HomeMy WebLinkAbout92-566Dear Mr. Elberti:
Mr. George W. Elberti,
640 Hoffer Street
Middletown, PA 17057
STATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
•
- ADVICE OF COUNSEL
April 22, _-1992
III 92 -566
Re:. Conflict, Public Official /Employee, Borough Council Member,
Use of Authority of Office,_. - Business with which Associated,
Salesman, Sales to Borough, Contracting with Governmental
Body. -
This responds to your letter of March 4, 1992, 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 - ; borough council
member who is also a salesman for a wholesale distributor, with
regard to sales to the borough ranging from a few dollars to
thousands of dollars, where the council member would solicit
various borough employees to purchase the prpducts. -,
Facts: As a Borough Council Member for the Borough of Middletown,
Pennsylvania,- you seek an advisory ,from the State Ethics
Commission. You recently started a new job as a salesman for
Appleby Bros. & Whittaker, a local wholesale distributor in
Lemoyne, Pennsylvania.- In your new employment,: you sell plumbing/
heating and mill supplies to various customers in Central
Pennsylvania. You state that you sell to a number of
municipalities in the area, including the Borough of Middletown.
However, you state that at the present time, ;you have not actively
called on anyone within the Borough because you were unsure as to
whether your new job would be in conflict with your position as a
Council Member. You specifically inquire as to whether you may
sell to the Borough of Middletown.
You acknowledge that you understand the bidding process and
how it operates in the municipal forum. You note that the cost of
the items you sell ranges anywhere from a few dollars to thousands
of dollars, depending upon quantities. You state that the large
items are always put out for bids, but the small items are
purchased locally by the various supervisors. You provide an
example whereby you might can on the supervisors of various plants
Mr. George W. Elberti, III
April 22, 1992
Page 2
and departments within the Borough, each of which could purchase
items amounting to less than $500 but with the combined amount of
sales to the Borough exceeding $500. Since the items you sell are
consumables, you state that this occurrence could happen each
month. You ask whether the Borough would have to use the bidding
process every time the total might exceed the $500 amount. You
state that the current purchasing practices of the Borough do not
require competitive bidding on small items under $4000, and that if
the Borough . is required to engage in the bidding process on every
purchase over $500, this would become very costly and time
consuming.
You acknowledge that you could decline to acquire the Borough
of Middletown as one of your accounts, but note that your company
could still sell to the Borough and the same costly bidding process
would be required. If the Borough elected not to buy from your
company because of fear of conflict of interest, then you believe
your company would not be treated fairly in the market place. You
ask how you may sell to the Borough of Middletown and not cause a
conflict or force additional burdens on the various supervisors.
Discussion: As a Borough Council Member for the Borough of
Middletown, Pennsylvania, you are a public official as that term is
defined under the Ethics Law, and hence you are 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 assaciated. "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
Mr. George W. Elberti, III
April 22, 1992
Page 3
general public or a subclass consisting of an
indust occupation or ,other
industry, pa group which
includes the public ; official or public
employee; a member of .his immediate family or
a business with which he ,car a ieinber 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; 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. "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 3(c) the Ethics Law provide
in part that _no person shall offer to a public official/employee
anything of monetary value and, no ; public _official /empIOyee_ 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.
Section 3(f) of the Ethics Law provides:
Seetion --3 Restricted. aorfties
sr: George W. Elberti, III
April 22, 1992
Page 4
(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 pudic
official or public employee is associate 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.
Parenthetically, where contracting is otherwise allowed or
where there ;appears to be no expressed prohibitions to such
contracting, the above particular provision of 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 in an amount of $500.00
or more. This open and public process would require:
(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 3(;f) of the Ethics Law also requires that the public
Of may not have any supervisory or overall
responsibility as to the implementation or administration of the
contract.
Mr. George W. Elberti, 1II
April 22, 1992
Page 5
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 orr 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
membet 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) the public
official /employee to abstain and to publicly disclose the
abstention and reasons for same, both orally and by filing a
written to , that effect with the -person 'recording the
minutes or supervisor.
In applying the above. provisions of the Ethics Law to the
circumstances which you have submitted, it is initially noted that
your employer, Appleby Bros. &Whittaker, is a business with which
you are associated as defined under the Ethics taw.
Section 3(a) does not apply to rattxitt2bustnesis entities, nor
does it apply to restrict individuals ,in their private capacities.
Rather, Section 3ta) applies to restrict public officials /public
Mr. George W. Elberti, III
April 22, 1992
Page 6
employees with regard to conduct in their public capacity.
Pursuant to Section 3(a) of the Ethics Law, a public official/
public employee is prohibited from using the authority of•publia
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.
A 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 -011.
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 could not
perform private business using governmental facilities or
personnel. In particular, the governmental telephones, postage,
staff, equipment, research materials, personnel or any other
property could not be used as a means, in whole or part, to carry
out private business activities. In addition, the public
official /employee could 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.
As a public official, you would have a conflict of interest as
to any matter where the use of the authority of your office as a
Borough Council Member, or the use of confidential information
received' by holding that public position, would result in a private
pecuniary benefit for you, any member of your immediate family, or
a business with which you are associated such as Appleby Bros. &
Whittaker. In the event that your private employer, Appleby Bros.
& Whittaker, has a matter pending before the governmental body you
serve or if you as part of such official duties must participate,
review or pass upon that matter, a conflict would exist. Miller,
Opinion 89 -024. Such matters would include, but would not be
limited to, contracting between the Borough and your employer and
payment of bills to your employer. In each instance of a conflict
of interest, you would be required to abstain from any
participation of any nature whatsoever, and to meet the
requirements of Section (j) set forth above, by publicly disclosing
the nature of your interest both orally and in a written memorandum
filed with the secretary who keeps the minutes.
In summary, the Ethics Law would restrict the following:
1. The use of authority of office to obtain any business iii
a private capacity;
Mr. George W. Eiberti, /II
April 22, 1992
Page :7
2._ utilization of confidential information gained through
public position;
3. participating In discussions, reviews, or recommendation§
on matters which relate to the business /private employer which may
come before the governmental body and in such cases publicly
announcing the relationship both orally and by filing a written
memorandum with the secretary recording the minutes as required by
Section 3(j) of the Ethics Law. Brooks, Opinion 89 -023.
Turning to your specific inquiry as to whether you may sell to
the Borough of Middletown, this would: theoretically be possible
because conduct in a purely private capacity would not be
restricted by Section 3(a). However, you are cautioned that even
where you are ostensibly acting in a private capacity as a
salesman, Section 3(a) would prohibit any use of the authority of
your public office, such as exerting influence as a Borough Council
Member upon Borough employees, for a private pecuniary benefit for
yourself and /or your employer. In Yezzi, Order,. No. 825, the
chairman of a township water authority was found to have violated
Sections 3(a) and 3(b) of foriter Act 170 of 1978 when he offered to
Obtain raises for authority emp-i.'oyees. based upon the understanding
that the employees would purchase insurance from him.
It seems clear that under the circumstances which you have
submitted, whereby you would be "calling on" various Borough
employees to peddle your employer's products, there is a
potential for violations of the Ethics Law through the use of the
authority of your position as a Borough Council Member.
If you nevertheless decide to pursue your proposed course of
conduct in selling products to the Borough, you will be subject to
further restrictions under Section :3 (a) of the Ethics Law as to
matters involving the Borough - employees with whom you deal. Given
the employer- employee relationship between you as a Borough Council
Member and the Borough employees from whom you would solicit sales,
and the inherent .. potential that your proffered products would be
viewed in a more favorable light than those of other. salesmen
and /or other companies, you would be prohibited from participating
in any way whatsoever in your capacity., as ; a Borough - Council Member
as to those Borough employees upon whom you would call as a
talesman in your private capacity. See, Woodrinq ,.Opinion 90 -001;
see also, Bassi, Opinion 86 -007. As to those particular Borough
employees, you would have a conflict of interest and would be
required to abstain completely as well as -to fully satisfy the
disclosure requirements of Section 3(j) as set forth above.
Turning t� the applicability of Section 3(f), that provision
by its terms would apply to contracts or Subcontrac.s valued at
$500 .or more between your employer and the Borough, regardless of
Mt. George W. Elberti, III
April 22, 1992
Page 8
whether you had any involvement in the matter. Although you
reference significantly higher bidding limits ordinarily used by
the Borough, the provisions of the Ethics Law set forth a different
standard which would apply under these circumstances. In this
regard, it is noted that if there were any conflict between the
Ethics Law and any other statute, ordinance, regulation or rule,
the Ethics Law.would control. 65 P.S. $412. Thus, for each
contract or subcontract between your employer and the Borough of
Middletown, where the contract is $500 or more, the restrictions of
Section 3(f) must be fully satisfied.
As for:your example whereby you illustrate individual sales of
products to various Borough employees where the individual sales
would be under the $500 threshold but taken as a whole would exceed
it, a determination as to whether such sales would be subject to
Section 3(f) restrictions would depend upon the specific facts
involved in a given instance. Generally, a purchase would appear
to be a separate. contract in each instance where there is an offer
and acceptance. However, this general guideline would hot apply-to
deliberately fragmented contracts designed to avoid the application
of Section 3(f). Should particular circumstances arise as to
future proposed contracts between the Borough and your employer,
you may, of course, seek additional advice from this Commission as
to the particular facts involved.
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 Borough Code.
In the instant situation, the Borough Code provides as
follows:
$46404. Penalty for personal interest in
contracts or purchases
Except as otherwise provided in this act, no
borough official either elected or appointed,
who knows or who by the exercise of reasonable
diligence could know, shall be interested to
any appreciable degree either directly or
indirectly in any purchase made or contract
entered into or expenditure of money made by
the borough or relating to the business of the
borough, involving the expenditure by the
borough of more than one thousand dollars
($1000) in any calendar year, but this
limitation shall not apply to cases where such
officer or appointee of the borough is an
employe of the person, firm or corporation to
Mr. George W. Elberti, III
April. 22, 199
Page 9
which the money is _ to be. paid in a capacity
with-no possible 'influence on the transaction,
and in which he cannot be possibly benefited
thereby either financially or otherwise. But
in the base of a councilman or mayor, if he
knows that he IA within the exception just
mentioned he shell ep inform council and shall
refrain from voting on the expenditure or any
ordinance relating thereto, and shall in no
manner participate therein. .Any official or
appointee who shall knowingly violate the
provisions cif this section shall be subject to
surcharge to' the extent of the damage shown to
be thereby sustained by the borough and to
ouster from office, and shall be guilty of a
misdemeanor, and upon conviction thereof shall
be sentenced to pay a fine not exceeding one
thousand dollars ($1000), or not exceeding one
hundred eighty days' imprisonment, or both.
1966, Feb. 1, P.L. (1:965) ,:No. 581, S1404.
53 P. S46404.
Since such contracting may be prohibited by the above, quoted
provision of the Code, but •not under; the Ethics Law, it is
suggested that advice in that regard be sought from legal counsel.
Lastly, 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 in this advice is the applicability of the Borough Code,
although it has been recommended that you seek advice from legal
counsel in that regard
Conclusion: As a Borough Council Member for the Borough of
Middletown, Pennsylvania, you are a public official subject to the
provisions of the Ethics Law. Section 3(a) of the Ethics Law would
not preclude <u from outside employment /business activity subject
to the restrictions and qualifications noted above.. In the event
that your employer would have matters pending before the Borough of
Middletown, then you would have a conflict of interest and could
not participate in such matters. ` If- you personally - engage . in sales
activities with the Borough of Middletown,: you would have a
conflict of interest as to any matters before Council ,involving
Borough employees with whom you have such business dealings. In
each instance of a conflict of interest, you ; would , ; required to
abstain from any participation of any - nature -- whatsoever, and . to
fully satisfy the disclosure requi- rements . of Section 3(j) . as set
forth above. rinally, if -a ,contract . between the - Borough . of
'Mr. George W. Elberti, III
April 22, 1992
Page 10
Middletown and your employer is valued at $500 or more, the open
and public process as outlined above must be accomplished. In your
capacity as a public official, you could not have any supervisory
or overall responsibilities as to such contracts between the
Borough of Middletown and your employer. Lastly, the propriety of
the proposed conduct has only been addressed under the Ethics Law.
Due to the possible application of the Borough Code in this matter,
it is suggested that advice be obtained from legal counsel in that
regard.
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.
such.
This letter is a public record and will be made available as
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may request that.the full Commission
review this Advice. A personal appearance before the Commission
will be scheduled and a.. formal Opinion from the Commission will be
:issued.. Any such appeal must be in writing and must be received at
the Commission within 15 days of the . date of this Advice pursuant
to 51 Pa. Code 52.12.
Sincerely,
10 be.
Vincent J. Dopko
Chief Counsel