ADVISORY OPINION NO. 06-090-E

December 8, 2006

The Mississippi Ethics Commission issued this opinion on the date shown above in accordance with Section 25-4-17(i), Mississippi Code of 1972, as reflected upon its minutes of even date. The Commission is empowered to interpret and opine only upon Article IV, Section 109, Mississippi Constitution of 1890, and Article 3, Chapter 4, Title 25, Mississippi Code of 1972. This opinion does not interpret or offer indemnity from liability for any other laws, rules or regulations. The Commission based this opinion solely on the facts and circumstances provided by the requestor as restated herein. The indemnity provided under Section 25-4-17(i) is limited to the individual who requested this opinion and to the accuracy and completeness of these facts.

I. LAW

The pertinent Ethics in Government Laws to be considered here are as follows, to wit:

Section 109, Miss. Const. of 1890.

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.

Section 25-4-103, Miss. Code of 1972.

(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.

(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.

(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.

Section 25-4-105, Miss. Code of 1972.

(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.

II. FACTS

Facts provided by the requestor are set forth below, with identifying information redacted, and are considered a part of this opinion.

I am a councilman in the city and I am also a “non-voting” member of a not for profit organization known as the City’s Men’s Club. There are a few events each year that the Men’s Club organizes for the citizens of the city. One such event is the annual Mardi Gras parade. This event has always been a great success for the city because of the retail sales on the day of the parade and just the overall good of people coming together for such a fun event. My dilemma is that I want to vote on issues concerning the Men’s Club because of the positive things that this group does in our community. I feel as though I have nothing to personally gain from supporting this group in my capacity as a Councilman. I would like to have an ethics opinion on this issue so that in the future when items that are related to the Men’s Club or any other non-profit organization that I might belong to, I can voice my opinion and make my vote count.

In a subsequent conversation with the requestor, a member of the Commission’s staff received additional information. The requestor is an “associate member” of the organization and has no right to vote within the organization. The organization is a non-profit corporation, but the requestor is not an officer or director of the corporation. None of the officers or members of the organization receive income from the organization. On occasion the city reimburses the organization for event expenses, such as insurance, and the city provides city services during the Mardi Gras parade.

III. ANALYSIS

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 any direct or indirect interest in a contract with the government which is funded or otherwise 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). The Commission need not address the question of whether the city has a contract with the non-profit organization. The council member would have no financial interest in payments from the city to the non-profit since he receives no income from the non-profit. Therefore, no violation of Section 109 and Section 25-4-105(2) will result from the councilman’s volunteer membership in the non-profit organization.

Section 25-4-105(1), Miss. Code of 1972, prohibits a city council member from using his position on the council to financially benefit a “business with which he is associated.” As defined in Section 25-4-103(c), above, the term “business” can include a non-profit organization receiving public funds. However, this non-profit corporation is not a business with which the councilman is associated because he has no ownership interest, receives no income and exercises no control over the organization. Thus, the council member will not violate Section 25-4-105(1) if he participates in approving payments to the club.

Pursuant to Section 25-4-105(3)(a), Miss. Code of 1972, no public servant of the city may have a “material financial interest” in a business which is a contractor, subcontractor or vendor to the city. The term material financial interest is defined in Section 25-4-103(k), above. Since the councilman has no ownership interest in and receives no income from the non-profit, he does not have a material financial interest in the organization, and no violation of Section 25-4-105(3)(a) should arise from the city’s relationship with the non-profit corporation as described herein.

MISSISSIPPI ETHICS COMMISSION


BY: Tom Hood, Executive Director and
Chief Counsel