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HomeMy WebLinkAbout06-564 DalyFrank W. Daly, Esquire Daly Gorbey & O'Brien, P.C. 110 West Front Street P.O. Box 199 Media, PA 19063 Dear Mr. Daly: ADVICE OF COUNSEL June 8, 2006 06 -564 This responds to your letters of April 28, 2006, and May 9, 2006, 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 borough council member with regard to voting to choose a repository bank for borough funds if the council member or a member of his immediate family is a depositor or debtor at one or more of the banks under consideration by the borough. Facts: As President of Council of Media Borough ( "Borough "), you have been authorized by all the members of Borough Council to seek an advisory from the State Ethics Commission based upon the following submitted facts. The Borough Council recently solicited proposals from local banks to be the repository of Borough funds. At the present time, the Borough is considering three banks, none of which is a savings and loans institution. You state that none of the Council Members own stock in any of the three banks under consideration. You ask whether a Borough Council Member would have a conflict of interest under the Ethics Act with regard to voting on the matter of choosing a repository for Borough funds when the Council Member or a member of his immediate family has a banking relationship as a depositor or debtor with one or more of the banks under consideration. You further ask whether the analysis of the question would be impacted if a Council Member's or immediate family member's loan with such a bank would pre- date Borough Council's request for proposals. 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 Daly, 06 -564 June 8, 2006 Page 2 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 Borough Council Members, you and the other Council Members who have authorized your inquiry 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 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 pertaining 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 Daly, 06 -564 June 8, 2006 Page 3 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 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. Subject to certain voting conflict exceptions, Section 1103(j) of the Ethics Act requires a public official /public employee with a conflict of interest 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. Sections 1103(b) and 1103(c) of the Ethics Act, pertaining to improper influence, provide as follows: § 1103. Restricted activities (b) Seeking improper influence. —No person shall offer or give to a public official, public employee or nominee or candidate for public office or a member of his immediate family or a business with which he is associated, anything of monetary value, including a gift, loan, political contribution, reward or promise of future employment based on the offeror's or donor's understanding that the vote, official action or judgment of the public official or public employee or nominee or candidate for public office would be influenced thereby. (c) Accepting improper influence. —No public official, public employee or nominee or candidate for public office shall solicit or accept anything of monetary value, including a gift, loan, political contribution, reward or promise of future employment, based on any understanding of that public official, public employee or nominee that the vote, official action or judgment of the public official or public Daly, 06 -564 June 8, 2006 Page 4 employee or nominee or candidate for public office would be influenced thereby. 65 Pa.C.S. §§ 1103(b), (c). The term "person" is defined in the Ethics Act as follows: § 1102. Definitions "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. 65 Pa.C.S. § 1102. Reference is made to Sections 1103(b) and 1103(c) of the Ethics Act 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 the instant matter, it is noted that Section 1103(a) of the Ethics Act 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. 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 response to the specific questions that you have posed, you are advised as follows. As noted above, it is possible for a business relationship to form the basis for a conflict of interest under Section 1103(a) of the Ethics Act. However, where the public official or his immediate family member is the customer /client of the business in question, rather than a director, officer, owner, employee, or person with a financial interest in the business, the mere existence of the business relationship does not, in and of itself, form the basis for a conflict of interest if all of the dealings involving the business and the public official or his immediate family member(s) are arms - length transactions at terms routinely extended by the business to members of the general public. Cf., Messick, Order 1155. This conclusion is based upon the fact that under such conditions, the requisite element of a private pecuniary benefit would not be met. Therefore, conditioned upon the assumptions that: (1) there would be no improper influence /understandings contrary to Section 1103(b) or Section 1103(c) of the Ethics Act; (2) all dealings between a given Borough Council Member or his immediate family member(s) and the banks under consideration would be arms - length transactions at terms routinely extended by the banks to members of the general public; (3) the banks would not be considered businesses with which the Borough Council Member or any of his immediate family members are associated, as that relationship is defined by the Ethics Act; and (4) there would be no other basis for a conflict of interest under the Ethics Act, then the Ethics Act would not prohibit that Borough Council Member from voting to choose such a bank as the repository of Borough funds. Finally, you are advised that generally, the above analysis would not change if a Council Member's or immediate family member's loan with such a bank would pre -date Borough Council's request for proposals. Because you have not submitted any specific facts for review as to this particular aspect of your inquiry, this Advice must necessarily be limited to providing only general guidance in response. Daly, 06 -564 June 8, 2006 Page 5 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 Borough Code. Conclusion: As Council Members of Media Borough ( "Borough "), you and the Council Members who have authorized your inquiry are "public officials" subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. In response to the question of whether a Borough Council Member would have a conflict of interest under the Ethics Act with regard to voting on the matter of choosing a repository for Borough funds when the Council Member or a member of his immediate family has a banking relationship, either as a depositor or debtor, with one or more of the banks under consideration, you are advised as follows. Conditioned upon the assumptions that: (1) there would be no improper influence /understandings contrary to Section 1103(b) or Section 1103(c) of the Ethics Act; (2) all dealings between a given Borough Council Member or his immediate family member(s) and the banks under consideration would be arms - length transactions at terms routinely extended by the banks to members of the general public; (3) the banks would not be considered businesses with which the Borough Council Member or any of his immediate family members are associated, as that relationship is defined by the Ethics Act; and (4) there would be no other basis for a conflict of interest under the Ethics Act, then the Ethics Act would not prohibit that Borough Council Member from voting to choose such a bank as the repository of Borough funds. Generally, the above analysis would not change if a Council Member's or immediate family member's loan with such a bank would pre -date Borough Council's request for proposals. 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 requester 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