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HomeMy WebLinkAbout00-583 MaioranoW. Thomas Andrews, Esquire Mansell & Andrews First Federal Bank Building 25 North Mill Street New Castle, PA 16101 -3791 Dear Mr. Andrews: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1 -800- 932 -0936 ADVICE OF COUNSEL June 13, 2000 00 -583 Re: Conflict; Public Official /Employee; Council Member; City Council; Municipal Pension Fund; Vote; School Board; Client; Vendor. This responds to your letter of May 22, 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 et seq., presents any prohibition or restrictions upon a city council member as to voting to invest funds through an investor who is also a school board member when the city council member is a vendor with that school district. Facts: You are the Solicitor for the City of New Castle Municipal Pension Fund (sion Fund "). The New Castle Municipal Pension Fund Ordinance provides that the New Castle City Council ( "City Council ") shall collectively be the Trustee for the Pension Fund. One member of the City Council, Nick Maiorano ( "Maiorano "), is in the business of testing, recharging, and selling fire extinguishers. Maiorano has a contract with the New Castle Area School District ("School District ") to inspect, recharge, and replace fire extinguishers as needed. The contract is a continuing one, which Maiorano secured through a bidding process. From 1997 -1999, Maiorano has received a yearly average of $2,016.95 from the School District on the contract. The Pension Fund is approximately twenty-five million dollars of which six million is invested with Goldman- Sachs. The local representative for Goldman -Sachs is David Domenick ("Domenick"). Domenick is also an elected member of the New Castle Area School Board ( "School Board "), the same School District with which Maiorano has the fire extinguisher contract. Domenick will receive a commission and /or fees from the sale of the Pension Funds. You seek an advice as to whether Maiorano has a conflict of interest as to voting to invest funds through Goldman -Sachs and its Sales Representative, Domenick. FAX: (717) 787 -0806 • Web Site: www.ethics.state.oa.us • e -mail: ethics @state.pa.us Andrews, 00-583 June 13, 2000 Page 2 If it is determined that Maiorano has a conflict of interest with regard to voting to invest the Pension Funds, he will join Council Members Deblasio and Elisco who also have conflicts of interest with the School District. You interpret this to result in all three members being permitted to vote on issues involving Domenick and the Pension Fund pursuant to Section 11030) of the Ethics Act. You also seek advice as to whether your interpretation of Section 11030) is correct. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. § §1107(10), (11), advisories are issued to the requestor based upon the facts which the request 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 re uestor 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 a Council Member for the City Council, Maiorano is a public official as that term is defined in the Ethics Act, and hence Maiorano 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. §1103(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 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. Andrews, 00 -583 June 13, 2000 Page 3 65 Pa.C.S. §1102. In addition, Sections 1103(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(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 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(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 Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. Having set forth the applicable sections of the Ethics Act, a general review of the State Ethics Commission precedent will now be set forth. In Bassi, Opinion No. 86- 007 -R, the State Ethics Commission held, inter alia, that a County missioner (Edward Paluso) could not enter into a lease with a municipal authority, where one of the members of the authority (Norman Carson) was a county employee directly responsible to the commissioners of the county, unless the execution Andrews 00 -583 June 13, 2000 Page 4 of the lease was accomplished after an open and public process, with the authority member abstaining from participating in the review and award of said lease, and the county commissioner abstaining from participating in any matter relating to the authority member in his position as a county employee. The Commission stated, inter alia: . we cannot ignore the fact that Mr. Carson is an authority member and has influence and control over authority decisions. In this respect, Mr. Carson, by voting on the final adoption of a lease, would be voting on a matter directly related to his employer. Even though that employer is . another governmental body, we have held, in the past, that a public official may not vote or participate in a matter if it somehow relates to a financial interest which he may have. See, Welz 86 -001. In the instant situation, Mr. Carson would be called upon tcdtermine the advisability of renting property for the authority. The property which they are seeking to rent is owned by the individual or one of the individuals who currently supervises him and controls his public employment with the county. As a result of this, Mr. Carson, as an authority member, should abstain from participating in any matter relating to this particular lease. See, Bassi 86 -007 at 3. The Commission further stated: Mr. Paluso as a county commissioner, is, in part, responsible for the general supervision of Mr. Carson. Mr. Carson, on the other hand, is an authority member in a position to grant Mr. Paluso a lease which results in Mr. Paluso receiving a financial gain. It may be difficult for the public to perceive how Mr. Paluso's actions as a county official, would not somehow be influenced by this potential leasing arrangement. It may be argued that Mr. Paluso, in dealing with Mr. Carson, to date, has done so in order to effect the favorable outcome of this lease. Additionally, it could be argued that Mr. Carson voted in favor of the lease in order to advance his position as a full -time county employee. The above factual scenarios, while hypothetical in nature, nonetheless create the types of conflicts of interest that are to be addressed by this Commission. Id. at 4. In Woodrin , Opinion No. 90 -001, the State Ethics Commission reviewed a similar situation. esJ se Woodrng, Chairman of the Sunbury Redevelopment Authority, had applied to the City for a rehabilitation grant through the Federal Rental Rehabilitation Program (hereinafter, the "Program "). Kenneth Pick, who was employed as the Executive Director of the Redevelopment Authority (chaired by Woodring) also served as the Community Development Coordinator for Sunbury. In the latter capacity, Pick was administrator in charge of the Program for the City. Pick's functions included administering the Program, reviewing all applications, and determining eligibility. The Commission stated: we are concerned that Mr. Pick, who is an employee of the Redevelopment Authority of which you are Chairman, has the duty of reviewing all applications and determining eligibility in his capacity as Community Development Coordinator for the city. In particular, the potential exists, given the employer - employee relationship between the Redevelopment Authority and Mr. Pick, that your application might be reviewed in a more favorable light than other applications. To forestall such a situation, you must not participate or take any action as to Mr. Pick if your application is approved and you receive benefits. Bassi, Opinion 86-007. In addition, Section 3(j) of the Ethics Law would require you to publicly note that you would have a conflict as to any matter involving Mr. Andrews 00 -583 June 13, 2000 Page 5 Pick. In addition, you must file a written memorandum to that effect with the person responsible for recording the minutes. Woodrinq Opinion No. 90 -001 at 6. Furthermore, the Commission generally has determined that a conflict of interest exists pursuant to Section 1103(a) of the Ethics Act where a public official /public employee, in his official capacity, participates, reviews or passes upon a matter involving a business with which he is associated and/or private clients. Miller Opinion No. 89 -024; Kannebecker, Opinion No. 92 -010. In Miller supra the Commission held that a zoning hearing board officer who worked for a private firm had a conflict regarding any matters presented by that firm or its clients before a governmental body. In addition, in Kannebecker, supra, the State Ethics Commission determined that a township supervisor, who in his private capacity was an attorney, would have a conflict of interest as to matters before the township involving ongoing client(s) or client(s) for whom he was on retainer, even if he would not represent such client(s) as to the matter pending before the township. Based upon the above Commission precedent, Maiorano would have a conflict of interest with regard to voting to invest funds through Domenick. Maiorano must abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. As to your inquiry regarding whether the three City Council Members who have conflicts of interest with the School District are permitted to vote, this Advice cannot address the application of Section 11030) to all three Council Members because this Advice relates to Maiorano. As to DeBlasio and Elisco, their conduct is not addressed herein. Their conduct was addressed in Advice 00 -530, which was appealed to the full Commission. On April 13, 2000, the Commission considered the appeal and affirmed the Advice of Counsel. Generally, however, an application of Section 1103(j) to a five member Board requires that at least three of the members have a conflict under the Ethics Act in order for the members to vote during the second round of voting after they each make the necessary disclosures required pursuant to Section 1103(j). See, Mlakar, supra. 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 respective municipal code. Conclusion: As a Council Member for the New Castle City Council, Maiorano is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq. As a City Council Member, Maiorano would have a conflict of interest with regard to voting to invest funds through Goldman -Sachs and its Sales Representative, Domenick, who is a Member of the School Board with which Maiorano has a fire extinguisher contract. In each instance of a conflict of interest, Maiorano would be required to abstain and observe the disclosure requirements of Section 11030) of the Ethics Act. In the event that the required abstention results in the inability of the overnmental 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. 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 Andrews, 00 -583 June 13, 2000 Page 6 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. erely, C s- Vi cent ,10 pko Chief Counsel