selected for a position with the
new administration; you responded that you could not take a job with such a
large salary reduction. On December 31, 1987, because of these rumors, you
wrote to your supervisor, Mr. Quentin Wood and advised him that the rumors
were without foundation and that you were not looking for other employment.
On January 6, 1987, you were contacted and asked if you would interview for
the position. You responded that you would not be interviewed for the
position but would be willing to suggest viable candidates. You went to
Pittsburgh on January 10, 1987, met with the selection committee and gave them
the names of three individuals who you believed would be qualified for the
job. Although you were pressed by the committee to accept the position, you
stated that you could be helpful by staying with the Pennsylvania Business
Roundtable, hereinafter Roundtable. Subsequently, on January 13, 15 and 29,
you spoke with members of the Governor's transition team who asked whether you
were interested in the position. You responded that the financial cost would
be too great and that you could be helpful in your current position. Mr.
Vince Gregory, a former Roundtable Chairman, contacted you on January 29 and
asked if you could do the job. You responded that you could, but that the
financial penalty would be too great. When Mr. Gregory asked whether you
believed the Governor wanted you to serve, you responded that you thought so.
Lastly, Mr. Gregory asked if you would object if he would contact Mr. Wood.
You responded that it would not be a problem. It is your recollection that
this was the first time that the possibility of a financial proposal was
considered. Mr. Wood, on January 30, 1987, asked you if you would be
interested in a package whereby there would be a termination allowance for
your past service. You responded that if your services were needed, you could
do the job and that a termination package should be in writing and be both
legal and ethical. You then met with the Governor's General Counsel on
January 30, 1987, to discuss your background and the severance agreement. On
February 2, when you met with Governor Casey, Mr. Keisling asked if you could
attend the announcement of your selection for the cabinet position. At a
press conference on February 3, the Governor announced that you were his
selection to head the Economic Development Department. Shortly after the
announcement, you were asked about a severance package to which you responded
that it was still in negotiation. On February 5, you met with Mr. Keisling
who asked when you could start your position. You responded that it would
take about two weeks for you to wind down your activities at the Roundtable.
Further testimony provided during the public meeting noted that, in the period
between February 3rd and 17th, you did appear at the Department of Commerce,
met with employees and began informally to exercise the authority-of the
Office of Secretary of Commerce. The severance agreement, which is
incorporated herein by reference, was sent to you on February 13.
It is provided in paragraph 2(e) of the termination agreement:
A lump sum severance payment of One Hundred Sixty -Six
Thousand Dollars ($166,000), payment which shall be
effected prior to the Effective Date.
Honorable Donald F. Mazziotti
Page 3
Section 3 of the agreement provides in part:
The parties hereto agree that neither the Roundtable nor
Mazziotti shall, after the Effective Date, owe any further
obligation of whatever nature one to the other. The
Roundtable and Mazziotti hereby mutually release any and
all claims of whatever nature, whether known or unknown,
that either party may have against the other arising out
of Mazziotti's employment relationship with the
Roundtable.
After you read the agreement, you signed the document and sent it back to the
Roundtable. The termination agreement provided for the payment of $166,000 as
a severance by the Roundtable and purported to sever all obligations between
you and the Roundtable. You received on February 14, a copy of the executed
agreement together with a check in the amount of $125,790.77, ($166,000 minus
deductions), which was drawn on the reserve of the Roundtable. As per the
agreement, you terminated your services with the Roundtable at midnight
February 15, 1987. You formerly began your duties with the Commonwealth of
Pennsylvania on February 17, 1987.
At the July 21, 1987 public meeting of this Commission, following the
testimony and discussion concerning the severance payment, an amended motion
that the severance payment was not prohibited by the Act subject to certain
restrictions was defeated by a 4 -3 vote.
A second motion was made which stated that if you retained the severance
payment and continued to serve as Executive Director of EDP and Secretary of
Commerce and if a complaint were filed against you, this Comission would find
a violation of Sections 3(a) and 3(b) of the Ethics Act. This motion was
carried by a 4 -3 vote.
Thereafter, the Chairman of this Commission believed that he may have
miscast his vote. After listening to the tapes of the public meeting, the
Chairman stated that he voted in favor of a motion with which he did not
agree.
A special meeting of this Commission was then held on July 28, 1987. The
Chairman advised that the appropriate procedure in this case would be to issue
an opinion based upon the vote of July 21, 1987, which would afford any person
the opportunity to request reconsideration within fifteen days of service of
the opinion. The Chairman also acknowledged that he "...did, in fact, vote on
a motion with which -- [he] did not agree."
On July 29, 1987, a Petition for Review and Application for Special
Relief were filed in Commonwealth Court at 1765 C.D. 1987, wherein you
requested the Court, inter alia, to enjoin this Commission from issuing an
opinion based upon the vote of July 21, 1987, and declare the "intended" vote
Honorable Donald F. Mazziotti
Page 4
of this Commission so as to find no prohibition as to the receipt of the
severance payment. This Commission filed an Answer, Preliminary Objections
and a Memorandum of Law. A hearing was held before Commonwealth Court on July
31, 1987, which thereafter issued an Opinion and Order on August 4, 1987,
denying the Application for Special Relief and dismissing the Petition for
Review.
On August 5, 1987, this Commission issued Mazziotti Opinion No. 87 -005.
On that same day, you filed a Motion for Reconsideration.
In the Motion, it is argued that the receipt of the severance payment was
not prohibited by the Ethics Act for the following reasons:
(1) There was no "use" of public office under Section
3(a), in that the severance was received prior to public
employment.
(2) Section 3(b) is inapplicable since the term
"candidate for public office" applies to candidates for
elective office but not appointive office. Further, it is
argued that there is no 3(b) prohibition because there was
no "understanding" that the severance payment would
influence official actions.
(3) Baxter Opinion, 84 -004, is cited as controlling as
authority for a "supplementation" of salaries for public
officials by private business.
Based upon the foregoing, you request reconsideration as to whether, in
your position as Acting Secretary of Commerce and Executive Director of the
Economic Development Partnership, hereinafter EDP, the Ethics Act imposes any
restrictions upon your receipt from the Roundtable of the severance payment.
III. Discussion:
On August 5, 1987, you filed a Motin for Reconsideration with this
Commission on Mazziotti Opinion, 87 -005.
Regulation 2.15 of this Commission provides:
§2.15.Reconsideration of opinions.
Any person may request within 15 days of service of
the opinion that the Commission reconsider its opinion.
The person requesting reconsideration should present a
detailed explanation setting forth the reasons why the
opinion requires reconsideration. 51 Pa. Code §2.15.
Honorable Donald F. Mazziotti
Page 5
Pursuant to the aforecited regulation and your Motion, this Commission
grants your request for reconsideration.
As previously noted, you, as acting Secretary of Commerce and Executive
Director of EDP, 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 Commission. 65 P.S. §402; 51 Pa. Code §1.1.
As a "public official" you are subject to the provisions of the Ethics
Act and the restrictions therein are applicable to you.
Section 3(a) of the Ethics Act provides as follows:
(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).
It is further provided in Section 3(b) of the Ethics Act:
(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 3(d) of the Ethics Act then provides:
(d) Other areas of possible conflict shall be addressed by
the commission pursuant to paragraph (9) of section 7.
65 P.S. 403(d).
The parameters of the types of activities encompassed, by the above
provision, are generally determined through a review of the scope and intent
of the State Ethics Act. Generally, the Act was promulgated in order to
ensure the public that the interest of their officials and employees are
neither in conflict with the public trust nor create the appearance of a
conflict with that trust. 65 P.S. §401. As such, this Commission has
determined that public officials would be in a prohibited conflict in any
situation wherein they attempted to serve one or more interests that are
adverse. See, Alfano, 80 -007; Fritizinger, 80 -008.
Honorable Donald F. Mazziotti
Page 6
On page 2 of your original request for advice, you raise the question as
to whether this Commission might have authority to issue an advisory opinion
after noting:
1. The agreement was prepared by the law firm of Kirkpatrick and
Lockhart;
2. The agreement is governed by the laws of the Commonwealth of
Pennsylvania which would include the Ethics Act;
3. The severance payment was made in a lump sum prior to your
resignation from the Roundtable and prior to the commencement of your
state employment and;
4. The agreement provides that upon your termination there are no
further obligations between you and the Roundtable.
Regarding the two statements that the termination agreement was prepared
by the law firm and that the agreement by its own terms specifies that it is
governed by the laws of the Commonwealth of Pennsylvania, this Commission is
the sole arbiter as to whether the actions of a "public official" fall within
any of the restrictions of the Ethics Act.
It is then suggested that this Commission may not have authority to issue
an advisory opinion, apparently based upon the notion that the termination
agreement provided for the severance payment prior to the resignation from the
Roundtable and prior to the commencement of state employment and secondly, the
termination agreement concluded any obligations between you and the
Roundtable.
Although there is no question that the severance payment was made prior
to your resignation from the Roundtable and was made prior to the commencement
of your state employment, it is equally clear that the agreement was entered
into as a result of your acceptance of an offer of state employment as
Secretary of Commerce and Executive Director of EDP. Therefore,
since the agreement was entered into as a result of anticipated state
employment, it is within the jurisdiction of this Commission to review the
terms of that agreement even though it occurred technically prior to the
commencement of your employment with the Commonwealth of Pennsylvania.
2. Am Jur 2nd, Administrative Law, 5332, provides:
"When a particular statute authorizes an administrative
agency to act in a particular situation it necessarily
confers upon such agency authority to determine whether
the situation is such as to authorize the agency to act -
that is, to determine the coverage of the statute..."
Id. at page 153
Honorable Donald F. Mazziotti
Page 7
See also, McDevitt v. Gunn, 182 F. Supp. 335 (1960):
" It is well established that an administrative body has
the power and the duty to determine its own
jurisdiction..." Id. at page 337
This Commission reaches the above conclusion that it has jurisdiction
over this matter by further noting the direction of the Commonwealth Court of
Pennsylvania in Phillips v. State Ethics Commission, 79 Cmwlth Ct. 491, 470
A.2d 659, (1984) that the Ethics Act is to be liberally construed and have
broad application while exclusions therein should be narrowly applied.
Having found jurisdiction, this Commission will now reconsider the
question as to whether the severance payment from the termination agreement is
within the restrictions of either Section 3(a), 3(b) or 3(d) of the Ethics Act
quoted above.
In order to answer the posed question, this Commission has not only
reviewed the termination agreement but also the articles of incorporation of
the Roundtable, the resolution of the policy committee of the Roundtable on
April 14, 1982, the transcripts of the confirmation hearings before the
Community and Economic Development Committee of the State Senate, and the
testimony before this Commission on July 21, 1987 and August 31, 1987, all of
which are incorporated herein by reference.
As to the articles of incorporation of the Roundtable, it is provided in
paragraph 3 that the Roundtable is to be a non - profit corporation for the
following purposes:
"To promote economic development, job opportunities and
fiscal responsibility within the Commonwealth of
Pennsylvania...
It is not the purpose of the Council to engage in a
regular business of a kind ordinarily carried on for
profit nor to perform particular services for individual
persons...
No part of the net earnings of the Council shall inure to
the benefit of its members, officers, directors, or other
private individuals. Nothing contained herein shall be
deemed to preclude the Council from paying compensation in
a reasonable amount to directors, officers or employees
for services rendered in accordance with the purposes of
the Council; from reimbursing its directors, officers or
employees for expenses incurred by them in accordance with
the purposes of the Council; or from conferring benefits
upon members of non - members in accordance with the
purposes of the Council. In the event of the dissolution
Honorable Donald F. Mazziotti
Page 8
of the Council, all of its remaining assets shall be
distributed in accordance with the provisions of the
Pennsylvania Non - Profit Corporation Law of 1972..."
The resolution of the Roundtable adopted by the policy committee on April
14, 1982 provides in part:
"The Pennsylvania Business Roundtable is organized to
promote economic growth and development, private sector
employment and fiscal responsibility in the
Commonwealth...
The Pennsylvania Business Roundtable will pursue public
policies and actions which are in the overall economic
interests of Pennsylvania. The Roundtable does not
represent nor advocate the interests of a single member,
firm or industry...
The Roundtable will seek to accomplish these purposes by
the direct participation and involvement of its members in
the development of public policies and programs, working
in partnership with Legislative and Executive branch
officials..."
In determining whether the Ethics Act imposes any prohibitions, based
upon the above facts and circumstances, this Commission is mindful of the
statement of the U.S. Supreme Court in U.S. v. Mississippi Valley Company, 364
U.S. 520 (1961), wherein the court in applying a federal conflict of interest
statute noted:
"This broad proscription embodies a recognition of the
fact that an impairment of impartial judgment can occur in
even the most well - meaning men when their personal
economic interests are affected by the business they
transact on behalf of the Government. To this extent,
therefore, the statute is more concerned with what might
have happened in a given situation than with what actually
happened. It attempts to prevent honest government agents
from succumbing to temptation by making it illegal for -
them to enter into relationships which are fraught with
temptation..." Id. at pages 549, 550.
In Gardner v. Nashville Housing Authority, 514 F.2d 38 (1975), cert. den,
423 U.S. 928 (1975), one of the questions addressed by the Sixth Circuit Court
of Appeals was whether there was a conflict of interest by members of the
housing authority who were also officers of banks. The Court, in finding no
conflict of interest, noted that there was nothing in the record other than a
showing that public officials worked toward the completion of a statutorily
authorized project. The actual position of the individuals was not enough for
the court to "deduce" any influence or control over the public housing
Honorable Donald F. Mazziotti
Page 9
authority members. Thus, just because a University Chan4ellor was a member of
the board of directors of a federal reserve bank, that did not establish
control over the decisions of two (2) housing authority members who were
officers of a state bank. Similarly, the fact that members of the university
board of trust were also officers of a state bank wherein housing authority
members were also bank officers did not establish influence or control over
them.
Based upon the facts, as presented, and the documents before this
Commission, there does not appear to be any basis for concluding that your
severance is prohibited by either Sections 3(a), 3(b) or 3(d) of the Ethics
Act. The lump sum severance payment which was given by the Roundtable in
anticipation of your public employment with the Commonwealth, does not in and
of itself provide a basis for this Commission to "deduce" that you used your
public office for financial gain or solicited or accepted the severance
payment with the understanding that it would influence your official action,
vote or judgment as a public official.
The above conclusion is supported by Baxter, 81 -004, wherein this
Commission "affirmed the propriety" of the "executive exchange program ", which
was "designed to bring into government some of the best business and private
talent while allowing the individuals in the program to remain on the payroll
of their private employer. It is noted, that while this Commission did laud
the implementation of the "executive exchange program," it did not laud the
supplementation of public official /employee salaries. In any event, Baxter,
cannot be differeniated from the severance payment in this case: in both
instances, there was a salary supplementation by private companies. In
Baxter, it occurred as part of the "executive exchange program"; here it
occurred as a flat payment prior to the inception of public employment.
In the instant matter, although it might be said that you used your
non - official status to secure the severance payment, there is nothing to
indicate that any of your activities or conduct as a public official are going
to be influenced by the severance payment as per the restrictions of Section
3(b) of the Ethics Act. Similarly, under Section 3(a) of the Act, since you
were not Secretary of Commerce and were not serving in the capacity of a
public official when you received the severance payment, you did not use
public office to secure the compensation.
The receipt of the severance payment, prior to the termination with the
Roundtable, but based upon anticipated employment with the Commonwealth is not
per se within the restrictions of Sections 3(a), (b) or (d) of the Ethics
Act
However, Section 3(a) of the Ethics Act would restrict you from
participating in any matter whereby individual members of the Roundtable could
obtain financial gain through dealings with the Department of Commerce or EDP.
Similarly, Section 3(a) would prevent you from using any confidential
information obtained in your public position to the financial benefit of any
Honorable Donald F. Mazziotti
Page 10
member of the Roundtable. Lastly, you should abstain from participating in
matters that you were involved in while employed by the Roundtable, so that
you do not, in your current public position, pass upon your past activity
while employed by the Roundtable. The foregoing restrictions parallel those
that were imposed by this Commission in Baxter, supra.
IV. Conclusion:
The Motion of August 5, 1987, requesting reconsideration of Mazziotti
Opinion, No. 87 -005, is hereby granted.
As Acting Secretary of Commerce and Executive Director of the
Partnership, you are to be considered a "public official" as defined in the
Ethics Act. The severance payment, as part of your termination agreement with
the Roundtable, in and of itself is not prohibited by either Section 3(a),
3(b) or 3(d) of the State Ethics Act at this point in time based upon the
facts as presented and the documents before this Commission.
The Ethics Act imposes the following restrictions upon your conduct in
your capacity as a public official:
1. You may not participate in any matter which would result in financial
gain to members of the Roundtable as a result of dealings with the
Department of Commerce or EDP.
2. You may not use confidential information obtained in your public
position to the financial benefit of any member of the Roundtable.
3. You may not participate in any matters in which you were previously
involved while employed by the Roundtable.
Accordingly, the prior Opinion No. 87 -005 of this Commission dated July
21, 1987, is vacated.
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.
This letter is a public record and will be made available as such.
BB�ytt,, the Commission,
K/• fa Attve ,6 -at
G. Sieber Pancoast
Chairman
I. ISSUE
II. FACTS
STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
DISSENTING OPINION
On July 21, 1987, the Pennsylvania State Ethics
Commission (hereinafter referred to as the "COMMISSION "), by
a four -to -three vote, decided that it would be a violation
of Sections 3(a) and 3(b) of the Ethics Act, 65 P.S 403(a),
(b), for Donald F. Mazziotti (hereinafter referred to as
"MAZZIOTTI ") to continue to serve as Acting Secretary of
Commerce and Executive Director of the Economic Development
Partnership (hereinafter referred to as the "EDP ") without
returning the $166,000.00 severance payment, which is amply
described in the majority opinion herein. Mazziotti.
87- 005 -R.
On August 31, 1987, the COMMISSION, on reconsideration,
reversed itself and ruled, again by a four -to -three vote,
that MAZZIOTTI could keep the money and continue to serve in
his official capacity, albeit with certain restrictions.
I believe that the COMMISSION'S original decision was
correct and that its ruling upon reconsideration is in
error. Accordingly, I must now respectfully dissent.
The precise issue before this COMMISSION is whether
MAZZIOTTI may continue serving in his public capacity while
retaining the $166,000.00 severance payment, which, by his
own admission, only came about as a result of his decision
to accept public employment.
In order to properly resolve this question it is
necessary to consider the facts of the instant matter, which
are contained in the voluminous record produced by the
various parties to this controversy.
The undisputed record reveals that MAZZIOTTI served as
Executive Director of the Pennsylvania Business Roundtable
(hereinafter referred to as the "ROUNDTABLE ") from July of
1981 until February of 1987. The ROUNDTABLE is an
organization, composed of the chief executive officers of
the thirty -eight or thirty -nine largest corporations in
Pennsylvania, which involves itself in general issues
related to business and economic development. Apparently,
eight or nine or members of the ROUNDTABLE are also members
of the EDP.
-2_
On December 11, 1986, MAZZIOTTI was contacted by
Governor -Elect Casey's designated Chief of Staff who urged
him to consider heading up the economic initiative. On
December 31, 1986, MAZZIOTTI wrote to the head of the
ROUNDTABLE, Mr. Quentin Wood, with regard to various rumors
concerning MAZZIOTTI taking a position with the new
administration. In his letter, he stated:
As a simple matter of rumor control, I want to let you
know that I have been repeatedly contacted by Bob
Casey's staff director (Bill Keisling) and, finally by
his transition team director (Bill Smith) urging me to
apply for the position of executive director of the
proposed statewide economic development corporation
which will be the Governor's lead agency for
development.
On January 6, 1987, MAZZIOTTI was contacted by members
of the Governor - Elect's transition team and asked to
interview for the position. He responded that he would not
interview for the position, but that he would be willing to
suggest other viable candidates.
On January 10, 1987, MAZZIOTTI travelled to Pittsburgh,
met with the search committee, and provided it with names of
three individuals who he believed were qualified for the
position. At that time, MAZZIOTTI was also urged by the
search committee to accept the position.
Subsequently, on January 13, 15 and 29, 1987, MAZZIOTTI
was again contacted by members of the transition team and
asked if he were interested in the position. He responded
that the financial cost of accepting government employment
was too great, and that he could be helpful in his current
position.
On January 29, 1987, MAZZIOTTI was contacted by Mr.
Vince Gregory, a former chairman of the ROUNDTABLE, and
asked if he could do the job. MAZZIOTTI responded in the
affirmative, but again stated that the financial penalty
would be too great. Mr. Gregory then inquired as to whether
Governor Casey wanted MAZZIOTTI for the position. MAZZIOTTI
opined that he believed this to be true. Finally, Mr.
Gregory asked whether MAZZIOTTI would object to him
contacting Mr. Wood. MAZZIOTTI replied that this would not
-3-
be a problem. According to MAZZIOTTI, this was the first
time that the possibility of a financial supplement was
considered.
On January 30, 1987, Mr. Wood asked MAZZIOTTI if he
would be interested in a package whereby he would accept the
position and would receive a severance_ allowance for his
past service to the ROUNDTABLE. MAZZIOTTI responded
affirmatively and stated that if his services were needed he
could do the job. MAZZIOTTI also stated that any severance
package should be in writing and be both legal and ethical.
On the same day, MAZZIOTTI also met with the Governor's
General Counsel to discuss his background and the proposed
severance agreement.
On February 2, 1987, MAZZIOTTI met with Governor Casey
and members of his staff. At that time, Mr. Keisling asked
if MAZZIOTTI could attend the announcement of his selection
to the cabinet position.
At a press conference on February 3, 1987, Governor
Casey announced that MAZZIOTTI was his selection to be
Secretary of Commerce and head of the EDP. After the formal
announcement, MAZZIOTTI was asked by the press about a
severance package, to which he replied that it was still in
negotiation.
The EDP was established, on February 4, 1987, pursuant
to Executive Order No. 1987 -4.
On February 5, 1987, MAZZIOTTI met with Mr. Keisling
who asked when he could officially commence his duties.
MAZZIOTTI responded that it would take about two weeks for
him to make the transition from the ROUNDTABLE to the
Department of Commerce.
Although somewhat in dispute, there was testimony
before the COMMISSION that between February 3 and 17, 1987,
MAZZIOTTI appeared at the Department of Commerce, met with
various employees, and began to informally exercise the
authority of the Office of Secretary of Commerce.
On February 13, 1987, MAZZIOTTI received the proposed
severance agreement, which is hereby incorporated by
reference herein. After reviewing the document, MAZZIOTTI
signed and returned it, unchanged, to the ROUNDTABLE.
-4-
On February 14, 1987, MAZZIOTTI received a copy of the
executed severance agreement and a check in the amount of
$125,790.77. This check represented the agreed upon
$166,000.00 less the applicable taxes.
The check representing the severance payment was drawn
on the reserves of the ROUNDTABLE. Thereafter, members of
the ROUNDTABLE were requested to replenish its reserves.
On February 15, 1987, MAZZIOTTI terminated his
employment with the ROUNDTABLE.
On February 17, 1987, MAZZIOTTI formerly began his
duties with the Commonwealth of Pennsylvania.
The $166,000,00 drawn on the reserves of the ROUNDTABLE
was replenished. However, although the actual number and
amounts of contributions in this regard were never
established, it is admitted that not all of the members of
the ROUNDTABLE participated in the replenishment effort.
The $166,000.00 severance payment was intended to make
up the difference between MAZZIOTTI'S salary at the
ROUNDTABLE and his lower government salary for a period of
four (4) years.
As Secretary of Commerce and head of the EDP, MAZZIOTTI
would be involved in and responsible for issues directly
affecting the ROUNDTABLE and its individual members.
Under the terms and conditions of MAZZIOTTI'S
employment with the ROUNDTABLE, there was never any
severance agreement or provision until he was considered for
the cabinet position.
Had MAZZIOTTI left his employment with the ROUNDTABLE
for any reason other than accepting the position as
Secretary of Commerce and head of the EDP, he would hot have
received any severance payment.
Had MAZZIOTTI not received the severance payment, he
would not have accepted the position as Secretary of
Commerce and head of the EDP.
The salary of the Secretary of Commerce, $61,500.00, is
statutorily prescribed by the General Assembly.
-5-
III. DISCUTSSION
The statutory and regulatory provisions applicable to
this matter are as follows:
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 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 2. Definitions.
"Public official." Any elected or appointed official
in the Executive, Legislative or Judicial Branch of
the State or any political subdivision thereof..." 65
P.S. 402; See also, 51 Pa. Code 1.1.
Section 1.1. Definitions.
Candidate - -- Any individual who seeks nomination or
election to public office, other than a judge of
elections or inspector of elections, whether or not
such individual is nominated or elected. An
individual shall be deemed to be seeking nomination
or election to such office if he has:
*
(ii) taken the action necessary under the laws of the
Commonwealth to qualify himself for nomination or
election to such office. 51 Pa. Code 1.1.
-6-
When the undisputed facts of the instant matter are
juxtoposed against the relevant legislative and regulatory
authority, it becomes apparent to me that Sections 3(a) and
(b) of the Ethics Act 65 P.S. 403 (a), (b), will be violated
if MAZZIOTTI continues in his official capacity and retains
the $166,000.00. Consequently, I cannot join in the
majority opinion.
MAZZIOTTI became a public official on or before
February 4, 1987. Moreover, he was a candidate for public
office prior to that time. Indeed, the record reflects the
fact that MAZZIOTTI had agreed to the severance payment in
return for accepting public employment on January 30, 1987.
This was after it became clear that he was the leading
candidate for the position as Secretary of Commerce and head
of the EDP. As such, not only was he qualified for
nomination, but he had also removed the one barrier to his
acceptance.
While it can be argued that qualifying oneself for
nomination to a cabinet position is essentially a passive
process, in that no filing is required and the choice is
ultimately the Governor's, it seems to me that it is
ignoring reality to suggest that a person who is offered a
position, turns it down for a specific reason, and then
indicates that he will accept the position after his concern
is addressed, is not, in fact, a candidate for public
office.
In any event, I believe that MAZZIOTTI was both a
public official and a candidate for public office when he
received the aforementioned $166,000.00 severance payment.
In addition, the suggestion that MAZZIOTTI did not become
subject to the Ethics Act until February 17, 1987, merely
serves to place form over substance.
Thib is especially true with respect to the instant
matter. It must be noted that it is undisputed that the
severance payment was tits directly to MAZZIOTTI'S decision
to accept the cabinet position. One would not follow
without the other. surely the majority would not permit a
sitting cabinet officer to approach a former empi.4er and
negotiate a severance agreement after the fact.
Unfortunately, I see no way to distinguish this situation
from the one just described. Indeed, taking this reasoning
to its logical extent, there now appears to be no problem
for a public official to resign on a Monday, negotiate and
accept a payment from private sources on Wednesday, and
then be rehired by the government on Friday. However, I do
not read the Ethics Act as permitting this type of
subterfuge. Just as, hopefully, we would not ignore the
reality of the situation just described, I do not believe we
can ignore the undisputed facts of the instant matter.
-7-
Thus the questions become whether public official
MAZZIOTTI used his office "to obtain financial gain other
than compensation provided by law ", 65 P.S. 402 (a), and
whether candidate MAZZIOTTI accepted something of value
based on the understanding that his actions "would be
influenced thereby." 65 P.S. 402 (b).
I believe that the undisputed record in this matter
requires an affirmative answer to both questions. With
respect to public official MAZZIOTTI, it is clear that he
used his public office - that is, his acceptance of the
Governor's appointment to secure the $166,000.00 severance
payment, which was obviously compensation not provided by
law. Similarly, candidate MAZZIOTTI accepted the
$166,000.00 severance payment with the understanding that
his action again, the acceptance of the Governor's
appointment - would be influenced thereby. Thus, the
severance payment was the quid pr. quo for MAZZIOTTI'S
acceptance of the position.
Although there is nothing in the record which even
remotely suggests that the payment was intended to induce
anything other than acceptance, the applicable portions of
the Ethics Act, 65 P.S. 403 (a), (b), do not distinguish
between acceptable and non - acceptable situations. Both use
of public office and acceptance of anything of value are
prohibited in all circumstances. As a result, the fact that
there was nothing untoward intended by the severance payment
is meaningless with regard to the analysis. Since MAZZIOTTI
was both a public official and a candidate for public
office, and because the decision to accept public office
constitutes the use thereof as well as an action subject to
influence, at least under the Ethics Act, I submit that we
have no choice but to find that a violation would occur
should MAZZIOTTI continue in office and not return the
severance payment.
Finally, with respect to the arguments that the BAXTER
Opinion is controlling as to salary subsidization,
MAZZIOTTI, 87 -005, details the distinction between'BAXTRR
and facts in this case. Furthermore, in BAXTER, it must be
noted that the exchanged employees under that program were
assigned to departments which had no involvement with their
corporations. They also were not cabinet level employees.
That is not the case here since MAZZIOTTI will be dealing
with thirty -eight (38) or thirty -nine (39) of the largest
corporations in Pennsylvania, some of which contributed to
his severance. Probably all of these corporations will be
dealing with the EDP or the Department of Commerce regarding
their corporate activities in Pennsylvania. In any event, I
do not believe that BAXTER is dispositive.
-8-
For the reasons stated above, I cannot join in the
majority opinion. I think that the majority has confused
form for substance, and has established a dangerous
precedent with no foundation in law or regulation. While we
may disagree with various provisions of the Ethics Act, it
is not our place to change it. Accordingly, I must
respectfully dissent.
Commissioner Brown joins in this dissent.
- A -1tip,. c)"-- 1 l�S
Jospeh W. Marshall, III
Vice - Chairman