HomeMy WebLinkAbout07-521 ConfidentialADVICE OF COUNSEL
April 5, 2007
07 -521
This responds to your letters dated March 5, 2007, and March 9, 2007, 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., would present any prohibitions or restrictions upon the A for the
B of Governmental Body C with regard to continuing to be involved with various
civic /non - profit organizations with which the A had been affiliated as a board
member /officer prior to commencing his current employment.
Facts: You accepted an 1 level position as the A for Public Official D, the B of
Governmental Body C, effective [date]. You work primarily, but not exclusively, in
Public Official D's E Office in City F, and you report directly to Public Official D.
Per your letters, your job duties and responsibilities include the following:
• Hiring staff for the E Office and making recommendations with regard to
individuals to be hired in City G.
• Overseeing the E Office, performing J services, and making contracts for
the E Office.
• Making recommendations on [types of matters].
• Making recommendations on [types of functions].
Prior to accepting the position of A, you served as a board member /officer for
various civic /non - profit organizations in the City F area. You currently are affiliated with
the following organizations in the designated capacities:
[list of organizations and offices].
You state that with the exception of a consulting contract for H work performed for one
of the above organizations, which terminated prior to the commencement of your
current employment, you have never received any money or other compensation in
consideration for services rendered to these organizations.
Confidential Advice, 07 -521
April 5, 2007
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To the best of your knowledge, some or all of the aforementioned organizations
have previously sought grants or other funds from federal, state, and local governments.
You state your assumption that this practice will continue in the future. You assert that
you do not intend to use your current position to assist these organizations in obtaining
any government funding.
You ask whether your continued participation with the aforementioned
organizations might create a conflict of interest under the Ethics Act.
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 the A for the B of Governmental Body C, you are a public employee subject to
the provisions of the Ethics Act. This conclusion is based upon the submitted facts,
which indicate clearly that the power exists to take or recommend official action of a
non - ministerial nature with respect to one or more of the following: contracting;
procurement; planning; inspecting; administering or monitoring grants; leasing;
regulating; auditing; or other activities where the economic impact is greater than de
minimis on the interests of another person.
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
Confidential Advice, 07 -521
April 5, 2007
Page 3 of 5
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.
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. The use of
authority of office includes more than mere voting; for example, it includes discussing,
conferring with others, and lobbying for a particular result. Juliante, Order 809. In each
instance of a conflict of interest, a public official /public employee is required to abstain
fully from participation.
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, 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 or private client(s). Miller, Opinion 89 -024;
Kannebecker, Opinion 92 -010.
In the instant matter, the above - listed organizations with which you are affiliated
qualify as "businesses" under the Ethics Act. Pursuant to prior rulings of the State
Ethics Commission, the fact that these particular organizations might be non - profit
organizations would not disqualify them from being encompassed within the definition of
a `business" under the Ethics Act. See, Soltis - Sparano, Order 1045; McConahy,
Opinion 96 -006.
The State Ethics Commission is aware of the recent ruling of the Supreme Court
of Pennsylvania in In re Nomination Petition of Carroll, 586 Pa. 624, 896 A.2d 566
(2006). In Carroll, in the narrow context of a challenge to a candidate's nomination
petition, the Supreme Court held that a candidate's omission from his Statement of
Financial Interests of his presidency of a non - profit corporation from which he received
no compensation was not a fatal defect to his nomination petition. In reaching this
conclusion, the Court reviewed the definition of the term "business" as set forth in the
Ethics Act. (See, definition of the term "business" set forth above).
Confidential Advice, 07 -521
April 5, 2007
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The Court noted that the "organized for profit" reference at the end of the
definition was subject to two possible interpretations —an interpretation that would
construe the reference as modifying all preceding forms of business listed in the
definition (such that only for - profit entities would qualify as "businesses ") and another
interpretation that would construe it as applying only to the last antecedent example
(such that non - profit entities would qualify as "businesses "). Having apparently been
erroneously informed that the State Ethics Commission had no rulings as to whether
non - profit entities would be considered "businesses" under the Ethics Act, the Court
construed the definition in the way most favorable to the candidate, such that the
candidate was viewed as not having been required to list his presidency of the non-
profit corporation on his Statement of Financial Interests.
Contrary to the inaccurate information that was apparently supplied to the
Supreme Court in the Carroll case, the Commission has long held that a non - profit
corporation is a "business" as that term is defined in the Ethics Act. In Soltis - Sparano,
Order 1045 (decided in 1997) the Commission specifically interpreted the language at
the end of the definition of the term "business" and concluded that:
The word "or" is disjunctive, and furthermore, 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
language is that any corporation, including a non - profit
corporation, is a "business."
Soltis - Sparano, Order 1045, at 31. The following are additional decisions in which the
Commission has held that a non - profit corporation is a "business" within the meaning of
that term as defined by the Ethics Act: Confidential Opinion, 89 -007 (decided in 1989);
McConahy, Opinion 96 -006 (decided in 1996); Maduka, Order 1277 (decided in 2003).
In reviewing Carroll, supra, the State Ethics Commission has stated that
challenges to candidate nomination petitions involve unique considerations, and that at
this time, there is no indication that the Supreme Court's ruling in the Carroll case would
have any applicability outside the scope of election - related challenges. Kravetsky,
Order 1420.
In the instant matter, which is not an election - related case, the necessary
conclusion under the aforementioned Commission rulings is that the civic /non - profit
organizations with which you are affiliated qualify as "businesses" under the Ethics Act.
Given that you serve in the capacity of officer /board member for these organizations,
these organizations are businesses with which you are associated. Section 1103(a) of
the Ethics Act would not prohibit you from remaining affiliated with these organizations
in your private capacity. However, pursuant to Section 1103(a) of the Ethics Act, in your
public capacity as the A for the B of Governmental Body C, you would generally have a
conflict of interest in matters that would financially impact these organizations. In each
instance of a conflict of interest, you would be required to abstain fully from
participation.
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.
Conclusion: As the A for Public Official D, the B of Governmental Body C, you
are a public employee subject to the provisions of the Public Official and Employee
Confidential Advice, 07 -521
April 5, 2007
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Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The civic /non - profit organizations
with which you serve in the capacity of officer/board member are businesses with which
you are associated. Pursuant to Section 1103(a) of the Ethics Act, in your public
capacity as A, you would generally have a conflict of interest in matters that would
financially impact these organizations. In each instance of a conflict of interest, you
would be required to abstain fully from participation. 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,
Robin M. Hittie
Chief Counsel