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HomeMy WebLinkAbout04-008 ConfidentialOPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Donald M. McCurdy Michael J. Healey Paul M. Henry Raquel K. Bergen DATE DECIDED: 6/8/04 DATE MAILED: 6/22/04 04 -008 Re: Conflict; Public Official; Board Member; AAuthority; B; C; E; F; H; I; L; Business With Which Associated; Business Client. This Opinion is issued in response to your letters dated April 6, 2004, and April 15, 2004, by which you requested a confidential advisory from the State Ethics Commission. I. ISSUE: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. presents any prohibition or restrictions upon two A Authority Board Members with regard seq., selecting a site for the construction of a B and selecting a C to build a D on that site where: (1) one such Board Member is E of a F that has a business relationship with G who owns one of the sites; and (2) the other Board Member is a H who expects to receive an I if G's site is chosen and G's employees J to new Ks that will be sold through an independent contractor of that Board Member's L. II. FACTUAL BASIS FOR DETERMINATION: As Solicitor for the A Authority (the "Authority "), you have been authorized by two Authority Board Members, R and U, to request a confidential advisory opinion from this Commission. You have submitted facts that may be fairly summarized as follows. The Authority was created pursuant to [statute]. The Authority Board consists of [number] Members whose votes count equally. The Authority Board will vote on the selection of a site for the construction of a [dollar amount] state - funded B and the selection of a C to build a D on the site to accommodate B patrons. The C would most likely be involved, to some degree, in providing M to the B, for which service the C would share revenues with the Authority. The Authority Board must choose between the following two sites for the construction of the B: (1) the N site [location]; and (2) the 0 site [location]. G owns the 0 site. G plans to build a P and a Q on the site. G has submitted a Confidential Opinion 04 -008 June 22, 2004 Page 2 proposal for the construction of a D on the 0 site. Two other Cs have submitted proposals for the construction of a D on the N site. R is Chair of the Authority Board. In a private capacity, R is an officer, specifically, E, of S in T City. S has had prior business dealings with G and is expected to have an ongoing business relationship with G. It is your belief that S has provided AAs to G; however, you state that at this point in time, S is not involved in the 0 site project. U is a H and owner of V, a L. W is a X who works as an independent contractor for V. W receives income through commissions on the sales of Ks. W is married to Y, a Z, who is a partner working with G on the 0 site project. Y does receive income as a result of involvement and work on the 0 site project. W has had no dealings with G. If G's site would be chosen, it would be expected that the G's employees, including management -level employees, would J to T City, and that Y would have some influence in directing such employees to W for the purchase of Ks. If W sells Ks to G's employees, U will receive an I and therefore will realize a financial gain. Based upon the foregoing facts, you ask whether R or U would have a conflict of interest under the Ethics Act with regard to the selection of a site for the construction of the B, and the selection of a C to build a D on the site. By letter dated May 10, 2004, you were notified of the date, time and location of the executive meeting at which your request would be considered. III. 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 that the requestor has submitted. In issuing the advisory based upon the facts that the requestor has submitted, this 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 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. 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. As Authority Board Members, R and U are public officials subject to the provisions of the Ethics Act. Sections 1103(a) and 1103(j) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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 Confidential Opinion 04 -008 June 22, 2004 Page 3 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(a), (j). The following terms that pertain to conflicts of interest under the Ethics Act are defined 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. "Immediate family." A parent, spouse, child, brother or sister. "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 Confidential Opinion 04 -008 June 22, 2004 Page 4 financial interest. 65 Pa.C.S. § 1102. Pursuant to Section 1103(a) of the Ethics Act, 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. In each instance of a conflict, Section 1103(j) requires the public official /employee to abstain from participation 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. The abstention requirement is not limited merely to voting, but extends 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 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. In applying the above provisions of the Ethics Act to your inquiry, we note 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. 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. (See, Gorman, Order 1041, Rembold, Order 1303, and Wilcox, Order 1306 as to a private business /employer; see, Miller, Opinion 89 -024, and Kannebecker, Opinion 92 -010 as to a private business client.) 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; Garner, Opinion 93 -004; Confidential Opinion, 00 -006; Moore, Opinion 04 -004; Snyder, Order979 -2, affd, Snyder v. SEC, 686 A. 2d 843 (Pa. Commw. Ct. 1996), allocatur den., No. 0029 M.D. Allocatur Docket 1997 (Pa. December 22, 1997). In considering the facts pertaining to R, S is a business with which R, as E, is associated. In addition, given that S has had prior business dealings with G and expects to have an ongoing business relationship with G, G is S's private business client. Pursuant to Section 1103(a) of the Ethics Act, R would generally have a conflict of interest as to using the authority of office as an Authority Board Member, or confidential information received by being an Authority Board Member, for the private pecuniary benefit of R, S, or business client(s) such as G. See, Miller, supra; Kannebecker, supra. Given that G, an S client, owns one of the sites that the Authority Board is considering for the B, R would generally have a conflict of interest under Section 1103(a) of the Ethics Act as to the B construction project. R would specifically have a conflict of interest as to selecting a site and selecting a C to build a D on that site. Moreover, R would have a conflict of interest as to official action that would effectuate a detriment to G's competitors. See, Pepper, Opinion 87 -008. In considering the facts pertaining to U, V is a business with which U, as owner, is Confidential Opinion 04 -008 June 22, 2004 Page 5 associated. Pursuant to Section 1103(a) of the Ethics Act, U would generally have a conflict of interest as to using the authority of office as an Authority Board Member for the private pecuniary benefit of U, V, or private client(s). See, Miller, supra; Kannebecker, supra. In light of the particular chain of events expected to occur if G would be chosen by the Authority, that is: (1) the relocation of G's employees to T City; (2) the referral by G's business partner of such employees to the partner's spouse, an independent contractor who works as a X for V; (3) the sale of Ks by said X to G's employees; and (4) the receipt of an I by U for the sale of such Ks, we conclude that U would generally have a conflict of interest under Section 1103(a) of the Ethics Act as to the B construction project. U would specifically have a conflict of interest with regard to selecting a site and selecting a C to build a D on that site. See Amato, supra; Garner, supra; Confidential Opinion, 00 -006, supra; Moore, supra; Snyder, supra. U would also have a conflict of interest as to related official action that would effectuate a detriment to G's competitors. See, Pepper, supra. In each instance of a conflict, R and U would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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. IV. CONCLUSION: Members of the governing board ( "Board ") of an A authority ( "Authority ") would be considered "public officials" subject to the provisions of the Ethics Act, including the restrictions and requirements of Sections 1103(a) and 1103(j). Two Authority Board Members would have conflicts of interest under Section 1103(a) of the Ethics Act with regard to selecting one of two sites for the construction of a B and selecting a C to build a D on that site where: (1) one such Board Member is E of a F that has a business relationship with G who owns one of the sites; and (2) the other Board Member is an H who expects to receive an I if the G's site is chosen and the G's employees J to new Ks that will be sold through an independent contractor of that Board Member's L. In each instance of a conflict, the Authority Board Members would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair Confidential Opinion 04 -008 June 22, 2004 Page 6