This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on September 1, 2000, basing its approval solely on the facts and circumstances stated herein.

May a city contract with a large national corporation's operations and maintenance division to oversee the technical maintenance of the city's newly constructed city hall when a member of the city's board of aldermen is employed by the large national corporation in its nursing home management division and who holds shares in the large national corporation?

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:

Constitutional Section 109 states:

"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."
 
 
 
 
 
 
 
 

Code Section 25-4-103 (a), (c), (e), (f)(i)(ii), (g)(ii), (h), (i), (k)(i)(ii) and (p)(i)(ii)(iii) states:

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

(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.

(e) 'Compensation' mean money or thing of value received, or to be received, from any person for services rendered.

(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:

(ii) Municipalities.

(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).

(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(2), (3)(a) and (4)(d) states:

"(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member.

(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:

(d) May be a contractor, subcontractor or vendor with any 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, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant."

Pertinent facts and circumstances in the form of the requestor's letter, absent identifying data, are attached hereto and considered a part of this opinion.

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

Constitutional Section 109 and Code Section 25-4-105(2), both cited above, prohibit an alderman from having an interest, direct or indirect, in any contract authorized by the board of aldermen of which he or she is a member during his or her term and for one year thereafter.

Code Section 25-4-105(3)(a), cited above, prohibits a public servant, including an alderman, from having a material financial interest in any business that is a contractor, subcontractor or vendor with the public servant's governmental entity, including a city.

Constitutional Section 109 and Code Section 25-4-105(2) will prohibit the city from contracting with the large national corporation through one of its divisions when the requestor is employed by the large national corporation in one if its other divisions and when the requestor holds shares in the large national corporation. This prohibition will apply during the requestor's term and for one year thereafter.

Code Section 25-4-105(3)(a) will prohibit the requestor from having a material financial interest in a large national corporation if the large national corporation is a contractor with the city providing technical maintenance for the city hall.

In this instance, the requestor would have a material financial interest in the large national corporation if the requestor receives for the large national corporation an aggregate annual net income of Five Thousand Dollars ($5,000.00) or more, as set forth in the above cited Code Section 25-4-103(k)(ii).

The only applicable exception to a violation of Code Section 25-4-105(3)(a) in this instance is found in the above cited Code Section 25-4-105(4)(d). The applicable exception is where such goods or services 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. In most if not all areas of the state, goods and services are reasonably available in a neighboring city, county or district.

Furthermore, the exception set forth in Code Section 25-4-105(4)(d) does not apply to Constitutional Section 109 or Code Section 25-4-105(2).

The requestor is advised that a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105(2) and (3)(a). Even without a board member's vote, the authorization by the member's board nonetheless results in a contract in which the board member has a prohibited interest.
 
 
 
 
 
 

Ronald E. Crowe

Executive Director