This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on May 4, 2001, basing its approval solely on the facts and circumstances stated herein.

May members of a state department's advisory council also be employees and officers of service organizations and agencies that receive funding through grants issued by the state department?

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 25-4-101 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), (c), (d), (e), (f)(i)(ii), (g)(v), (h), (i), (k)(i)(ii), (l), (o) 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.

(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.

(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:

(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).

(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.

(o) 'Public funds' means money belonging to the government.

(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), (2) and (3)(a) 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.

(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."

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.

The Commission formally adopts Advisory Opinions No. 97-088-E in response to this request and by attachment incorporates it into this opinion.

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

Much like the state fund advisory board in the attached Advisory Opinion No. 97-088-E, the state department's proposed advisory council has no statutory reference and is therefore established by way of a policy decision of the state department and not a requirement of state law.

The state law clearly gives the state department the authority to administer and disburse the grant funds for the services the service organizations and agencies provide to the community as did the state law give the state agency's division the power to administer and disburse the monies in the State Fund addressed in the attached Advisory Opinion No. 97-088-E.

As in the Attached Advisory Opinion No. 97-088-E, Constitutional Section 109 and Code Section 25-4-105(2), both cited above, will not apply to the requestor's circumstance as the state department advisory council will not authorize any contracts funded by public funds. The authority to enter into grants related to the services in question remain with the state department.

However, the members of the proposed state department advisory council will be public servants for purposes of the Ethics in Government Law. They will meet the requirements to qualify as public servants set out in the above cited Code Section 25-4-103(p)(ii). Specifically, they will be officers of the state department's advisory council established by the state department for the purpose of recommending the use of grants funds and services within the community and the advisory council operation will be funded by public funds.

The members of the state department advisory council as public servants of the state department will be prohibited by the Ethics in Government Law from having certain involvements and/or relationships with the state department.

Specifically, Code Section 25-4-105(3)(a), cited above, will prohibit the state department advisory council members from being contractors, subcontractors or vendors or from having a material financial interest in any businesses that are contractors, subcontractors or vendors with the state department. The service organizations and agencies that the advisory council members serve as officers and employees are certainly expected to be considered businesses under the definition set forth in Code Section 25-4-103(c).

Therefore, funding by way of a grant will result in a contract between the state department and the respective service organizations and agencies that the advisory council members serve as officers and employees in violation of Code Section 25-4-105(3)(a). Violations of Code Section 25-4-105(3)(a) cannot be avoided by the affected advisory council members not participating in advisory council actions concerning their respective service organizations or agencies. In other words, a recusal or an abstention will not prevent a violation of Code Section 25-4-105(3)(a).

Code Section 25-4-105(1), cited above, prohibits the state department advisory council members as public servants from using their official positions to benefit themselves, their relatives or businesses with which they are associated. As stated above, the state department advisory council member's service organizations and agencies are certainly expected to be considered businesses under the definition set forth in Code Section 25-4-103(c).

The state department advisory council member's actions, either directly or indirectly, supporting the council's recommendations that provide a pecuniary benefit to their respective service organizations and agencies will be a use of their official positions to provide a pecuniary benefit to a business with which they are associated. Such actions will violate Code Section 25-4-105(1).

The requestor is advised that a proper recusal can prevent a violation of Code Section 25-4-105(1), although as advised earlier, a violation of Code Section 25-4-105(3)(a) would still occur.

A recusal results when the public servant avoids debating, discussing or taking action on the subject matter during the official meeting, as well as, avoids discussing the subject matter with other board members, staff or any other person prior to and after the official meeting. 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. The minutes of the governing entity's board should state the public servant left the meeting by showing him or her absent for that matter.

The issue presented by the requestor also must be viewed as it relates to Code Section 25-4-101, set forth above. This code section 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.

Clearly, a circumstance as the one set forth by the requestor has the potential of creating suspicion among the public and reflecting unfavorably upon the state department.
 

Ronald E. Crowe

Executive Director