HomeMy WebLinkAbout94-541 O'HaraFrancis P. O'Hara, Esquire
McGrory, Wentz, Fernandez & O'Hara
Suite 100
115 West Germantown Pike
Swede Square
Norristown, PA 19401
Dear Mr. O'Hara:
STATE ETHICS COMMISSION
309 FINANCE'. BUILDING
PO. BOX 11470
'HARRISBURG, PA 17108-1470
TELEPHONE_ (71,71783 -1610
ADVICE OF COUNSEL
April 6 19 94
94 -541
Re: Conflict, Public Official /Employee, School Director, Use of
Authority of Office or Confidential Information, Business with
which Associated, Doing Business with School District, Vote.
This responds to your letter of March 4, 1994 in which you
requested advice from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Law
presents any prohibition or restrictions upon a School Board Member
who is the owner of an auto parts company contracting with the
School District.
Facts: For the past twenty -nine years you have been Solicitor for
the Board of Directors of the Upper Merion School District. During
this entire period of time, the School District has purchased
vehicle parts from Bridgeport Auto Parts, Inc. (BAP), a dealer in
automotive supplies located in the Upper Merion Area School
District.
The process for purchase from BAP, a Pennsylvania corporation,
is that the School District has an oPen charge account which is
invoiced monthly and placed on the bills list for approval by the
School Board. You state that each purchase from BAP is a separate
transaction completely unrelated to any previous or subsequent
transaction, except for the possibility that several different
transactions may be for parts for the same vehicle. At no time are
purchases segregated to minimize the amount of the particular
purchase. No purchase is in excess of $210, and the total
purchases in fiscal year 1990 -91 were $3,663.82, in fiscal year
O'Hara, Francis P., 94 -541
April 6, 1994
Page 2
1991 -92 were $2,839.87 and in fiscal year 1992 -93 were $4,566.60.
In the fall of 1991, Mr. William Del Collo, Jr., the son of
the sole stockholder in BAP was appointed to a vacant position on
the Board of Directors of the Upper Merion Area School District.
Mr. Del Collo was successfully elected to a four year position on
the School Board in the fall of 1993. Since the -mid 1970's, Mr.
William Del Collo, Jr. has been an employee of BAP. Prior to that
time, Mr. William Del Collo, Jr. served as a teacher for several
years in the Upper Merion School District.
Since assuming his position as a Member_ of the Board of
Directors, Mr. Del Collo has abstained from voting on any bills
list item involving BAP, which practice continues to the present.
Ycu state that when Mr. Del Collo was first appointed to the Board
of Directors, it was your opinion that Mr. Del Collo did not have
a conflict of interest under Section 324 of the Public School Code
in that the business transactions that could be. an issue were
between .a Pennsylvania corporation and the school district. The
fact that Mr. Del Collo was an employee of the corporation, in your
opinion, did not amount to Mr, Del Collo, "as a private person ",
engaging "in any business transaction with the school district in
which he is elected or appointed ". At that time, you recognized
that Mr. Del Collo's father was the sole stockholder in BAP. You
state that you also reviewed the Ethics Act, and concluded that M.
Del Collo did not have a conflict of interest under the Act, even
though the potential existed under the definition of "conflict of
interest" in the Act. He was an employee of a legal entity engaged
in business transactions with the School District. You also
recognized that the sole stockholder of that legal entity was a
member of Mr. Del Collo's "immediate family ", as that term is
defined under the Act. It was your opinion that there was no
conflict of interest under the Act because the individual business
transactions never exceeded $210, and that there was no effort to
minimize each transaction to avoid any monetary limitations set
forth in the Act. You state that you were influenced by the fact
that the BAP had been engaged in business transactions with the
School District for about twenty -five years before Mr. William Del
Collo, Jr. became a Member of the Board: of Directors and that the
amount of business was declining as the school district was doing
less in -house maintenance because of the complexities of the newer
motor vehicles.
You were advised by Mr. Del Collo recently that in August,
1993, as part of his father's estate planning, Mr. Del Collo was
given one -third of the stock in BAP. Upon obtaining this
information, you again reviewed both the School Code and the Ethics
Act, to ascertain whether the obtaining of one -third of the stook
in the legal entity changed your legal opinion that Mr. Del Collo
does not have a conflict of interest under either the Ethics Act or
O'Hara, Francis P., 94 -541
April 6, 1994
Page 3
Section 324 of the Public School Code. You indicate that you have
concluded that your original opinions are appropriate, and that Mr.
Del Collo is not - guilty of a conflict of interest under either
statute.
You seek 'an advisory on behalf of Mr. Del Collo, 'who has
authorized you to obtain this advisory, regarding the following
issues:
1. For purposes of the Ethics Act, and specifically
the definition of "conflict of interest ", as an
employee and as a one -third stockholder of the
corporation known as BAP, would Mr. William Del
Collo, Jr. be exposed to•a conflict of interest
under that Section 3(f) of the Ethics Law, unless
such contract was awarded through an open and
public process set forth in that section of the
Act, if the School District entered into a contract
with BAP valued at $500 or more?
. 2. - Because each business transaction between the
School District and BAP is a separate and
individual contractual transaction, and because no
transaction exceeds the monetary amount of $210,
are BAP and the Upper Merion Area School District
entering into any contract valued at $500 -or more?
3. Is Mr. William Del Collo, Jr., while a member of
the Board of School Directors of the Upper Merion
Area School District, engaging in a business
transaction with the School District as a private
person when his employer, BAP, in which he is
minority stockholder, engages - in business
transactions with the School District?
Although Mr. Del 'Collo is an employee and minority
stockholder of BAP, and he and other members of his
"immediate family" own all of the shares of stoc]
in BAP, does that fact change the determination
that under Sectio_n`324 of the Public School Code,
Mr. Del Collo is not engaging in ipusiness
transactions with the Upper Merlon Area Schbol
District in his capacity "as a private person" when
the business transactions are with the corporate
entity, - BAP, and not with Mr. Del Cgi.10,
individually?
5. Is there an obligation for Mr. Del Collo to file a
written memotandum for recording his abst in
the minutes of the meetings under the provisions of
O'Mara, Francis P.,, 94 -.541
pri1 6., 1994
page 4
Section 3(j) of the Ethics Law, when the bills list
includes payments to BAP?
Discussion: It is initially noted that pursuant to Sections 7(10)
and 7(3,11 of the Ethics Law, 65 P.S. SS407(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. 55407(10), (11). An
advisory only affords a defense to the extent the requestor has
truthfully disclosed all of the material facts.
As a Member of the Board of Directors for Upper Merion Area
Solaol District, Mr. William Del Collo is a public official as that
term is defined under the Ethics Law, and hence he is subject to
the provisions of that law.
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
emPleY @ .e a P;mbar pf his immediate family or
# 1 w1th WW-Ph he or a fiber of his
imm�e iatg fa4 i$ $$$Q,c acted .
O'Hara, Francis P., 94 -541
April 6, 1994
Page 5 .
"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.
"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. "Contract" 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.
In addition, Sections-3(b) and of the Ethics Law provide
in part that no person shall offer to a public official /employee
anything of monetary value and no public of ficial /employee shall
solicit or accept anything- of .monetary value baeed 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 .'o pzovide a
com l_OVe response to the question presented*
Section 3(f) of the Ethics Law provi44s 44 follows:
O'Hara, Francis P., 94 -541
April 6, 1994
Page 6 .
65 P.S. S403(f).
Parenthetically, where contracting is otherwise allowed or
where there appears to be no expressed prohibitions to such
contracting, the above particular provision of the law would
require that an open and public process must be used in all
situations where a public official /employee is otherwise
appropriately contracting with his own 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. This open
and public process would require that the following be observed as
to the contract with the governmental body:
(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 pastt an
application or proposal;
public disclosure of all applications or proposals
considered and;
(3)
Section 3. Restricted 4ctivities
(f) No public official or public
employee or his spouse or child or any
business in which the person or 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, 3n 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.
O'Hara, Francis P., 94 -541
April 6, 19
Page 7
(4) public disclosure of the contract awarded and offered and
accepted.
Section 3(f) of the Ethics Law 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 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 world 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 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 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 thg
minutes or" supervisor .
O'Hara, Francis P., 94 -541
(APri l 6, 1994
Page 8
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
permisiible - provided the disclosure requirements noted above are
iiowed.•,; Wig, Mlakar, Advice 91-523-S.
You are further advised that the use of authority of office is
more than the' mere mechanics of voting and encompasses all of the
tasks-needed to perform_ functions of a 'given position. ape,
Juliantel.'Order No. 809. Use of authority of includes
,discussing, conferring with others, lobbying for a particular
-rlt. and/or any other use of the authority of office in which the
res: t Awould be a private pecuniary benefit to a business with
wch a public official or a member of his immediate family is
,associated.
Under Section 3(a) of the Ethics Law quoted above, a public
official may not use the authority of office or confidential
information to obtain a private pecuniary benefit for himself, a
member of his immediate family or a business with which he is or a
member of his immediate family is associated.
Generally, the Ethics Law places no per se prohibition upon a
public official or business with which he is associated from
contracting with his governmental body. Pancoe, Opinion 89 -011.
It is clear that BAP is a "business with which Mr. Del Collo
is associated" as that term is defined under the Ethics Law.
Under Sections 3(a), Mr. Del Collo could not participate or
vote on matters involving the contract between the government body
and BAP or the "business with which he is associated." In
addition, the requirements` of. Section 3(j) of the Ethics Law must
be followed whereby the reasons for the abstention must be publicly
noted as well as a written memorandum to that effect must be filed
with the secretary recording the minutes.
Therefore, under Section 3(a), BAP, or the "business with
which he is associated" is not precluded from contracting with his
governmental body but he could not participate or vote as to the
matter of the contract and must comply with the disclosure
requirements of Section 3(j) of the Ethics Law.
Parenthetically, although the contracting in question would
not be prohibited under the Ethics ;Law provided the requirements of
Sections 3(a), (f) and (j) are satisfied, a problem may exist as to
such contracting under the respective code.
In the instant situation, the Public School Code provides as
s.
O'Hara, Francis P., 94 -541
April 6, 1994
Page 9 ..
follows:
No school director shall, during the term of
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 aiy
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. S3 -324.
Since such contracting may be prohibited: by the above quoted
provision of the Code, but not under the Ethics Law, it is
suggested that Mr. Del Collo be appropriately advised as to the
applicability of the Public School Code.
Your specific inquiries will now be addressed.
As to your first inquiry, the Ethics Law does not prohibit
contracting between BAP and Upper Merion Area School D,istrict, no
matter what the contract amount. The restriction is that if the
contract is in excess of $500.00, then Section 3(f) of the Ethics
Law must be followed. Further, on any contract, Mr. Del Collo must
follow the requirements set forth in Section 3(j).
Second, this advisory cannot address the issue of the contract
value as the inquiry presents a legal conclusion that the contracts
are separate and individual. It is noted, however, that the
Commission has indicated that contracts in an amount less than
$500.00 can nevertheless be . included within the statutory .
requirements of Section 3(f) if it is determined that fragmentation
has occurred.
Third, the definitions relating to this inquiry are clear: As
an owner of one -third of the stock and as an employee, BAP, Inc. is
a business with which Mr. Del Collo is associated. Therefore,
under the Ethics Law, he would have a conflict as to any matter
before the school board. involving. BAP and must comply with the
requirements of Section 3(j).
Fourth, this inquiry relates strictly to an interpretation of
the Pennsylvania Public School Code which is outside the
jurisdiction of the Ethics Commission. Therefore, no response can
be provided to this question.
Finally, the response to the fifth inquiry depends upon the
O'Hara, Francis P., 94 -541
April 6, 1994
Page 1a
nature Of the bills list-. Conflicts of intere would arise where
the use of authority would result in a private pecuniary, benefit to
a business with which . he or a member of his immediate family is
associated, in this case BAP He would have a conflict of interest
in any matter before the School Board, _includir}g the . payment of
bills to BAP on the bills list, and' again, Section 3(j) must be
followed. parenthetically, it is noted, however, that in
Krushinski, Order 168, the Commission held that a public official
who voted €o approve invoices of a business with which he was
associated did not contravene the Ethics Law where the invoices
were routine, ziot subject to dispute or adjustment and related to
item fo= which there were pre -set costs.
The propriety of the proposed conduct has only been addressed
under` t1re Ethics Law; the applicability of any other statute, code,
i rc inaiice / regulation or other code of conduct other than the
t1iics 144 Yeas not been considered in that they do not involve an
interpretation of the Ethics Law. Specifically not addressed
l e is the applicability of the Pennsylvania Public School Code.
Cana Egloh: As a Member of the Board of Directors for Upper Merion
Area SChoO1 District, Mr. William Del Collo, Jr. is a public
official subject to the provisions of the Ethics Law. Subject to
s a. ..
the limitations and qualifications noted above, the Ethics Law does
not prohibit a school director or a business with which he is
associated from contracting with his school district. In any
matter in which a contract exceeds $500.00, Section 3(f) must be
followed. Further, a conflict of interest exists as to any matter
which the business with which he is associated has before the
School District such that he must comply with 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 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
O'Hara, Francis P., 94 -541
April 6, 1994
Page 11
received at the Comn ssi n within fifteen- (15) 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 malt, e
service, or by FAX transmission (717 - 787- O8O6);
cerely,
Vincent. J \ Dopko
Chief Counsel