This Advisory Opinion concerns the following issues as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on July 14, 2000, basing its approval solely on the facts and circumstances stated herein.

ISSUE 1. May a retail store business owned by the county's chancery clerk sell to the county's hospital?

ISSUE 2. May a retail store business owned by the county's chancery clerk sell to the regional library system serving the county?

Your opinion request to the Office of the Attorney General dated June 7, 2000, was referred by that Office to the Mississippi Ethics Commission on June 9, 2000, as your request involves the above issue that concern the Mississippi conflict of interest laws.

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Code Section 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103(a), (b), (c), (d), (f)(i)(ii), (g)(i)(v), (h), (i), (k)(i)(ii)(iii)(iv), (l) and (p)(i)(ii)(iii) states:

"(a) 'Authority' means any component unit of a governmental entity.

(b) 'Benefit' means any gain or advantage to the beneficiary, including any gain or advantage to a third person pursuant to the desire or consent of the beneficiary.

(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

(d) 'Business with which he is associated' means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(i) Counties; and

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(i) 'Income' means money or thing of value received, or to be received, from any source derived, including but not limited to, any salary, wage, advance, payment, dividend, interest, rent, forgiveness of debt, fee, royalty, commission or any combination thereof.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00);

(iii) The income as an employee of a relative if neither the public servant or relative is an officer, director or partner in the business and any ownership interest would not be deemed material pursuant to subparagraph (i) or (ii) herein; or

(iv) The income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control, direct or indirect, over the contract between the spouse and such governmental entity.

(l) 'Pecuniary benefit' means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105(1), (3)(a) and (4)(b) states:

"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(b) May be a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor or vendor with any authority of the governmental entity other than the authority of the governmental entity of which he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws."

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered a part of this opinion.

I write you as attorney for the Board of Supervisors of County, Mississippi and request your written opinion regarding the following facts:

The subject individual is the elected and serving Chancery Clerk of County, Mississippi. The subject individual was elected in 1999 and assumed the Office of Chancery Clerk in January, 2000. Prior to his election, the subject individual was president of a Mississippi corporation and owned all outstanding shares of stock in the corporation. The corporation has, for many years, operated a retail store business in the City. Prior to the subject individual's election as Chancery Clerk, he transacted, at various times, sales to various government entities, including County, Mississippi. Following his election, and prior to assuming office, the subject individual ceased sales from the store to County. After assuming the office of Chancery Clerk, he is no longer active in the management of the retail store business. However, he continues to own the business.

County, Mississippi is one of the owners of community hospital at City, Mississippi, and the Board of Supervisors appoints certain of the board members of that hospital. County, Mississippi is owner of the regional library system building at City, Mississippi, and the Board of Supervisors of this county appoints members to the library board.

At various times, the hospital and the library have sought to make purchases from the retail store owned by the subject individual's corporation.

May the retail store owned by the subject individual's corporation continue to transact business with the hospital and/or library?

The subject individual, who has served in the Chancery Clerk's office for approximately four months, want to be very careful in following the laws of our state related to ethics in government, and he requested that I obtain your opinion on this matter.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

ISSUE 1. Code Section 25-4-105(3)(a), cited above, prohibits a business in which a public servant has a material financial interest from being a contractor, subcontractor or vendor with the public servant's governmental entity.

A material financial interest is defined in Code Section 25-4-105(k)(i)(ii)(iii)(iv), cited above, and includes an ownership interest of 10% or more, regardless of income.

As defined in Code Section 25-4-103(h), cited above, the county is the governmental entity that the requestor serves as an officer as its chancery clerk.

The community hospital is an authority of the county as defined in the above cited Code Section 25-4-103(a) and is therefore part of the governmental entity of the county.⁽¹⁾

Therefore, Code Section 25-4-105(3)(a) will prohibit the retail store business owned by the chancery clerk's corporation from being a vendor with the county's community hospital.

The only applicable exception to the prohibition imposed by Code Section 25-4-105(3)(a) in this instance is set forth in the above cited Code Section 25-4-105(4)(b).

Code Section 25-4-105(4)(b) provides that a business in which a public servant has a material financial interest may still be a contractor or vendor with an authority of the governmental entity other than the authority of the governmental entity of which the public servant is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

Since the community hospital and the office of the chancery clerk are in separate authorities of the county governmental entity, the retail store business owned by the chancery clerk's corporation may sell to the community hospital without violating Code Section 25-4-105(3)(a) if it is the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

It is the Commission's opinion that the geographical boundary of a local governmental entity is not sufficient by itself to set in motion the above exception of where the goods and services involved are reasonably available from two (2) or fewer commercial sources. In most if not all areas of the state, goods and services are reasonably available in a neighboring city, county or district.

ISSUE 2. As set forth above in ISSUE 1, Code Section 25-4-105(3)(a) prohibits a business in which a public servant has a material financial interest from being a contractor, subcontractor or vendor with the public servant's governmental entity.

Also as set forth above in ISSUE 1, a material financial interest is defined in Code Section 25-4-105(k)(i)(ii)(iii)(iv) and includes an ownership interest of 10% or more, regardless of income and as defined in Code Section 25-4-103(h) the county is the governmental entity that the requestor serves as an officer as its chancery clerk.

The regional library system is an authority of the county as defined in the above cited Code Section 25-4-103(a) and is therefore part of the governmental entity of the county.⁽²⁾

Therefore, Code Section 25-4-105(3)(a) will prohibit the retail store business owned by the chancery clerk's corporation from being a vendor with the county's regional library system.

As in ISSUE 1, the only applicable exception to the prohibition imposed by Code Section 25-4-105(3)(a) in this instance is set forth in the above cited Code Section 25-4-105(4)(b).

Again, Code Section 25-4-105(4)(b) provides that a business in which a public servant has a material financial interest may still be a contractor or vendor with an authority of the governmental entity other than the authority of the governmental entity of which the public servant is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

Since the regional library system and the office of the chancery clerk are in separate authorities of the county governmental entity, the retail store business owned by the chancery clerk's corporation may sell to the regional library system without violating Code Section 25-4-105(3)(a) if it is the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods, services or property involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

It is the Commission's opinion that the geographical boundary of a local governmental entity is not sufficient by itself to set in motion the above exception of where the goods and services involved are reasonably available from two (2) or fewer commercial sources. In most if not all areas of the state, goods and services are reasonably available in a neighboring city, county or district.

Notwithstanding the above, the requestor is cautioned to advise the chancery clerk to remain keenly aware of the above cited Code Section 25-4-105(1) and the above cited Code Section 25-4-101 should it be determined that in certain instances the retail store business owned by the chancery clerk's corporation may be a vendor with the community hospital or regional library system due to the above discussed exception set forth in Code Section 25-4-105(4)(b).

Code Section 25-4-105(1) provides that a public servant may not use his official position to obtain a pecuniary benefit for himself or a business with which he is associated.

Code Section 25-4-101 sets the tone for the conflict of interest laws as the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

Because of the chancery clerk's financial and auditing functions with the county, it is the Commission's position that the chancery clerk must totally and completely recuse himself from any and all financial and auditing functions pertaining to any authority or component unit of the county that purchases from the retail store business the chancery clerk's corporation owns. The chancery clerk's total and complete recusal in such instances is necessary so as to be certain that a violation of Code Section 25-4-105(1) does not occur and to avoid actions contrary to the state's public policy set forth in Code Section 25-4-101.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter within his or her official capacity or during an official meeting, but also avoid discussing the subject matter with board members, staff or any other person prior to and after official actions and/or official meetings. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

Also to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. If applicable, any minutes of the governing entity's board should state the public servant left the meeting by showing him or her absent for that matter.
 

Ronald E. Crowe

Executive Director

1. See §§41-13-10 et seq., 1972 Mississippi Code Annotated, amended.

2. See §§39-3-1et seq., 1972 Mississippi Code Annotated, amended.