This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on July 16, 2004, basing its approval solely on the facts and circumstances stated herein.
 

May a regional airport board contract with a medical insurance provider immediately after an appointment to the regional airport board of an individual who was a former officer and director of the medical insurance provider?

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(c), (f)(i)(ii), (g)(v), (h), (i), (k)(i)(ii)(iii)(iv) and (p)(i)(ii)(iii) states:
 

“(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.

(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) ‘Government’ 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);

(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.

(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) and (3)(a) 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.”

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

The Regional Airport Authority, each year, after consideration of bids from medical insurance providers, enters into a contract for medical insurance coverage.  A former officer and director of such provider no longer serves in that capacity and has no control or interest in such provider.  Should such person be appointed to serve on the Board of Commissioners of the Airport Authority, may the Authority, should it so elect after consideration of bids, contract with such medical insurer without waiting for one year after the Commissioner’s position with the medical provider terminated?  I am having difficulty in determining whether Mississippi Constitution, Article IV, Section 109 and Miss. Code Ann. 25-4-104 apply to this inquiry.  Those authorities seem to address the reverse factual sequence and structure.

Since the individual, at the time of commencement of membership on the Airport Board, would have no connection, directly or indirectly, with the medical insurance company at the time of his commencement of service or during his commencement of service on a public body, I do not believe that a conflict of interest would exist.  Therefore, there appears to be no reason for a one year delay provided by statute for the reverse factual situation.

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 a member of a governmental body, such as a member of a regional airport authority, from having an interest, direct or indirect, in any contract authorized by the governmental body of which he or she is a member during his or her term and for one year thereafter.

In Frazier v. State, 504 So. 2d 675, (Miss. 1987), the Mississippi Supreme Court set forth the following four elements necessary to apply the Constitutional Section 109 prohibition, and thereby the Code Section 25-4-105(2) prohibition:
 

1. Is there a governmental contract with the state, county, municipality or district?

2. Does the public officer have an interest, direct or indirect, in the contract?

3.  Is the contract authorized by a law passed or order made by a board or public body of which the public officer is a member?

4. Was the authorizing law or order passed during the public officer’s term or within one year after the expiration (or termination) of such term?

Elements 1, 3 and 4, as set forth in Frazier, will be met if and when the regional airport authority board authorizes a contract to purchase from the medical insurance provider during the prospective member’s term or within one year thereafter.

Therefore, the single question to be considered herein is whether the prospective member will have an interest, direct or indirect, in the regional airport’s contract to purchase medical insurance coverage from the medical insurance provider of which the prospective member was a former officer and director.

In reliance upon the requestor’s facts that the prospective member has totally and completely divested himself or herself of all his or her interests, direct or indirect, in the medical insurance provider, Constitutional Section 109 and Code Section 25-4-105(2) will not prohibit the regional airport board from immediately contracting for coverage from the medical insurance provider at the time of commencement of membership should the anticipated appointment occur.

The requestor is advised that the prospective member’s divestiture must be outright and complete, without his retention of any direct or indirect personal or pecuniary interests in the medical insurance provider or his or her receipt of any direct or indirect personal or pecuniary benefits from the medical insurance provider. If this is not the case, then the regional airport board’s authorization of a contract with the medical insurance provider, during the prospective member’s term or within one year thereafter, will violate Constitutional Section 109 and Code Section 25-4-105(2).

 The requestor is also advised that Code Section 25-4-105(3)(a), cited above, would prohibit the regional airport board from having an existing contract for medical insurance coverage with the medical insurance provider at the time of the commencement of membership of the prospective member if he or she had an existing material financial interest in the medical insurance provider as defined in Code Section 25-4-103(k), cited above.

As a precaution, the requestor is cautioned to advise the prospective member that a recusal or an abstention will not prevent a violation of Constitutional Section 109 and Code Section 25-4-105(2) or (3)(a).  Even without a board member’s vote, the authorization by his or her board, nonetheless, results in a contract in which the board member has a prohibited interest.
 
 

Scott Rankin
Executive Director