Loading...
HomeMy WebLinkAbout02-620 ConfidentialADVICE OF COUNSEL November 20, 2002 02 -620 Re: Former Public Official /Public Employee; Section 1103(g); Executive -Level State Employee; Section 11030); Commonwealth Executive -Level State Employee A; Commonwealth Department B. This responds to your letter of November 13, 2002, by which you requested a confidential advisory from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 § 1101 et seq., would restrict the former Commonwealth Executive -Level State Employee A of Commonwealth Department B with regard to accepting employment with two private companies, when one of the companies was a subcontractor under contracts awarded with his or her official involvement during Commonwealth service. Facts: As the former Commonwealth Executive -Level State Employee A for Commonwealth Department B, you request a confidential advisory from the State Ethics Commission regarding the post - employment restrictions of the Ethics Act. You have submitted extensive facts which may be fairly summarized as follows. From [month and year] through [month and year], you served as Commonwealth Executive -Level State Employee A for Commonwealth Department B. In that capacity, you reported to the C of Commonwealth Department B; the D of Office E; and the F of Office E. Your numerous responsibilities included, inter alia, managing a [dollar amount] budget for G, and serving as account manager r relative contracts. You also previously served as H for Commonwealth Department B (from month and year] through [month and year]) and as I for Commonwealth Department (from [month and year] through [month and year]). You left Commonwealth employment more than one year but less than two years ago. Since [date], you have been employed by Federal Office J as Federal Employee K. You are considering leaving your current federal employment to accept what you describe as a "dual employment arrangement" in the private sector. Under the proposed arrangement, you would serve as President of two companies, Company L and Company M. Both companies are incorporated, organized, and headquartered in the Commonwealth of Pennsylvania. Company L has been in existence for Confidential Advice, 02 -620 November 20, 2002 Page 2 approximately four years. Company M is a newly- formed entity. Majority interests in both companies are held by Company N. During your employment with the Commonwealth of Pennsylvania, neither Company N nor Company M sought or received Commonwealth funding. However, during your tenure as Commonwealth Executive -Level State Employee A for Commonwealth Department B, Company L was a subcontractor under an 0 contract and a P contract awarded under your oversight. At that time, you managed all O and P contracts. You also supervised all Requests for Proposals ( "RFPs ") concerning same. You provided oversight of the RFP process concerning both of the above contracts and served on the RFP Committee for each of them. You state that the selection process was conducted in accordance with the RFP processes as outlined in each of the RFPs. The successful respondent as to each contract included Company L in its response, as the provider of certain services. Company L participated in the interview process held in connection with each of these RFPs and, upon the awarding of the contracts, performed services as a subcontractor. Additionally, during your tenure with Commonwealth Department B, a principal of Company L was associated with other companies that provided subcontracting services to the Commonwealth by and through Commonwealth Department B in connection with O and P contracts. You state that you worked closely with these companies in connection with the services provided. Specifically, you reviewed and managed each of these contracts, as well as the Company L subcontracts. However, you were not the signatory on behalf of the Commonwealth on any of these contracts, nor did you approve the final budgets. These responsibilities were undertaken by the individuals to whom you reported. The contract funding came through line items in the Commonwealth Department B portion of the Commonwealth's annual budget, as enacted by the General Assembly of the Commonwealth. You state that in performing your roles in the matters described above, you did not actively participate in: recruiting Company L, Company M, or Company N to the Commonwealth; inducing Company L, Company M, or Company N to open a new facility or branch in the Commonwealth; or inducing Company L, Company M, or Company N to expand an existing facility by a grant or loan of money or a promise of a grant or loan of money from the Commonwealth to any of these companies. As for the future, the Board of Directors of Company N envisions that Company M will operate as a high -end strategic consultant, while Company L will implement the recommendations through its expert development staff. The dual position for which you are under consideration will focus on the creation and pursuit of three specific types of business activities: (1) selling to Fortune 500 companies; (2) establishing partnerships; and (3) expanding existing verticals, including certain public /private partnerships. Your position will not be funded with state monies. Finally, you state that you will not use your positions with Commonwealth Department B or emoluments of public office or confidential information that you gained therein for your private pecuniary gain or for the pecuniary gain of Company N, the departments or other entities within Company N, or any personnel of same. 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 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 Pa.C.S. §§ 1107(10), (11). An advisory only Confidential Advice, 02 -620 November 20, 2002 Page 3 affords a defense to the extent the requestor has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Act, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct which has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct — specifically, your prospective acceptance of dual positions as President of Company L and Company M - -your inquiry may, and shall be addressed. In your former capacity as Commonwealth Executive -Level State Employee A for Commonwealth Department B, you would be considered a public official /public employee and an "executive -level State employee" subject to the Ethics Act and the Regulations of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1 Consequently, upon termination of public service, you became a former public official /public employee and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 11030) of the Ethics Act. Given that the one -year period of applicability of Section 1103 has expired, this advisory shall not further address that particular provision of the Ethics Act. See, Confidential Opinion, 97- 008 -R. Section 11030) of the Ethics Act, which applies for two years following termination of Commonwealth employment, shall be addressed. Section 1103 restricts former executive -level State employees as follows: § 1103. Restricted activities (i) Former executive -level employee. - -No former executive -level State employee may for a period of two years from the time that he terminates employment with this Commonwealth be employed by, receive compensation from, assist or act in a representative capacity for a business or corporation that he actively participated in recruiting to this Commonwealth or that he actively participated in inducing to open a new plant, facility or branch in this Commonwealth or that he actively participated in inducing to expand an existent plant or facility within this Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money or a promise of a qrant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 Pa.C.S. § 11030) (Emphasis added). Section 11030) restricts the ability of a former executive -level State employee to accept employment or otherwise engage in business relationships following termination of State service, under certain narrow conditions. The restrictions of Section 11030) apply even where the business relationship is indirect, such as where the business in question is a client of the new employer, rather than the new employer itself. See, Confidential Opinion, 94 -011. Confidential Advice, 02 -620 November 20, 2002 Page 4 However, Section 11030) would not restrict you from being employed by, receiving compensation from, assisting, or acting in a representative capacity for Company L, Company M, or Company N provided and conditioned upon the assumptions that you did not actively participate in recruiting such company(ies) to Pennsylvania, and that you did not actively participate in recruiting or inducing such company(ies) to open or expand a plant, facility, or branch in Pennsylvania, through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to such company(ies). As for other Sections of the Ethics Act, such may not be applied to the submitted facts in this advisory because their applicabilit would hinge upon past conduct. It is generally noted that pursuant to Section 1103(a of the Ethics Act, a public official /public employee is prohibited from using the aut ority 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. 65 Pa.C.S. § 1103(a). Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, Gorman, Order 1041, or private client(s). Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation and to satisfy certain disclosure requirements set forth in Section 1103(j) of the Ethics Act. 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. 65 Pa.C.S. §§ 1103(b), (c). See, e.q., Zwick, Order 1062; Kasaback, Order 993. Notwithstanding the above general discussion of other Sections of the Ethics Act, this Advice has addressed the applicability of Section 11030) only. It is expressly assumed that there has been no use of authority of office or confidential information received by being in the public position for a private pecuniary benefit as prohibited by Section 1103(a)) of the Ethics Act or any improper influence /understanding as prohibited by Sections 11 03(b) and 1103(c) of the Ethics Act. Lastly, 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 Code Q. Conclusion: Upon termination of service as Commonwealth Executive -Level State Employee A for Commonwealth Department B, you became a former public official and a former executive -level State employee subject to the restrictions of Section 1103(g) and Section 11030) of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Under Section 11030) of the Ethics Act, you would not be prohibited from being employed by, receiving compensation from, assisting, or acting Confidential Advice, 02 -620 November 20, 2002 Page 5 in a representative capacity for Company L, Company M, or Company N based upon the assumptions that you did not actively participate in recruiting such company(ies) to Pennsylvania, and that you did not actively participate in recruiting or inducing such company(ies) to open or expand a plant, facility, or branch in Pennsylvania through a grant or loan of money or a promise of a grant or loan of money from the Commonwealth of Pennsylvania to such company(ies). The propriety of the proposed conduct has only been addressed under Section 11030) of the Ethics Act. Given that the one -year period of applicability of Section 1103(g) has expired, this advisory does not further address that particular provision of the Ethics Act. It is expressly assumed that there has been no use of authority of office or confidential information received by being in the public position for a private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act or any improper influence /understanding as prohibited by Sections 1103(b) and 1103(c) of 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 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. Sincerely, Vincent J. Dopko Chief Counsel