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HomeMy WebLinkAbout96-617 WrightStephen P.B. Minor, Esquire PO Box 385 219 North Main Street Port Allegany, PA 16743 Dear Mr. Minor: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL December 16, 1996 96 -617 Re: Conflict, Public Official /Employee, County, Housing and Redevelopment Authority Director, Spouse, Purchase of Assembly Company. This responds to your letters of October 11, 1996 and November 8, 1996 in which you requested advice from the State Ethics Commission. Jssue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon the Director of a County Housing and Redevelopment Authority where the Director's spouse is the sole shareholder of a corporation which seeks to purchase an assembly company in the same County, and the Director would be a Board Member and Officer in the company to be acquired and would be directly involved in the business should the proposed transaction be accomplished. Facts: You have been authorized by John A. Wright (Wright) to seek an advisory from the State Ethics Commission on his behalf. Wright has served as the Director of the Potter County Housing and Redevelopment Authority for approximately 16 years. This is a non - voting position. As Redevelopment Director, Wright is often involved in soliciting and procuring federal, state and private grants and loans to help develop local businesses and industries. Several years ago, Wright's agency worked with other organizations to establish an industrial development park to help attract industry and business to the county. You state that because of the size of the County and due to Wright's position, he is acquainted with many of the business owners in the County. Several years ago, Wright became acquainted with Rodney Heymann (Heymann). Heymann was involved in establishing several small businesses in and around the County. One such business was Couder Components which is located in the industrial park. You state that Couder Components was given the same opportunities as was any other potential business venture in the development area. You state that to the best of your knowledge that company was a corporation, Minor/Wriaht, 96 -617 December 16, 1996 Page 2 although you are not sure whether Heymann and /or his wife was the shareholder. It is your belief, however, that Heymann was at least an officer and board member of the corporation. You state that the Redevelopment Authority Board was engaged in a transaction with that corporation but had no other connection or business involvement in any other entity in which Heymann was a shareholder, officer or director. Your letter is unclear as to the nature of the transaction with Couder Components, but you state that "it" was paid in full over a period of time. In addition to Couder Components, Heymann was involved in another business outside of the industrial park, Potter Pak, which is a small packaging company. It is your understanding that Heymann and /or his children were the shareholders and that Heymann was an officer and board member of that corporation. The Authority has never had any business dealings of any nature with Potter Pak. In the last year or so, Heymann and Wright's family entered into negotiations for the purchase and sale of Potter Pak. You state that the purchase price appears reasonable and is to be paid over a period of years. Heymann has since passed away and his heirs now own the Potter Pak Corporation. The purchaser of the corporation will be a separate corporation which was formed by Wright's wife wherein she will be the sole shareholder. Wright will be an officer and board member of that corporation and will be directly involved in the business. You state that Potter Pak has never been involved with any grants or loans or received any preferential treatment through the Authority during the period of time that Wright has been involved with the agency, nor does Potter Pak have any pending dealings with the Authority. You further state that as far as you know, no other corporation or business in the County is in direct competition with the business that is being purchased. You request an advisory as to whether the purchase of Potter Pak by Wright's wife would present a conflict of interest for Wright as the Authority Director. Discussion: it is initially noted that pursuant to Sections 7(10) and 7(1 1) of the Ethics Law, 65 P.S. § 5407(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 P.S. § 5407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. It is further initially noted that a reading of Sections 7(10) and (11) of the Ethics Act makes it clear that an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Law violations by a person who is subject to the Ethics Law. As Director of the Potter County Housing and Redevelopment Authority, Wright is a public official /public employee as that term is defined under the Ethics Law, and hence he is subject to the provisions of that law. Minor /Wright, 96 -617 December 16, 1996 Page 3 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 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. In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgement 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. Minor /Wriaht, 96 -617 December 16, 1996 Page 4 Section 3(j) of the Ethics Law provides as follows: 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 the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Law, then in that event participation is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Law to the circumstances 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. Section 3(a) of the Ethics Law does not prohibit public officials /employees from outside business activities or employment; however, the public official /employee may not use the authority of office for the advancement of his own private pecuniary benefit or that of a business with which he is associated. pancoe Opinion 89 -01 1. Minor /Wright, 96 -617 December 16, 1996 Page 5 Likewise, pursuant to Section 3(a), a public official /public employee may not use the authority of the public position or confidential information obtained by being in that position to effectuate a detriment to business competitors. Pepper Opinion 87 -008. A public official /employee must exercise caution so that his private business activities do not conflict with his public duties. Crisci, Opinion 89 -013. Thus, a public official /employee may not perform private business using governmental facilities or personnel. In particular, the governmental telephones, postage, staff, equipment, research materials, personnel or any other property may not be used as a means, in whole or part, to carry out private business activities. In addition, the public official /employee may not during government working hours, solicit or promote such business activity. Pancoe supra. Similarly, Section 3(a) would expressly prohibit the use of confidential information received by holding public office/ employment for such a prohibited private pecuniary benefit. Section 3(a) operates to restrict a public official /public employee in his official capacity. From the facts, it does not appear that there is any matter pending before the Housing and Redevelopment Authority involving the Heymann's, Potter Pak, or any other business owned by the Heymann's or the Wright's. If the proposed purchase of Potter Pak is culminated as planned, it will obviously be a business with which Mr. Wright, as a board member and officer, is associated as that term is defined in the Ethics Law. Matters before the Housing and Redevelopment Authority involving Potter Pak would present potential conflicts of interest for Mr. Wright. It is suggested that if and when such circumstances arise, further advice be sought from this Commission. In each instance of a conflict of interest, a public official /public employee is required to abstain fully from participation and to fully satisfy the disclosure requirements of Section 3(j) as set forth above. 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. Specifically not addressed herein is the applicability of the County Code. Conclusion: As Director of the Potter County Housing and Redevelopment Authority, John A. Wright is a public official /public employee subject to the provisions of the Ethics Law. Section 3(a) of the Ethics Law would not preclude Wright from outside employment /business activity subject to the restrictions and qualifications as noted above. If Wright becomes a board member and officer of Potter Pak, Potter Pak will be a business with which Wright is associated. Matters before the Housing and Redevelopment Authority involving Potter Pak as a business with which Wright is associated would present potential conflicts of interest for Wright. It is suggested that further advice be sought from this Commission should such matters arise. In each instance of a conflict of interest, Wright would be required to abstain fully from participation and to satisfy the disclosure requirements of Section 3(j). Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), this Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any JNinor /Wright, 96 -617 December 16, 1996 Page 6 other civil or criminal proceeding, providing 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, VincentJ Chief Counsel