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HomeMy WebLinkAbout00-549 JonesGeorge R. Hludzik, Esquire 67 West Butler Drive Drums, PA 18222 STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1 -800- 932 -0936 ADVICE OF COUNSEL March 23, 2000 Re: Conflict; Public Official /Employee; School; Director; Business With Which Associated; Bid; Contract. Dear Mr. Hludzik: This responds to your letters of February 14, 2000 and February 18, 2000, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 e ., presents any prohibition or restrictions upon a school director as to selling food products to the school district through a business with which he is associated where: (1) there is no contract for the sale of the food products; and (2) the business's sales average exceeds $500 per year. Facts: As Solicitor to the Crestwood School District ( "School District "), you request an advisory on behalf of William G. Jones ( "Jones "), Director of the Crestwood School Board ( "School Board "). Following the election of Jones to the School Board in November 1999, an issue arose as to whether he could continue to conduct business with the School District on behalf of Mr. Paul Enterprises, a business in which he is involved. On March 7, 1985, Mr. Paul Enterprises was incorporated by Jones' father -in- law, Paul Coniglio. You have submitted copies of the incorporation documents, which are incorporated herein by reference. Mr. Paul Enterprises is engaged in the business of distributing snack foods. Jones is the President of that company. You do not know whether Jones is also an employee of Mr. Paul Enterprises. You state that questions have arisen among the School Board members as to whether Jones may engage in business with the School District. If Jones may engage in business with the School District, the School Board members have asked under what conditions Jones may do so. You state that for a number of years, Mr. Paul Enterprises, through Jones, has been selling potato chips and snacks to the School District. To your knowledge, there is no contract for the sale of these snacks. You note that the average monthly sales of Mr. Paul Enterprises have ranged from $400 to $500 while annual sales have never been in excess of $4,325. FAX: (717) 787 -0806 • Web Site: www.ethics.state.Da.us • e -mail: ethics @state.pa.us 00 -549 Hludzik, 00 -549 March 23, 2000 Page 2 Since the time Jones became a School Director, he has continued to sell snack foods to the School District. You believe that Section 004(C) of the Crestwood School District Policy and Title 24, Section 3 -324 of the Pennsylvania School Code conflict with the Ethics Act. You have submitted a copy of the pertinent sections of the Crestwood School District Policy and the Pennsylvania School Code, which is incorporated herein by reference. Given the above facts, you pose the following questions. 1. Whether Jones or Mr. Paul Enterprises may continue to engage in business transactions with the School District; 2. Whether the School District is required to provide requests for proposals or bids to potential providers; 3. Whether the School District may continue to do business with Mr. Paul Enterprises, with or without bids, so long as Jones is a School Director; and 4. Whether the School Board should have taken any other action or should take any action in the future with regard to the matter involving Jones and Mr. Paul Enterprises. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(1 1) of the Ethics Act, 65 Pa.C.S. §51107110), (1 1), 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), (1 1). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As Director of the Crestwood School Board ( "School Board "), William G. Jones ( "Jones ") is a public official as that term is defined in the Ethics Act, and hence Jones is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: Section 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. 51103(a). The following terms are defined in the Ethics Act as follows: Section 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 Hludzik, 00 -549 March 23, 2000 Page 3 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. "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. The term 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. 65 Pa.C.S. §1102. In addition, Sections 1 103(b) and 1103(c) of the Ethics Act 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 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. Section 1103(f) of the Ethics Act provides as follows: Section 1103. Restricted activities. (f) Contract. - -No public official or public employee or his spouse or child or any business in which the person or Hludzik, 00 -549 March 23, 2000 Page 4 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. 65 Pa.C.S. §1103(f). Section 1 103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the 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, Section 1 103(f) requires that an "open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(0, an "open and public process" includes: (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 1103(f) of the Ethics Act 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 1103(j) of the Ethics Act provides as follows: Section 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 Hliidzik, 00 -549 March 23, 2000 Page 5 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. 65 Pa.C.S. §1103(j). In each instance of a conflict, Section 1103(9 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 Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, 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. The facts which you have submitted indicate that Jones is the President of Mr. Paul Enterprises. Therefore, Mr. Paul Enterprises is a business with which Jones is associated as that term is defined under the Ethics Act. Pursuant to Section 1103(a) of the Ethics Act, Jones would be prohibited from using the authority of his office as a School Board Director, or any confidential information he would have access to by being a School Board Director, for the private pecuniary benefit of Jones or Mr. Paul Enterprises. Furthermore, if a matter would come before the School Board that would result in a financial gain to Jones or Mr. Paul Enterprises, Jones would have a conflict and would be required to abstain and observe the disclosure requirements of Section 1103(9 of the Ethics Act as set forth above. Having established the above principles, your specific inquiries shall now be addressed. As for your first question, you are advised that the Ethics Act would not prohibit Jones from continuing to engage in business transactions with the School District through Mr. Paul Enterprises. However, it is clear that during any given year, sales of snack foods by Mr. Paul Enterprises to the School District exceed $500. Therefore, the requirements of Section 1103(f) of the Ethics Act would have to be strictly Hludzik, 00 -549 March 23, 2000 Page 6 observed and Jones could not have any supervisory or overall responsibility as to the implementation or administration of the contract with the School District. As for your second question, to the extent that your inquiry relates to possible action required by the School Board, you are advised that since advisories are issued to public officials /public employees, but not to governmental bodies, it is beyond the scope of the Ethics Act to advise the School Board. Section 1103(f) requires an open and public process in instances where a public official /public employee, his spouse, child or any business with which the public official /public employee or his spouse or child is associated seeks to enter into a contract of $500 or more with the governmental body. The conditions of Section 1103(f) are imposed upon the public official /public employee to ensure that the process must conform with the requirements of the Ethics Act before such contracting may occur. As for your third question, as noted above, it is beyond the scope of the Ethics Act to advise the School Board. The contracting between Mr. Paul Enterprises, the business with which Jones is associated, and the School Board may continue provided the requirements of Sections 1103(a), (f) and (j) noted above are followed. As for your fourth question, you are advised that advisories do not address past conduct. As noted above, since advisories are issued to public officials /public employees, but not to governmental bodies, it is beyond the scope of the Ethics Act to advise the School Board. Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Section 1103(a), 1103(0, and 1 103(j) are satisfied, a problem may exist as to such contracting under the respective code. In the instant situation, the Public School Code of 1949, as amended, provides as follows: §3 -324. Not to be employed by or do business with district; exceptions. No school director shall, during the term for which he was elected or appointed, as a private person engage in any business transaction with the school district in which he is elected or appointed, be employed in any capacity by the school district in which he is elected or appointed, or receive from such school district any pay for services rendered to the district except as provided in this act .. . 24 P.S. §3 -324. Since such contracting may be prohibited by the above quoted provision, it is suggested that Jones might consider obtaining legal advice on the application of the Public School Code. 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 Public School Code. Hludzik, 00 -549 March 23, 2000 Page 7 Conclusion: As Director of the Crestwood School Board ( "School Board "), William G. Jones ( "Jones ") is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 t seq. Mr. Paul Enterprises, a company of which Jones is the President, is a business with which Jones is associated. Pursuant to Section 1103(a) of the Ethics Act, Jones would be prohibited from using the authority of his office as a School Board Director or any confidential information for the private pecuniary benefit of himself or Mr. Paul Enterprises. Furthermore, if a matter would come before the School Board that would result in a financial gain to Jones or Mr. Paul Enterprises, Jones would have a conflict and would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act as set forth above. The contracting between the School District and Mr. Paul Enterprises may continue provided that all of the requirements of the Ethics Act as specifically delineated above are followed. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. It is suggested that Jones might consider obtaining legal advice on the application of the Public School Code. Pursuant to Section 1107111), 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 I. 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. rely, incent J. T pko Chief Counsel