Loading...
HomeMy WebLinkAbout05-531 StoneBronson Stone R. R.1, Box 116B Thompson, PA 18465 Dear Mr. Stone: ADVICE OF COUNSEL April 8, 2005 05 -531 Re: Conflict; Public Official /Employee; School District; Superintendent; Bank; Associate Board; Business Relationship. This responds to your letter of March 9, 2005, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibition or restrictions upon a school superintendent with regard to serving as a member of a non - voting advisory /referral board of a bank when the bank serves as the school district's depositor and the school superintendent would receive a $1200 annual stipend from the bank for serving on such board. Facts: You are the Superintendent of Schools of the Susquehanna Community School District ( "School District ") in Susquehanna County, Pennsylvania. You have been given the opportunity to serve on the Peoples National Bank Associate Board ("Bank Associate Board "), a non - voting advisory /referral board of Peoples National Bank ( "Bank "). You state that the School District has used the Bank for over the past two decades as its depositor, which time period predates your service as the School District Superintendent. In a telephone conversation with a staff attorney in the Legal Division of the State Ethics Commission on March 14, 2005, you stated that as a member of the Bank Associate Board you would not be holding an office, directorship or employee position. You further stated that you would receive a $1,200 annual stipend. Based upon the foregoing facts, you ask whether you would have a conflict of interest under the Ethics Act as a result of serving on the Bank Associate Board. If a conflict would exist, you ask whether you could annually declare your relationship with the Bank to the Board of Education to remove the conflict. Stone, 05 -531 April 8, 2005 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 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 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 requester has truthfully disclosed all of the material facts. As School District Superintendent, you are a public official /public employee subject to the provisions of the Ethics 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. "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. Stone, 05 -531 April 8, 2005 Page 3 "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. 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 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 the instant matter, it is noted that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees Stone, 05 -531 April 8, 2005 Page 4 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. A reasonable and legitimate expectation that a business relationship will form will also support a finding of a conflict of interest. Amato, Opinion 89 -002. You have factually submitted that as a member of the Bank Associate Board, you would not be holding an office, directorship or employee position but you would be the recipient a $1,200 annual stipend from the Bank. You are advised that given the proposed arrangement, it is clear that a business relationship would exist between you and the Bank. Therefore, in your capacity as School District Superintendent you would have a conflict of interest as to matters that would financially impact the Bank, including, but not limited to, matters pertaining to the School District's utilization of the Bank as its depositor. See, Miller, Opinion 89 -024; Snyder v. State Ethics Commission, 686 A.2d 843 (Pa. Cmwlth. 1996), alloc. den., 0029 M.D. Allocatur Docket 1997 (Pa. December 22, 1997). Such a conflict would exist even prior to your actual service on the Bank Associate Board based upon the reasonable and legitimate expectation that a business relationship will form between you and the Bank. Amato, Opinion 89 -002, supra. In each instance of a conflict of interest, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In response to your specific inquiry, an annual declaration of your relationship with the Bank to the Board of Education would not remove a conflict. You are further advised that pursuant to Section 1103(a) of the Ethics Act, absent a pre- existing mechanism in place specifying how and by whom your authority is to be exercised in the event of a conflict, your delegation of such authority to a subordinate would itself constitute a use of authority of your public position in contravention of Section 1103(a) of the Ethics Act. Confidential Opinion, 02 -004. While the State Ethics Commission may not decide the appropriate measures to be taken by the School District's School Board with respect to shifting to someone else those of your responsibilities that would place you in a conflict of interest, it is noted that a pre- existing mechanism delegating such responsibilities to a School Director as your superior rather than to one of your subordinates would appear to be an acceptable course of action under 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 Public School Code of 1949. Conclusion: As Superintendent of Schools of the Susquehanna Community School District ( "School District"), you are a public official /public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Given the proposed arrangement whereby: (1) you would serve as a member of Peoples National Bank Associate Board ( "Bank Associate Board "), a non- voting advisory /referral board of Peoples National Bank ( "Bank "); and (2) you would receive a $1200 annual stipend from the Bank for serving on the Bank Associate Board, you are advised as follows. In your capacity as School District Superintendent, you would have a conflict of interest under Section 1103(a) of the Ethics Act as to matters that would financially impact the Bank, including, but not limited to, matters pertaining to the School District's utilization of the Bank as its depositor. A conflict of interest would exist even prior to your actual service on the Bank Associate Board based upon the reasonable and legitimate expectation that a business relationship will form between you and the Bank. In each instance of a conflict of interest, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Stone, 05 -531 April 8, 2005 Page 5 Absent a pre- existing mechanism in place specifying how and by whom your authority is to be exercised in the event of a conflict, your delegation of such authority to a subordinate would itself constitute a use of authority of your public position in contravention of Section 1103(a) 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 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