This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on February 18, 2005, basing its approval solely on the facts and circumstances stated herein.
 

May a municipality operating under the council form of government sub-contract for the deposit of municipal funds with a bank which employs the mayor’s spouse as a vice-president?

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), (d), (f)(i)(ii), (h), (k)(i)(ii)(iii)(iv), (l), (p)(i)(ii)(iii) and (q) 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.

(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.

(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.

(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.

(q) ‘Relative’ means the spouse, child or parent.”

Code Section 25-4-105(1), (2), (3)(a) and (4)(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.

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

(a) May be an officer or stockholder of banks or savings and loan associations or other such financial institutions bidding for bonds, notes or other evidences of debt or for the privilege of keeping as depositories the public funds of a governmental entity thereof or the editor or employee of any newspaper in which legal notices are required to be published in respect to the publication of said legal notices.”

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

My question concerns a possible conflict of interest if I would be the Mayor of our city and my spouse is a Vice-President of a bank that serves as a depository of public funds.  This is not a current situation, but needs to be resolved prior to me qualifying to run for office, with a deadline of March 3, 2005.  Obviously I would have to win the election first, but in fairness to the voters, would not run if a conflict of interests would be an issue during my term of office

Our city has a Mayor-Council form of government, with the Council granted the authority over all financial matters. The Mayor does not vote.

Awarding of contracts for banks serving as a depository are made by the council on a best bid basis.  The City Clerk/Financial Officer accepts sealed bids at a public meeting advertised for that purpose, with the winning bidder approved by the Council for a two year contract.

The current contract will be awarded on 2-15-05 to a certain bank for a two year period.  They are required to let the other bidding banks participate in a share if they will meet the same rate as the winning bank.  The city deals only with the winning bank, which then services the other participating banks.

My spouse is employed by a participating bank which is entitled to 25 percent of the business for the next two years should they accept the bid rate.  She is not in a position with the bank that deals with the bidding process in any manner.

Does this relationship meet the exclusion of 25-4-105, (4) (a)?

The Commission formally adopts Advisory Opinion No. 94-046-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.

As set forth in Advisory Opinion No. 94-046-E, the Commission first notes that in a Mayor-Council form of government, while the Council exercises legislative power of the municipality (Code Section 21-8-9), the Mayor is responsible for enforcing the municipal charter and ordinances, has veto power (Code Section 21-8-17), and appoints, manages and may dismiss municipal department heads (Code Section 21-8-21).  The Mayor may also attend meetings of the Council, may take part therein and may cast a deciding vote in the case of a tie on the question of filling a vacancy in the Council; otherwise the Mayor has no vote (Code Section 21-8-17).  The Commission therefore considers the Mayor as a working member of the Council.

Section 109, Miss. Const. of 1890, and its statutory parallel, Section 25-4-105(2), Miss. Code of 1972, both quoted above, prohibit a member of a public board from having an interest in a contract authorized by that board during his or her term or for one year thereafter. Frazier v. State, ex rel. Pittman, 504 So.2d 675, 693 (Miss. 1987).

A member of a governmental body, including a mayor, has an indirect interest by way of his or her spouse’s direct interest in a contract authorized by the governmental body.

Therefore, Constitutional Section 109 and Code Section 25-4-105(2) prohibit a city’s authorization of a contract with a bank to serve as its depository, or for other purposes, when the mayor serving the city has a spouse that the bank employs as its vice-president.  The prohibition applies during the mayor’s term and for one year thereafter.

In summary, the requestor’s spouse being employed as an officer of the bank is sufficient to result in the requestor having a prohibited interested in any contract between the city and the bank, resulting in a violation of Constitutional Section 109 and Code Section 25-4-105(2), should the contract be entered into during the requestor’s term of office or one year thereafter.

Section 25-4-105(4)(a), Miss. Code of 1972, quoted above, provides an exception to the prohibition imposed in Code Section 25-4-105(3)(a). That exception provides that a public servant’s relative may be an officer of a bank “bidding for ... the privilege of keeping as depositories the public funds of a governmental entity thereof.” Code Section 25-4-105(4)(a). As vice-president of the bank in question, the requestor’s spouse falls within this exception. It should be noted, however, that the exceptions found in Code Section 25-4-105(4)(a) apply only to the provisions of Code Section 25-4-105(3)(a) and not to other segments of the Ethics in Government Laws.

Therefore, the bank may complete its current contract with the city if the requestor is elected mayor.  However, all future contracts with the bank will be prohibited during the requestor’s term and one year thereafter, if his spouse continues to serve as a vice-president of the bank.

We must address another matter since the bank may complete its current contract with the city because the requestor’s spouse is a bank officer and as such the bank is a business with which the requestor is associated. See Section 25-4-103(d), Miss. Code of 1972, quoted above. Specifically, the requestor, if elected, cannot use his or her position as mayor to obtain pecuniary benefit for the bank employing his or her spouse. See Section 25-4-105(1), Miss. Code of 1972, quoted above. In fact, the requestor would be obliged to recuse himself or herself from any action which would result in a monetary benefit to the bank.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter, such as signing orders or other official documents, during official meetings or deliberations, but also avoid discussing the subject matter with staff or any other person. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means. Even though the mayor is not a member of the council, the minutes of the meeting should state the mayor left the council room before the matter came before the council and did not return until after the vote.

The requestor is advised that a recusal will not avoid a violation of Constitutional Section 109 or Code Section 25-4-105(2). It is a public servant’s prohibited interest in a contract and not his or her actions that result in a violation of Constitutional Section 109 and Code Section 25-4-105(2).
 

Scott Rankin
Executive Director