This Advisory Opinion concerns the following issues 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 December 1, 1995.

         1. May a university employee or a publishing company, owned by a state university
employee and his spouse, in conjunction with another communication company form
a new company to provide Internet services to:

a. state governmental entities other than his university employer; or

b. his state university employer?

2. What if the state university employee was involved in discussions between his university employer and the communication company, and its subsidiary, as a university employee prior the establishment of the new company?

         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 governmental entities are not addressed by this opinion.

          The pertinent conflict of interest laws to be considered here are:

Code Section 254-103(a), (c), (d), (f)(i)(ii), (g)(v), (h), (k)(i)(ii)(iii)(iv), (1), (m), (p)(ii)(iii) and (q) 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, a 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:

(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.

(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.

(m) 'Person' means any individual, firm, business, corporation, association, partnership, union or other legal entity, and where appropriate a governmental entity.

(p) 'Public servant' means:

(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. 9,

Code Section 25-4-105(1), (3)(a), (4)(b), (4)(d) and (5) 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.

(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:

(b) May be a contractor or vendor with any authority of the governmental entity other than the 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 he is a member, officer, employee or agent where such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws.

(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.

(5) No person may intentionally use or disclose information gained in the course of or by reason of his official position or employment as a public servant in any way that could result in pecuniary benefit for him self; any relative, or any other person, if the information has not been communicated to the public or is not public information."

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

My client is Director of Public Relations, Resources Development, a grant Project and Associate Professor of Journalism for a State University. My client, with his wife, own a Publishing Company, which publishes a nationally circulated magazine.

My client is also vitally interested in the emerging Internet industry. In that connection, my client and Corp C, a corporation involved in the Internet industry and based in Jackson, contemplate forming a new corporation (herein called "New Corp") to engage in various aspects of the Internet industry. My client has no intention of violating or appearing to violate Mississippi's conflicts of interest statutes. My client has requested that I provide your office with all of the facts relating to New Corp and what New Corp intends to do, and to seek the opinion of the Ethics Commission regarding the proposed activities.

The facts are:

A. Corporations/entities/individuals who may be involved in projected transactions.

(a) Corp A

(b) Corp B

(c) Corp C

(d) My client's Publishing Company

(e) My client

(f) A corporation to be formed (New Corp)

B. Relationships:

(a) Corp A owns Corp B

(b)CorpBownsCorpC

(c) My client is a major shareholder in the Publishing Company but has no interest in Corp A, Corp B or Corp C.

C. The Publishing Company and Corp B want to form and own New Corp, a limited liability corporation. The Publishing Company will be a major shareholder of New Corp.

D. The business purposes of New Corp are:

(a) to sell Internet services to a wide range of businesses, industries, and government agencies, as well as students, faculty and staff of colleges and universities in Mississippi and throughout the nation.

(b)to sell Internet services to Mississippi universities and colleges other than the university employing my client.

E. Several months ago, my client, in his official capacity, was involved, along with other university officials, in discussions with Corp A and Corp B. The establishment of an Internet activity to sell Internet services to university students, faculty and staff was discussed. Corp B also discussed a possible employment of university research facilities.

F. It is understood by my client and all other prospective stockholders of New Corp that New Corp will not enter into any sort of contract with the university employing my client. My client explained that Corp B might sell certain services to the university employing my client - but no corporation in which he is involved will do so.

For purposes of this letter, I assume that: (1) My client is a "public official" as that term is defined in Section 25-4-1(j), and not a "public employee," as defined in Section 25-4-1(i), (2) My client is also a "public servant" as defined in Section 25-4- 105(u). (3) "Public funds" mean all monies, whether, federal, state, district, or local. Section 25-4-1(i) (4) The university employing my client is a part of "government", as defined in Section 25-4-1 03(g)(2), and therefore it and its employee, my client, is bound by the terms of the ethics statutes.

Are possible conflicts of interest corporation involved here? Would my client be involved in a conflict of interest as that term is used in Mississippi statutory law relating to employees of state institutions if:

A. My client (or his Publishing Company) is a stockholder in New Corp?

B. New Corp earns income from state institutions other than the university employing my client?

C. Neither my client nor any member of his immediate family benefits in any way from revenues generated from possible contracts between Corp B and the university employing my client?

D. My client was involved in early meetings between his employer university's officials, Corp A and Corp B as a university employee?

E. New Corp will not be a vendor to the Governmental entity of which he is a member. See: Sec. 25-4-105(3)(a)?

F. If new Corp is a contractor or vendor with any State of Mississippi governmental entity other than the governmental entity of which my client is an officer or employee the contract is let after the governmental entity receives three or more bids for the service or the services are available from two or fewer commercial sources?

I understand that the Ethics Commission will, on my client's request, and after being given all pertinent facts, issue an advisory opinion as to the answers to the questions posed in this letter. See Sec. 254-17(I) MCA. Please consider this letter my client's request for such an opinion.

         Based solely on the facts and circumstances presented herein, the Commission's opinion is as follows.

         Issue la. The new company [New Corp] owned in part by the university employee and/or his and his spouse's publishing company would be prohibited from contracting with other authorities of his governmental entity by the above cited Code Section 25-4-105(3)(a) except when allowed by Code Section 25-4-105(4)(p) as discussed below.

         In other words, New Corp's contracting with universities or agencies of the State, other than the university employer, would be prohibited unless the contract falls within the exception set forth in the above cited Code Section 25-4-105(4)(b).

         Code Section 25-4-105(4)(b) would allow New Corp to contract with universities or agencies of the State, other than the university employer, if "such contract is let to the lowest and best bidder after competitive bidding and three (3) or more legitimate bids are received or where the goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws."

         Issue lb. The new company[New Corp] owned in part by the university employee and/or his and his spouse's publishing company would be prohibited from contracting with the authority of the governmental entity employing the university employee by the above cited Code Section 25-4- 105(3)(a) except as allowed by Code Section 25-4-105(4)(d)(i) as discussed below.

         In other words, New Corp's contracting with the university employer would be prohibited unless the contract falls within the exception set forth in the above cited Code Section 25-4-105(4)(d)(i).

         Code Section 25-4-105(4)(d)(i) would allow New Corp to contract with the university employer if "such goods or services involved are reasonably available from two (2) or fewer commercial sources, provided such transactions comply with the public purchases laws."

         Notwithstanding the above, there would not be a violation of Code Section 25-4-105(3)(a) should Corp A or Corp B contract with authorities of the State governmental entity for services totally and completely unrelated to New Corp. This position is based on the university employee, the publishing company and New Corp not having a "material financial interest" as long as no personal and/or pecuniary benefit accrues to the university employee, his spouse, the publishing company and/or New Corp.

         Issue 2.  In regard to the earlier discussions which the university employee attended in his official capacity, Code Section 25-4-105(5), cited above, prohibits the university employee from using or disclosing non-public information gained during said discussions that could result in a pecuniary benefit to him self; his spouse, the publishing company, New Corp, Corp A, Corp B, Corp C or any other person. Person means any individual, firm, business, corporation, association, partnership, union or other legal entity, and where appropriate a governmental entity.

         Therefore, should the agreement between Corp C and the university employee, or his publishing company, to establish New Corp have resulted from non-public information gained during the above referenced earlier discussions than the university employee would be in violation of Code Section 25-4-105(5).

         In addition to be above, the university employee may not use his official position to obtain a pecuniary benefit for himself; his relatives or any business with which he is associated as to do so is prohibited by the above cited Code Section 25-4-105(1).

         In order to avoid using his official position to obtain a pecuniary benefit, the university employee must totally and completely recuse himself from future discussions or meetings between his university employer and Corp A, Corp B or Corp C.

         A total and complete recusal requires that the university employee not only avoid debating, discussing, or taking action on the subject matter in his official capacity with the university, but also avoid discussing the subject matter with other university officials, staff or any other persons. This includes casual comments, as well as detail discussions, made in person, by telephone or by any other means.

         Also in order to properly recuse himself from this subject matter, the university employee must leave the room or area where such discussions, considerations and/or actions take place

         As to whether the university employee may have already violated Code Section 25-4-105(1), this can not be determined from the facts provided by the requestor nor is an advisory opinion a proper method for such a determination.
 
 
 

Ronald E Crowe Executive Director