HomeMy WebLinkAbout04-597 ConfidentialADVICE OF COUNSEL
September 29, 2004
04 -597
Re: Conflict; Public Official /Employee; City; Council Member; Participating in Official
Action Pertaining to Allocation of Public Funds to a Business With Which Council
Member is Associated.
This responds to your letter of August 30, 2004, by which you requested a
confidential advisory from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa. .S. § 1101 et seq., presents any prohibition or restrictions upon a city council
member with regard to participating in discussions, motions or votes pertaining to
legislation that would allocate public funds to a business with which the council member
is associated.
Facts: As Solicitor for the City of A ( "City "), you have been authorized to seek a
confidential advisory on behalf of B, a member of City Council. You have submitted
facts, which may be fairly summarized as follows.
The City is a City of the Third Class operating under the Optional Charter Law.
All of the positions on City Council are part -time positions; all Council Members hold full -
time jobs in addition to their positions on Council. B, who was elected to a four -year
term on City Council in [year], is C for D, a non - profit E located in Central Pennsylvania.
In City Council's 2003 budget, public funds were set aside to be allocated to
needy organizations in the form of assistance grants. City Council received a request
for such a grant from D.
B would like to be the movant of legislation that would allocate [dollar amount] of
public funds to D. You state that B has informed you that she will in no way benefit from
this grant, monetarily or otherwise. You ask whether B may introduce such legislation,
participate in discussions regarding such legislation, and vote on the allocation of public
funds to D.
Confidential Advice, 04 -597
September 29, 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 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.
As a City Council Member, B is a public official as that term is defined in the
Ethics Act, and hence she 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,
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.
Confidential Advice, 04 -597
September 29, 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 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
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,
Confidential Advice, 04 -597
September 29, 2004
Page 4
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 1103(j) 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.
Based upon the submitted facts, D would be considered a "business" with which
B, as C, is associated. First, the definition of the term "business" as set forth in the
Ethics Act is very broad. Novak, Opinion No. 91 -009. As a corporation, D is clearly
within that definition. Moreover, the fact that D is a non - profit corporation would not
disqualify it as a "business." The word "or" toward the end of the definition of "business"
is disjunctive, and the repeated use of the word "any" precludes any interpretation that
the final phrase "legal entity organized for profit" modifies the initial word `corporation ":
Any corporation, ... or any legal entity organized for profit." The clear and unambiguous
statutory language is that any corporation, including a non - profit corporation, is a
"business." Soltis - Sparano, Order No. 1045 at 31 (Citing, Confidential Opinion, No. 89-
007; McConahy, Opinion No. 96 -006). Since D is a "business" as that term is defined in
the Ethics Act, it is clearly a business with which B is associated in her capacity as C.
Having established that D is a business with which B is associated, pursuant to
Section 1103(a) and 1103(j) of the Ethics Act, as a City Council Member, B would
generally have a conflict of interest and could not participate in any matter(s) that would
financially impact herself, D, or business client(s). B would specifically have a conflict of
interest in participating in discussions, motions or votes pertaining to legislation that
would allocate public funds to D because such action on the part of B would constitute a
use of authority of office for the private pecuniary benefit of a business with which she is
associated, contrary to Section 1103(a) of the Ethics Act. In each instance of a conflict
of interest, B would be required to abstain and to fully 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. Specifically not addressed herein is the applicability of
the Third Class City Code.
Conclusion: As a member of the A City Council, B 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. D is a business with which B, as C, is associated. Pursuant to Section
1103(a) and 1103(j) of the Ethics Act, as a City Council Member, B would generally
have a conflict of interest and could not participate in any matter(s) that would financially
impact herself, D, or business client(s). B would specifically have a conflict of interest in
participating in discussions, motions or votes pertaining to legislation that would allocate
public funds to D because such action on the part of B would constitute a use of
authority of office for the private pecuniary benefit of a business with which she is
associated, contrary to Section 1103(a) of the Ethics Act. In each instance of a conflict
of interest, B would be required to abstain and to fully satisfy the disclosure
requirements of Section 1103(j) of the Ethics Act. 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
Confidential Advice, 04 -597
September 29, 2004
Page 5
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