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.

May a non-profit corporation created by state statute maintain a bank account/deposit agreement with a bank:

1. in which any member of the board of directors of the corporation holds corporate stock or is an employee, or both; and

2. in which the attorney for the board of directors of the corporation is the chairman and a member of the board of directors of the bank?

    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 entity are not addressed by this opinion.

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 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103(g)(v), (h), (k)(i)(ii), (1), (m) and (p)(ii)(iii) states:

"(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).

(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."

Code Section 25-4-105(1), (2), (3)(a), (4)(a) and (5) states:

"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided 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.

(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 himself 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 a part of this opinion.

I represent a non-profit corporation formed under the 1972 Mississippi Code Annotated. The Board of Directors has requested an opinion on the following issues:

 May the corporation maintain a bank account/deposit agreement with a bank in which any member of the Board holds corporate stock or is an employee, or both? The second question is, may the corporation maintain a bank account/deposit agreement with a bank of which lam the Chairman of the Board and a member of the Board of Directors?

Although these issues seem straight forward to me, it appears that some statutory authority may have been overruled by the Mississippi Supreme Court as violating Section 109.

Additionally, I am a private attorney who represents the Board of Directors of the non-profit corporation on an hourly basis as I do other individual clients.

    In addition to the above, the Legislative Act that created the non-profit corporation provides for the following:

"The corporation created and established shall be a body politic and corporate, may acquire and hold real and personal property, may receive, hold and dispense monies appropriated to it by the Legislature of the State of Mississippi received from the federal government, received from the sale of products, goods, and services which it produces, and received from any other sources whatsoever."

 "No member of the board of directors shall vote on any matter that comes before the board that could result in pecuniary benefit for himself or for any entity in which such member has an interest"

"Each member of the board of directors of the corporation shall receive per diem as provided in Section 25-3-9 for each day or fraction thereof spent in actual discharge of his official duties and shall be reimbursed for mileage and actual expenses incurred in the performance of his official duties in accordance with the requirements of Section 25-341, Mississippi Code of 1972."

"In addition to its other powers, the corporation shall have the power to request, through the department, an appropriation of general revenue finds for the purposes of operation of addition to or renovation of facilities or work programs at the various institutions; however, upon receipt of such appropriation, the rental paid by the corporation for the operation of or such new remodeled or renovated facilities or the operation of a work program shall be sufficient to amortize its cost over a period of five (5) years."

    The Commission finds the above statutory language sufficient to conclude that the non-profit corporation meets the definition of "government" as set forth in Code Section 25-4-103(g)(v), cited above, that the attorney for the board is within the definition of "public servant" as set forth in Code Section 25-4-l03(p)(ii), cited above, and that the board members are within the definition of "public servant" as set forth in Code Section 25-4-103(p)(iii), cited above.

    The Commission formally adopts Advisory Opinions No. 95-073-E, with attachments, and No. 95-104-E, with attachments, in response to this request and by attachment incorporates them into this opinion.

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

    Issue 1. The corporation's maintaining of a bank account/deposit agreement with a bank in which any member of its board holds corporate stock or is an employee would be prohibited by the above cited Constitutional Section 109 and Code Section 25-4-105(2).

    The Commission directs the requestor to the attached Advisory Opinion No. 95-073-E, with attachments, to review the discussion on "de minimis" interests in regard to any stock ownership by a board member. The cautions relating to potential violations of Code Section 25-4-105(1) and (5) discussed in Advisory Opinion No. 95-073-B are also directed to the requestor's attention.

    The requestor is advised to take note of the fact that the exception set forth in the above cited Code Section 25-4-105(4)(a), applies only as an exception to a violation of the above cited Code Section 25-4-105(3)(a). It is not an exception to Constitutional Section 109 or Code Section 25-4-105(2).

    Furthermore, in Frazier v. State, 504 So.2d 675 Miss. 1987), the Supreme Court held that a statute exempting from operation of conflict-of-interest law a public servant who is an officer or stockholder of banks or savings and loan associations bidding on privilege of keeping as depositories public finds of a governmental entity is unconstitutional.

    Also, the requestor is cautioned to advise the directors that a recusal or abstention will not prevent a violation of Constitutional Section 109 or Code Section 25-4-105(2). Even without a director's vote, the authorization by the director's board nonetheless results in a contract in which the director has a prohibited interest.

    Issue 2. The requestor's serving as the corporation's attorney and also serving as chairman and a member of the board of directors of the corporation's depository is prohibited by the above cited Code Section 25-4-105(3)(a), if the requestor's interest in the bank results in a "material financial interest" as defined in the above cited Code Section 25-4-103(k)(i)(ii).

    As stated in Advisory Opinion No. 95-104-E, a "board member" of a bank does not fall within the statutory exception found in Code Section 25-4-105(4)(a), cited above, which refers only to an "officer" or "stockholder."

    In addition to the above, the requestor also must remain keenly aware of the above cited Code Section 25-4-105(1) and (5).

    Code Section 25-4-105(1), cited above, prohibits public servants from using their official positions to obtain a pecuniary benefit for themselves, a relative or a business with which they are associated.

    In order to avoid using their official positions to obtain a pecuniary benefit, the public servants must totally and completely recuse themselves from subject matters providing the pecuniary interests.
 
    A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during an official meeting, but also avoid discussing the subject matter with board members, staff, employees or any other person prior to and after the official meeting. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

    Also in order to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. The minutes of the governing entity's board should state the public servant left the meeting by showing him or her absent for that matter.

    Code Section 25-4-105(5) prohibits a public servant from intentionally using or disclosing non-public information gained in the course of or by reason of one's official position that could result in a pecuniary benefit for the public servant, a relative or any other person. A person within the meaning set forth in Code Section 25-4-103(m), cited above, would include a bank.

    The issues presented by the requestor also must be viewed as they relate to Code Section 25- 4-101, set forth above. This code section sets the tone for the conflict of interest laws as it is the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

    Clearly, serving as the attorney for the corporation's board and as chairman and as a board member of the corporation's depository has the potential of creating suspicion among the public and reflecting unfavorably upon the corporation.
 

Ronald B. Crowe Executive Director