This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on June 14, 2002, basing its approval solely on the facts and circumstances stated herein.

May members of a governing board be collectively held responsible for one of it’s board members violating the 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:

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 25-4-19(f) states:
 

“The commission shall have the authority to do the following:

 
(f) Seek, in the name of and for the use and benefit of the State of Mississippi, or a political subdivision thereof, restitution or other equitable or legal remedies in civil law to recover public funds or property unlawfully taken, as well as any unjust enrichment, although not public funds, and to recover on bonds where the state or a political subdivision thereof is the beneficiary.”

Code Section 25-4-103(f)(i)(ii), (g)(iii), (h), (l) and (p)(i)(ii)(iii) states:
 

“(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:
 

(iii) All school districts.

(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.

(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), (2) and (3)(a)(b)(c)(d)(e) 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.

(b) Be a purchaser, direct or indirect, at any sale made by him in his official capacity or by the governmental entity of which he is an officer or employee, except in respect of the sale of goods or services when provided as public utilities or offered to the general public on a uniform price schedule.

(c) Be a purchaser, direct or indirect, of any claim, certificate, warrant or other security issued by or to be paid out of the treasury of the governmental entity of which he is an officer or employee.

(d) Perform any service for any compensation during his term of office or employment by which he attempts to influence a decision of the authority of the governmental entity of which he is a member.

 
(e) Perform any service for any compensation for any person or business after termination of his office or employment is relation to any case, decision, proceeding or application with respect to which he was directly concerned or in which he personally participated during the period of his service or employment.”

Code Section 25-4-109(1) and (2) states:
 

“(1) Upon a finding by clear and convincing evidence that any elected public servant or other person has violated any provision of this article, a circuit court of competent jurisdiction may censure the elected public servant or remove the elected public servant from office or impose a civil fine of not more than five thousand dollars ($5,000.00) or both.

(2) Upon a finding by clear and convincing evidence that any nonelected public servant has violated any provision of this article, a circuit court of competent jurisdiction may censure, remove, suspend, or order a reduction in pay or demotion of the nonelected public servant or impose a civil fine of not more than five thousand dollars ($5,000.00) or both.”

Code Section 25-4-113 states:
 

“The attorney general of the state of Mississippi or any governmental entity directly injured by a violation of this act may bring a separate civil action against the public servant or other person or business violating the provisions of this article for recovery of damages suffered as a result of such violation.  Further, any pecuniary benefit received by or given by a public servant in violation of this article shall be declared forfeited by a circuit court of competent jurisdiction for the benefit of the governmental entity injured.  In the discretion of the court, any judgment for damages or forfeiture of pecuniary benefit may include costs of court and reasonable attorney’s fees.”

Code Section 25-4-115 states:
 

“This article shall not bar, suspend or otherwise restrict any right or liability to damage, penalty, forfeiture, restitution or other remedy authorized by law to be recovered or enforced in a civil action, regardless of whether the conduct involved in the proceeding constituted an offense covered by this article.”

Code Section 25-4-117 states:
 

“The provisions of this article shall be in addition to any criminal laws.  Actions taken under the provisions of this article shall not bar prosecution for violations of the criminal law.”

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

As attorney for the City School District, I am seeking an ethics opinion on the following: Can members of a governing board, such as a board of trustees for a school district, collectively be held responsible for an ethical violation of one of its members?  If so, under what circumstances?

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

Members of a governing board can be collectively held responsible in addition to the individual board member being held responsible for violating the conflict of interest laws, as discussed below.

An individual public servant violating the conflict of interest laws is certainly personally subject to the penalties imposed by the above cited Code Section 25-4-109, as well as a civil action for damages and forfeiture of any pecuniary benefit received through an illegal contract or action as provided for by the above cited Code Section 25-4-113. The penalties that may be imposed by a circuit court upon a finding by clear and convincing evidence include removal and a civil fine of not more than $5,000.00. The pecuniary benefit received that will be forfeited is the total amount of public funds paid or other economic interests received, in violation of the state conflict of interest laws.

At common law and generally under statutory enactment, it is now established beyond question that a contract made by an officer of a governmental entity with himself, or in which he is interested, is contrary to public policy and tainted with illegality; and this rule applies whether such officer acts alone on behalf of the governmental entity, or as a member of a board and any such direct or indirect interest in the subject matter is sufficient to taint the contract with illegality. [Frazier v. State, 504 So. 2d 675 (Miss. 1987)]

 
Also, it is important to understand what the Mississippi Supreme Court has said about injury and damages in conflict of interest law cases.  The Court, in Hinds Community College District, et al. v. Muse, 725 So. 2d 207 (Miss. 1998), held, “The legislative directive focuses on the wrongful gain to the violative public servant as a measure of damages to the public trust.  The injury is the loss of public trust; the damages are the benefits wrongfully gained.”  “ . . . “monetary damages” . . . “are not necessary in order to show damages under § 25 4 105(1).”      . . .  “violations are not moot and must be enforced without regard to whether the government suffered monetary damages.”

The members of a governmental board, or other public servants, that knowingly or illegally enter into a contract in violation of the state conflict of interest laws or otherwise knowingly or illegally participate in a violation of the conflict of interest laws, are subject to “a separate civil action” for “violating the provisions of [Article 3 of the Ethics in Government Act] for recovery of damages suffered as a result of such violation” as also set forth in Code Section 25-4-113.

Again, it is important to note what the Court said in Muse, supra, about injury and damages.
Specifically, the injury is the loss of public trust and the damages are the benefits wrongfully gained.  Monetary damages are not necessary in order to show damages in conflict of interest law cases.

It is well-established legal principle in this state that a contract is illegal and void because it violated Mississippi conflict of interest law §25 4 105, as well as, the Mississippi Constitution. [Towner v. Moore ex rel. Quitman County School District, 604 So.2d 1093 (Miss.1992) and Hinds Community College District, et al. v. Muse, 725 So 2d. 207 (Miss.1998)].  Further, acts of governmental boards which do not come clearly within the powers granted, or which are expressly prohibited by the Constitution, are void. [Golding v. Salter, 107 So.2d 348, 234, Miss. 567 (Miss. 1958)].

Therefore, it is clear that board members, or other public officials, who are involved in the authorization of illegal contracts are liable for injury done to the public trust.

Specifically in regard to joint liability and the recovery of benefits wrongfully gained, the Court has made findings supportive of joint liability of board members or other officials participating in the illegal action.

In Miller v. Tucker, 105 So. 774 (Miss. 1925), the Court held that a board member making a contract in violation of Constitutional Section 109 is liable on his bond for the amount so received, and other members of the board participating in the allowance are liable on their bonds for amount allowed. [Emphasis added to bold text]

 
Also, in State ex rel. Pittman v. Ladner, 512 So. 2d 42 (Miss. 1987), the Court held that the school superintendent who executed a contract with a firm which employed a member of school board and who recommended payment of monies under contract was liable for violating conflict of interest statute, even if superintendent was prohibited from participating in decision to assign to superintendent responsibility to make emergency repairs, where board gave superintendent authority to enter into contracts on behalf of board subject to board’s subsequent approval. [Ref. § 37-11-27]

In addition to the above, any action against an individual public servant for violating Article 3 of the Ethics in Government Act would not preclude other civil or criminal actions authorized by law against that individual public servant or other public servants.  In support of this position the Commission offers the following sections:

Code Section 25-4-115, cited above, states, “This article shall not bar, suspend or otherwise restrict any right or liability to damage, penalty, forfeiture, restitution or other remedy authorized by law to be recovered or enforced in a civil action, regardless of whether the conduct involved in the proceeding constituted an offense covered by this article;” and

Code Section 25-4-117, cited above, states, “The provisions of this article shall be in addition to any criminal laws. Actions taken under the provisions of this article shall not bar prosecution for violations of the criminal law.”

Lastly, the requestor is advised that Code Section 25-4-19(f), cited above, provides that the Commission’s authority includes ample power to seek restitution or other equitable or legal remedies in civil law to recover public funds or property unlawfully taken against any public servant responsible, as well as, his or her surety.
 
 

Scott Rankin
Executive Director