ADVISORY OPINION NO. 06-101-E

January 5, 2007

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.

(g) “Government” means the state and all political entities thereof, both collectively and separately, including but not limited to:

(i) Counties;

(ii) Municipalities;

(iii) All school districts;

(iv) All courts; and

(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.

(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.

(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 the Board Attorney for the Public School District (the District) and we are seeking an official opinion regarding a situation with one of our board members.

The District is seeking to enter into two consulting services agreements with a [contractor]. Under the agreements, the contractor will provide education consulting services and materials, including professional development and instructional support, teacher coaching and training, and curricula materials at two of the District’s schools. The total amount of fees to be paid the contractor under the two contracts is $165,000.00. The District is also considering a third contract with the contractor for similar services at a third school. The proposed amount of that contract is $91,000.00.

One of the District’s board members is a practicing attorney and partner in a large law firm. He is one of approximately 100 partners in the firm. Another partner in the firm represents the contractor and its parent company. In 2005, firm billings to the contractor and its parent company were $0.00. To date, in 2006, firm billings to the contractor and its parent company totaled $415.00. Aggregate billings of the firm for 2005 and 2006 exceed $90,000,000.00, so billings to the contractor and its parent represent less than one-half of one-thousandth of one percent (.0000046). Our board member has no ownership interest in the contractor or its parent company, nor does he occupy any position in either company as officer, director or employee. Our board member does no legal work, personally, for the contractor or its parent company. Pursuant to the definitions contained in Miss. Code Section 25-4-103(d) and (k), respectively, the law firm is a business with which our board member is associated and our board member does have a material financial interest in his law firm. If necessary or advisable, our board member is willing to completely and totally recuse himself from voting on this or any other matter involving the contractor or its parent company that comes before the District’s board of trustees for consideration and action.

Given the foregoing factual scenario, please provide us an official advisory opinion regarding whether our board member would have a conflict of interest if the District enters into the consulting services agreements with the contractor.

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 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 school board member who is a partner in a law firm could have a prohibited interest in a contract between the school board and a client of the law firm if the board member or his law firm were to derive some monetary benefit from the contract. Here that does not appear to be the case. These facts imply the law firm will not perform any legal services for the client in relation to the proposed contract between the school board and the client. If the law firm will derive no monetary benefit from the proposed contract, then the school board member will have no interest in the contract, and no violation of Section 109 and Section 25-4-105(2) should result.

Yet the contract will obviously result in a monetary benefit to the client, and the board member may ultimately be precluded from participating in the board’s actions on that contract. Every public servant is prohibited from using his position in government to obtain a pecuniary benefit for a “business with which he is associated,” pursuant to Section 25-4-105(1), Miss. Code of 1972. That term is defined in Section 25-4-103(d) in part as “any business ... from which [the public servant] derives more than One Thousand Dollars ($1,000.00) in annual income.” Certainly the law firm is a business with which the school board member is associated, and he may not use his position in government to obtain a pecuniary benefit for the law firm. However, if at some point the board member “derives more than One Thousand Dollars ($1,000.00) in annual income” from the client through fees paid by the client to the law firm and distributed to the board member as a partner in that firm, then the client would also become a business with which the board member is associated, and he would be prohibited from using his position on the school board to obtain a monetary benefit for the client.

Based on the figures provided in these facts, the client does not appear to be a business with which the board member is associated at this time. But that crucial fact could easily change if payments from the client to the firm increase in the future. In light of this clear potential for a violation of Section 25-4-105(1), the board member in question should avoid using his position on the school board to benefit the client by fully recusing himself from any board action involving the client.

A total and complete recusal requires that the board member not only avoid debating, discussing or taking action on the subject matter 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. An abstention is considered a vote with the majority and is not a recusal. Furthermore, the minutes of the meeting should state the recusing member left the room before the matter came before the board and did not return until after the vote.

While the board member clearly has a “material financial interest” in the law firm, as defined in Section 25-4-103(k), his firm will not be a contractor, subcontractor or vendor to the school district, as proscribed in Section 25-4-105(3)(a). Therefore, no violation of that provision should occur.

MISSISSIPPI ETHICS COMMISSION


BY: Tom Hood, Executive Director and
Chief Counsel