This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The opinion is based solely on the facts and circumstances as stated below and was approved by the Commission on August 25, 1995.

May a municipality contract with either of two cellular telephone companies having the exclusive rights to its service area when an independent agent for one of the cellular telephone companies is an alderman of the municipality and an independent agent for the other company is a police officer for the municipality?

    The Mississippi Ethics Commission is restricted 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, Mississippi laws outside the jurisdiction of the Commission and internal rules and regulations of the local governmental entity are not addressed by this opinion.

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

This firm serves as counsel for the City. In this regard, we are hereby requesting on the City's behalf an opinion with regard to possible ethics conflicts concerning the provision of cellular services. As you may recall, an alderman from the City wrote to your office for an opinion regarding the ramifications of the City contracting with a cellular services company for which that alderman was an agent. It is my understanding of the State Constitution and the Ethics in Government provisions of the Mississippi Code, and based upon confirmation through the opinion issued by your office, that generally such transactions are prohibited.

At the time that issue first arose, it was our understanding that there were more than two providers of cellular phone services in the County. Further, we were not aware that any other employees of the City were also agents of any other cellular services entities. Accordingly, it was recommended, and supported by your opinion, that the City do business with a company other than the one for which the alderman was an agent. The Mayor and City Secretary then began inquiring into the provision of services by other companies. It was at this time that it became apparent that there is only one other cellular services carrier in the County. The City then entered into a contract for the provision of cellular phone services with that carrier, [Company A].

Several weeks after this contract was executed, we were informed that the [Company A] agent for which the City is under contract is the girlfriend of a City police officer. The City police officer is also an agent for [Company A] and works with his girlfriend. Thus, the question arose as to whether or not this arrangement would also present a conflict of interest between the City and the police officer. It is for this reason that we now seek an opinion from the Ethics Commission.

The Ethics in Government provisions of the Mississippi Code, and more particularly Miss. Code Ann. §25-4-105(4)(b) and (c) (1994 Com. Supp.), appears to provide an exception from the general conflict of interest provision contained in Section 25-4- 105(1) for those situations where there are two or fewer providers of the services in question. It is my understanding that while there are numerous agents selling cellular services, there are only two carriers of the actual services themselves. To the best of our knowledge, [Company B] and [Company A] are the only two actual cellular phone services carriers in the County area. There are, however, numerous companies that are agents for one or the other carrier. Based on this fact, we would like for your office to clarify whether or not the above cited exemption applies to the City's situation. If it does not, we would also like some guidance as to what the City can do to receive cellular services, since if the exception does not apply there will be no company in the area with whom we can do business.

If this exception cited above does indeed apply, it also raises an additional question for which we need some assistance. If the exception applies, does it apply equally to the police officer and the alderman, or should a distinction be made between their positions to lessen the appearance of conflict. That being that unlike the alderman, the police officer is not an elected official, does not have authority to appropriate funds nor to authorize the City to enter into contracts for such services. Thus, would the City be better served to maintain its contract with [Company A] and avoid the lesser of two apparent conflicts. Also, it appears that more than one conflict provision may be applicable to the alderman. Any assistance that you may provide in this area would be greatly appreciated.

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(a), (c), (d), (f)(i)(ii), (g)(ii), (h), (i), (k)(i)(ii)(iii)(iv), (1) and (p)(i)(ii)(iii) states:

"(a) 'Authority' means any component unit of a governmental entity.

(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, an non-profit corporation or other such entity, association or organization receiving public funds.

(d) 'Business with which he is associated' means any business or 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) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(ii) Municipalities.

(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.

(1) '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 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

("il) 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 254-105(2), (3)(a) and (4)(d) 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.

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

(d) May be a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent or have a material financial interest in a business which is a contractor, subcontractor or vendor with any authority of the governmental entity of which he is a member, officer, employee or agent: (i) where such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws; or (ii) where the contractual relationship involves the further research, development, testing, promotion or merchandising of an intellectual property created by the public servant."

    The Commission formally adopts Advisory Opinion No. 95-065-E in partial 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 is providing the following opinions.

    Code Section 25-4-105(3)(a), cited above, prohibits a public servant from being a vendor or having a material financial interest in a business which is a vendor with the governmental entity of which he is a member, officer, employee or agent. Therefore, both the alderman and the police officer, respectively a member and an employee of the city, are prohibited from having such a vendor relationship with the city.

    Notwithstanding the above, there are certain exceptions to the prohibitions found in Code Section 25-4-105(3). These exceptions are found in Code Section 25-4-105(4).

    Specifically, Code Section 25-4-105(4)(d), cited above, is applicable in regard to the facts and circumstances presented by the requestor.

    Code Section 25-4-105(4)(d) sets forth the circumstances that must exist before a public servant may be a vendor or have a material financial interest in a business that is a vendor with the authority of the governmental entity of which he is a member, officer, employee or agent.

    The police officer and the alderman are both with the authority of the city under the jurisdiction of the mayor and board of aldermen. Likewise, the cellular telephone services contract will be with the authority of the city under the jurisdiction of the mayor and board of aldermen.

    Therefore, the exception in Code Section 25-4-105(4)(d)(i) allows Company A and Company B to contract with the city without the police officer and the alderman being in violation of Code Section 25-4-105(3)(a). This finding is based on the understanding that Company A and Company B are the only two (2) commercial sources from which the city can obtain cellular telephone services and the transactions leading to the telephone services contract comply with the state purchasing laws.

    Notwithstanding the above, the exceptions in Code Section 25-4-105(4) do not apply to the above cited Constitutional Section 109. The Mississippi Supreme Court in Frazier v. State by and through Pittman, 504 So.2d 675 Miss. 1987) stated, "To the extent that [the Mississippi Code] attempts to provide for an exception to § 109, it is in conflict and therefore unconstitutional."

    Therefore, the Commission's opinion in the attached advisory opinion, No. 95-065-E, remains in effect. Company B cannot contract with the city without the alderman serving as its independent agent being in violation of Constitutional Section 109 and Code Section 25-4-105(2).

    Even though the above referenced exception allows Company A to contract with the city without there being a violation of Code Section 25-4-105(3)(a), it does not mean that the police officer may be the agent for the company selling cellular services to the city.

    The requestor in the request letter states, "There are, however, numerous companies that are agents for one or the other carrier."

    Since Company A has numerous agents, the exception in Code Section 25-4-105(4)(d)(i) is not applicable with regard to the police officer being the agent or having a material financial interest in the agent company selling cellular services to the city.

    The girlfriend of the police officer would not be prohibited by the conflict of interest laws from being the agent or having a material financial interest in the agent company selling cellular services to the city. However, the police officer would violate Code Section 25-4-l05(3)(a) if he has a material financial interest in the agent company through which the girlfriend is selling cellular services to the city. The police officer may not be a co-owner, partner, shareholder, employee or agent in or for the agent company if such involvement's result in his having a material financial interest as defined in the above cited Code Section 25-4-103(k)(i)(ii).

    In summary, the city may contract with Company A without violating the conflict of interest laws, as long as, the police officer has no material financial interest in the agent company.

Ronald E. Crowe Executive Director