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HomeMy WebLinkAbout92-594STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL June 1, 1992 Mr. Michael Kennedy 92 -594 Deputy Executive Director /Marketing Pennsylvania Turnpike Commission P.O. Box 8531 Harrisburg, PA 17105 Re: Conflict, Public Official /Employee, Deputy Executive Director/ Marketing, Pennsylvania Turnpike Commission, Use of Authority of Office /Employment or Confidential Information, Business with which Associated, Clients. Dear Mr. Kennedy: This responds to your letter of April 27, 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 the Deputy Executive Director /Marketing for the Pennsylvania Turnpike Commission who is also a shareholder, director and Chief Executive Officer of a private corporation, where the private corporation is formulating a business relationship and may contract with another private company that may do business with the Commonwealth of Pennsylvania, the Pennsylvania Turnpike Commission and /or other governmental agencies. Facts: As the Deputy Executive Director /Marketing for the Pennsylvania Turnpike Commission ( "PTC "), you request an advisory from the State Ethics Commission. You state that from 1985 to 1988, you were the Director of Housing and Development for the Commonwealth of Pennsylvania in which position you were responsible for a wide range of programs including the regulation of the manufactured housing industry in Pennsylvania. In 1988, you were employed by the PTC as the Deputy Executive Director of Marketing. In this position you are responsible for public information, public relations, traveler services and business development (trucking, land use, advertising). In 1990, you were involved in the formation of a Pennsylvania corporation named International Housing Technology, Inc. ( "IHT ") The expressed intent of said ?company was to introduce new materials and technologies to the manufactured housing industry. You are a Director on the Board and own twenty percent of the stock. You also serve as Chief Executive Officer Mr. Michael Kennedy June 1, 1992 Page 2 with the primary responsibility for contractually obligating IHT. A business relationship is being formulated between IHT and General Electric Company ( "GE "), acting through its GE Silicones ( "GES ") operation. The business relationship would allow IHT to act as a sales agent for specific GES products to the manufactured housing industry. This business relationship may also include some form of a technology disclosure agreement. You state that in your capacity as Deputy Executive Director/ Marketing for the PTC, you do not have any responsibility for purchasing of materials or products and to your knowledge have not requested any GE product or service. GES has expressed a concern that your involvement with IHT and the PTC might limit or restrict the ability of GE to do business, as a contractor, vendor, subcontractor, or on any other. basis, with the Commonwealth of Pennsylvania, the PTC, or any other governmental agency in Pennsylvania. You state that if your request is approved, you will abstain in your position at the PTC from being involved in any decision involving GE and GES. You pose the following specific inquiries: 1. Whether your employment with the PTC would preclude your acting as a shareholder, director and Chief Executive Officer of IHT; 2. Whether your employment with. the PTC and your involvement with IHT would preclude or present a conflict of interest in executing a. contract with GE; and 3. Whether the ability of GE to do business in any capacity directly or indirectly, with any ;:agency of the Commonwealth of Pennsylvania, would be restricted or limited in any way or would require any filings or disclosures, if any contract is executed between GE and IHT while you serve as a Board member, stock holder and Chief Executive. Officer? Discussion: As Deputy Executive Director /Marketing for the Pennsylvania Turnpike Commission ( "PTC "), you are a public employee 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. Mr. Michael Kennedy. June 1, 1992 Page 3 The following terms are defined in the .Ethics Lao 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 it 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 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 influeinced.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(j) of the Ethics Law provides as follows: Mr. Michael Kennedy June 1, 1993 Page 4 Section . Restricted activities 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 applying the above provisions of the Ethics Law to the three narrow and specific inquiries which you have raised, each inquiry shall be addressed seriatim. With regard to your first specific inquiry, you ask whether gout position with PTC would preclude your acting as a shareholder, director and Chief Executive Officer of IHT.. It must initially be noted that to the extent that you are already so serving in these capacities, you are requesting an advisory as to past conduct which would be beyond the scope of an advisory,. However, to the extent that you are seeking an advisory as to your prospective continued service in each of the above capacities, your question will be addressed. Mr. Michael Kennedy June 1, 1992 Page 5 Pursuant to Section 3(a) of the =`Ethics 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. It is noted that 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 -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. In the event that your private employer or business and /or its clients has a matter pending before your governmental body 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. In those instances, it will be necessary that you be removed from that process. In such cases as noted above, Section 3(j) of the Ethics Law would require not only that you abstain from participation but also file a written memorandum to that effect with'the person the minutes or your supervisor.` In summary, the Ethics Law would restrict the following: 1. The use of authority of office to obtain any business in a private capacity; 2. utilization of confidential information gained through public position; 3. participating in discussions, reviews, or recommendations on matters which relate to the business /private employer which may come before the governmental body and in such cases publicly announcing the relationship or advising the supervisor as well as filing a written memorandum as per the requirements of Section .3 (j") of the Ethics Law. Brooks Opinion 89 -023. Thus, the Ethics Law would not preclude your proposed_cgn4uct Mr. Michael Kennedy June 1, 1992 Page 6 of acting as a shareholder, Director and Chief Executive Officer of IHT while serving as the Deputy Executive Director /Marketing for the PTC, subject to the above restrictions and qualifications. Turning to your second specific inquiry, you ask whether your position with the PTC and your involvement with IHT would preclude or present a conflict of interest in executing a contract with the General Electric company. It is unclear from your question whether you are referring to contracting between GE and the PTC or between GE and IHT. Therefore each scenario will be discussed. As to contracting between IHT and GE, you are advised that Section 3(a) of the Ethics Law does not apply to restrict private companies, but rather applies to restrict the conduct of public officials /public employees in their public capacities. On the other hand, as to any proposed contracts between the PTC and GE, you would have a conflict of interest in such matters which may come before you in your public capacity if IHT has a business relationship and /or contracts with GE and /or its subsidiaries. This conclusion is based upon the Commission's decision in Miller supra. As noted in Miller, Opinion 89 -024, matters which come before a public official /public employee involving his private business or private clients place the public official /public employee in a situation where he is faced with - conflicting interests. In his private capacity, his duties are to the private firm and its clients, while in his capacity as a public official /public employee, his primary duty is to act in the best interests of the governmental body with the duty being owed to the public rather than.to private clients. 11.; see also, Brooks, Opinion 89 -023. In each instance of a conflict of interest you would be required to abstain from any participation of any nature whatsoever and to satisfy the disclosure requirements of Section 3(j) as set forth above. Turning to your third and final specific inquiry, you ask whether the Ethics Law would impose any restrictions or limitations upon the ability of GE to do business with any agency of the Commonwealth of Pennsylvania or would require any filings or disclosures, if any contract is executed between GE and IHT while you serve as a board member, stockholder and Chief Executive Officer. As noted above, Section 3(a) of the Ethics Law would not apply to restrict the conduct of GE, but rather, would apply to restrict your conduct in your capacity as a public employee. 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 Governor's Code of Conduct. Conclusion: As the Deputy Executive Director /Marketing for the Pennsylvania Turnpike Commission ( "PTC "), you are a public employee sublecA to the provisions of the Ethics Law. Section 3(a) of. the Mr. Michael Kennedy June 1, 1992 Page.7 Ethics aW would not preclude you from outside employment /business activity subject to the restrictions and qualifications as noted above. In the event that the employer /business and /or any of its clients has matters pending before your governmental body, then you could not participate in that matter and the disclosure requirements of Section 3(j) of the Ethics Law as outlined above must be satisfied.; 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 Commisa..on, 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, iL qfi Vincent J. Dopko Chief Counsel •