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HomeMy WebLinkAbout04-543 ConfidentialADVICE OF COUNSEL May 12, 2004 04 -543 Re: Conflict; Public Official /Employee; County; Commissioner; Insurance; Business With Which Associated; Business Client(s); Appointment of Solicitor; Attorney; Law Firm; Bassi/Woodrinq. This responds to your letter of April 12, 2004, by which you requested confidential advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.GS. § 1101 et seq., presents any prohibition or restrictions upon a count commissioner who, in a private capacity, an insurance business with regard to (1) voting to approve the disbursement of funds to a business client or voting to approve the expenditure of money on behalf of a business client; and (2) voting to appoint an attorney to serve as county solicitor when the attorney is a partner of a law firm that is a business client. Facts: On behalf of A, a duly elected Commissioner of B County, you seek an advisory from the State Ethics Commission. You have submitted facts, which may be fairly summarized as follows. In a private capacity, A owns a C business in B County. A's business clients include a law firm, and several non - profit organizations such as D and E. Occasionally, D and E are eligible to receive grants or outright funds from the County. In addition, the County may purchase vehicles on behalf of D for use in that corporation's business. You state that grants and expenditures from the County appear on the Commissioners' meeting agenda and require a public vote. As to above, you pose the following two specific inquiries: 1. Whether A would have a conflict of interest as to voting to approve the disbursement of money to D or E or voting to approve the expenditure of money on behalf of D or E; and 2. Whether A would have a conflict of interest as to voting to appoint an attorney to serve as County Solicitor when the attorney is a partner of a law firm that has purchased insurance from A. You state that the appointment of a Solicitor involves a partner in the law firm, but not the law firm itself. Confidential Advice 04 -543 May 12, 2004 Page 2 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 liave 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 affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As a County Commissioner, A is a public official as that term is defined in the Ethics Act, and hence he is subject to the provisions of that Act. 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. 65 Pa.C.S. § 1103(a). The following terms 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. 65 Pa.C.S. § 1102. "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, 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. Confidential Advice 04 -543 May 12, 2004 Page 3 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. 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 1103(j) of the Ethics Act provides as follows: § 1103. Restricted activities (j) Voting conflict. - -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. 65 Pa.C.S. § 1103(j). In each instance of a conflict, Section 1103(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 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 Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to your inquiry, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position - -or confidential information obtained by being in that position- -for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. 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 Confidential Advice 04 -543 May 12, 2004 Page 4 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. If the private employer or business with which the public official /public employee is associated or a private client would have a matter pending before the governmental body, the public official /public employee would have a conflict of interest as to such matter. Miller, supra; Kannebecker, supra. 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 from participation and to satisfy the disclosure requirements of Section 11030) set forth above. The abstention requirement would not be limited merely to voting, but 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. In considering the above, the insurance business which A owns would be considered a business with which he is associated. See, Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102. Pursuant to Sections 1103(a) and 1103(j) of the Ethics Act, as a County Commissioner, A would generally have a conflict of interest and could not participate as to matters that would financially impact himself, his insurance business, or business client(s). Having set forth the above general principles, your specific inquiries shall now be addressed. As to your first question, A would have a conflict of interest under Section 1103(a) of the Ethics Act as to voting to approve the disbursement of money to D or E or voting to approve the expenditure of money on behalf of D or E given that the foregoing entities are A's business clients. As to your second question, A would have a conflict of interest under Section 1103(a) of the Ethics Act as to voting to appoint an attorney to serve as County Solicitor when the attorney is a partner of a law firm that has purchased insurance from A. This conclusion is based upon the State Ethics Commission's rulings in Bassi, Opinion No. 86- 007 -R, and Woodrinq, Opinion No. 90 -001, and Elisco, Opinion 00 -003. In Bassi, Opinion No. 86- 007 -R, the State Ethics Commission held, inter alia, that a County Commissioner (Edward Paluso) could not enter into a lease wit municipal authority, where one of the members of the authority (Norman Carson) was a county employee directly responsible to the commissioners of the county, unless the execution of the lease was accomplished after an open and public process, with the authority member abstaining from participating in the review and award of said lease, and the county commissioner abstaining from participating in any matter relating to the authority member in his position as a county employee. The Commission stated, inter alia: . we cannot ignore the fact that Mr. Carson is an authority member and has influence and control over authority decisions. In this respect, Mr. Carson, by voting on the final adoption of a lease, would be voting on a matter directly related to his employer. Even though that employer is another governmental body, we have held, in the past, that a public official may not vote or participate in a matter if it somehow relates to a financial interest which he may have. See, Welz, 86 -001. In the instant situation, Mr. Carson would be called upon too determine the advisability of renting property for the authority. The property which they are seeking to rent is owned by the individual or one of the individuals who currently supervises him and controls his public employment with the county. As a result of Confidential Advice 04 -543 May 12, 2004 Page 5 this, Mr. Carson, as an authority member, should abstain from participating in any matter relating to this particular lease. See, Bassi, 86 -007 at 3. The Commission further stated: Mr. Paluso as a county commissioner, is, in part, responsible for the general supervision of Mr. Carson. Mr. Carson, on the other hand, is an authority member in a position to grant Mr. Paluso a lease which results in Mr. Paluso receiving a financial gain. It may be difficult for the public to perceive how Mr. Paluso's actions as a county official, would not somehow be influenced by this potential leasing arrangement. It may be argued that Mr. Paluso, in dealing with Mr. Carson, to date, has done so in order to effect the favorable outcome of this lease. Additionally, it could be argued that Mr. Carson voted in favor of the lease in order to advance his position as a full -time county employee. The above factual scenarios, while hypothetical in nature, nonetheless create the types of conflicts of interest that are to be addressed by this Commission. Id. at 4. In Woodrin , Opinion No. 90 -001, the State Ethics Commission reviewed a similar situation. Jesse Woodring, Chairman of the Sunbury Redevelopment Authority, had applied to the City for a rehabilitation grant through the Federal Rental Rehabilitation Program (hereinafter, the "Program "). Kenneth Pick, who was employed as the Executive Director of the Redevelopment Authority (chaired by Woodring) also served as the Community Development Coordinator for Sunbury. In the latter capacity, Pick was administrator in charge of the Program for the City. Pick's functions included administering the Program, reviewing all applications, and determining eligibility. The Commission stated: we are concerned that Mr. Pick, who is an employee of the Redevelopment Authority of which you are Chairman, has the duty of reviewing all applications and determining eligibility in his capacity as Community Development Coordinator for the city. In particular, the potential exists, given the employer - employee relationship between the Redevelopment Authority and Mr. Pick, that your application might be reviewed in a more favorable light than other applications. To forestall such a situation, you must not participate or take any action as to Mr. Pick if your application is approved and you receive benefits. Bassi, Opinion 86 -007. In addition, Section 3(j) of the Ethics Law would require you to publicly note that you would have a conflict as to any matter involving Mr. Pick. In addition, you must file a written memorandum to that effect with the person responsible for recording the minutes. Woodrinq, Opinion No. 90 -001 at 6. In Elisco, Opinion 00 -003, the Commission similarly held that where a City Council Meter was an Assistant Principal and another City Council Member's spouse was a Principal in a certain School District, both Council Members would have a conflict of interest with regard to voting to invest pension funds through an investment company and its sales representative who was a School Director in that School District. As was the case in the Bassi and Woodrin rulings discussed above, the facts which you have submitted reflect in A s p' ublic position as a County Commissioner, he exercises authority over the appointment of an attorney to serve as County Solicitor, who in this case, is a partner in the law firm that is A's business client. In turn, the attorney, as a partner in the law firm, exercises authority over decisions regarding Confidential Advice 04 -543 May 12, 2004 Page 6 whether the law firm should purchase insurance from A. Therefore, for the reasons enunciated in Bassi and Woodring supra, A would have a conflict of interest pursuant to Section 1103(a) of the Ethics Act in matters pertaining to the appointment of an attorney to serve as County Solicitor when the attorney is a partner of a law firm that has purchased insurance from A. In each instance of a conflict, A would be required to abstain from participation and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act as set forth above. 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 the respective municipal code. Conclusion: As a B County Commissioner, A is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The insurance business that A owns is a business with which he is associated. Pursuant to Sections 1103(a) and 1103(j) of the Ethics Act, as a County Commissioner, A would generally have a conflict of interest and could not participate as to matters that would financially impact himself, his insurance business, or business client(s). A would have a conflict of interest under Section 1103(a) of the Ethics Act as to voting to approve the disbursement of money to D or E or voting to approve the expenditure of money on behalf of D or E given that the foregoing entities are A's business clients. In addition, A would have a conflict of interest under Section 1103(a) of the Ethics Act as to voting to appoint an attorney to serve as County Solicitor when the attorney is a partner of a law firm that has purchased insurance from A. Lastly, the propriety of the proposed conduct has only been addressed under 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