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HomeMy WebLinkAbout21-568 Confidential PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL December 27, 2021 To the Requester: 21-568 This responds to your submission received \[REDACTED\], by which you requested a confidential advisory from the Pennsylvania State Ethics Commission (Commission), seeking guidance as to the issue presented below: Issue: Whether the \[DIRECTOR\] of the \[CITY\] would have a conflict of interest pursuant to Section 1103(a) of the Public Official and Employee Ethics Act (Ethics Act), 65 Pa.C.S. § 1103(a), with regard to participating in matters involving the \[ENTITY\], when the \[DIRECTOR\] will, in a private capacity, be employed as a part-time \[EMPLOYEE\] at the \[ENTITY\]? Brief Answer: YES. The \[ENTITY\] DIRECTOR\] is use of office resulting in a pecuniary benefit to the \[ENTITY\] would contravene Section 1103(a) of the Ethics Act. Facts: You request a confidential advisory from the Commission on behalf of \[CITY\] \[DIRECTOR\], based upon the following submitted facts: \[DIRECTOR\] is scheduled to \[BEGING EMPLOYMENT\] at the \[ENTITY\] in 2022. \[DIRECTOR\] will be classified as a part time \[EMPLOYEE\] and will be paid. Your current understanding is that she/he will be considered an employee (albeit part time). In her/his role as \[DIRECTOR\], \[DIRECTOR\] oversees the entire financial function of the \[CITY\]. \[DIRECTOR\] oversees \[DEPARTMENT\] and \[OFFICE\]. \[DIRECTOR\] her/himself Confidential Advice, 21-568 December 27, 2021 Page 2 approves certain large contracts. She/He is one of many individuals participating in a \[PROJECT\] group. \[ENTITY\] is a large non-profit \[ENTITY\] (one of several in the \[CITY\]) with a large land holding. \[ENTITY\] is also a large private employer (also, one of several). The specific question to which you seek guidance is to what extent must \[DIRECTOR\] recuse her/himself in matters relating to \[ENTITY\]? The range of possible matters before her/him include approving a large contract with \[ENTITY\] or its \[SUBSIDARIES\] or resolving a tax- related dispute with the \[ENTITY\], to general discussion and policymaking affecting all similarly situated \[ENTITIES\]. \[DIRECTOR\] may also be involved in hiring decisions involving \[ENTITY\] \[ASSOCIATED PERSONS\]. Discussion: Pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all the material facts. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. -- No public official or public employee shall engage in conduct that constitutes a conflict of interest. *** (f) Contract.--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. 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(a),(f). Confidential Advice, 21-568 December 27, 2021 Page 3 The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 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. 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. 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 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. S (i.e. 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office or confidential information received by holding such a public position for the private pecuniary (financial) benefit of the public official/public employee himself, any member of her/his immediate family, or a business with which she/he or a member of his immediate family is associated. Confidential Advice, 21-568 December 27, 2021 Page 4 In each instance of a conflict of interest, the public official/public employee would be required to abstain from participation. The abstention requirement would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the Ethics Act, a public official/public employee: purpose of obtaining for himself a private pecuniary benefit. Such directed action implies awareness on the part of the \[public official/public employee\] of the potential pecuniary benefit as well as the motivation to obtain that benefit for himself. Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics Act, a st be consciously aware of a private pecuniary benefit for himself, his family, or his business, and then must take action in the form of one or more specific Id., 610 Pa. at 528, 22 A.3d at 231. Conclusion: As the \[DIRECTOR\] for the \[CITY\], \[DIRECTOR\] is a public official/public employee subject to the provisions of the Ethics Act. Furthermore, pursuant the above cited definitions of the Act, the \[ENTITY\] is a business with which \[DIRECTOR\] is associated. Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is prohibited from using the authority of public office/public employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/public employee herself/himself, any member of her/his immediate family, or a business with which she/he or a member of her/his immediate family is associated. Additionally, Section 1103(f) places requirements upon contracts to be entered into between the governmental entity and a business with which a public official/employee is associated. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, her/his spouse or child, or a business with which she/he, her/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 with the governmental body. Section 1103(f) of the Ethics Act also requires that the public official /public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. It is noted that the restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed as to any contract between the \[ENTITY\] and the \[CITY\] that would be entered into during \[DIRECTOR\]tenure as the Confidential Advice, 21-568 December 27, 2021 Page 5 \[DIRECTOR\]. (See, Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), regarding the requirements f Given \[DIRECTOR\]\[DIRECTOR\], the implementation of a delegation of authority regarding matters between the \[CITY\] and the \[ENTITY\] (requiring a use of office by \[DIRECTOR\]) would be required. Pursuant to Section 1103(a), where there is no pre- exercised in the event of a conflict, the public officials delegation of such authority to a subordinate is itself a use of authority of office. (See, Edwards, Opinion 91 -003 at 6.) As such, to the extent that a delegation will be made to a subordinate, as a public official/public employee \[DIRECTOR\] would still be utilizing the authority of his See, Confidential Opinion, 02-004). The above IS NOT to suggest that there would be any improper influence exerted as to this delegation, but merely to explain why the delegation by \[DIRECTOR\] to a subordinate would fail to avoid a conflict of interest. However, in the event a superior within \[DIRECTOR\] chain of command would reallocate all matters and work involving instances where official action could indirectly impact the \[ENTITY\] to persons who would not be subordinates within her/his chain of command; and there would be no means by which she/he could use the authority of her/his public office/employment a conflict of interests would be avoided. See, Dobrowolski, 07-002. As to the potential hiring of \[ENTITY\] \[ASSOCIATED PERSONS\], there would be no transgression of the Ethics Act - unless \[DIRECTOR\] would realize a private pecuniary gain her/himself or an offer/acceptance of improper influence would accompany the hiring thereby transgressing Section 1103(b)/(c). 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, this advisory does not address any applicability of the \[CITY CODE/CITY LAW\]. Pursuant to Section 1107(11) of the Ethics Act, 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 requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. An adapted version of this letter will be made available as a public record. 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. Confidential Advice, 21-568 December 27, 2021 Page 6 Respectfully, Brian D. Jacisin Chief Counsel