This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on April 5, 1996, basing its approval solely on the facts and circumstances stated herein.

May a county depository distribute a portion of the county's funds to another bank that employs the spouse of one of the county's supervisors?

    State law restricts the Mississippi Ethics Commission 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, this opinion does not address the Mississippi laws outside the Commission' s jurisdiction nor the governmental entity's internal rules and regulations.

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(f)(i)(ii), (g)(i), (h), (1), (p)(i)(ii)(iii) and (q) states:

"(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:

(i) Counties.

(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.

(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 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.

(q) 'Relative' means the spouse, child or parent." Code Section 25-4-105(1) and (2) 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.

(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."

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

    Would a member of a Board of Supervisors violate the conflict of interest laws as a
result of the facts listed below?

The Board selects Bank A as its depository. Bank A then distributes a portion of county funds among other banks, including Bank B, which is the employer of the spouse of one of the supervisors.

The county is not part of the agreement between Bank A and the other banks nor do the other banks receive the funds in the name of the county. Therefore, the county cannot withdraw funds from any banks except Bank A.

The county's control of its funds is contractual control over Bank A only. It has no contract directly or indirectly with Bank B.

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

    First, should the county contract with Bank B to serve as its county depository, the supervisor whose spouse is Bank B's employee would violate the above cited Constitutional Section 109 and Code Section 25-4-105(2).

    In order for this same prohibition to apply to the contract with Bank A, the supervisor must have an interest, direct or indirect, in the contract with Bank A since there is not a contract between the county and Bank B.

    If in the normal course of business, Bank A is voluntarily investing those funds it holds on deposit, including the county's deposits, that are in excess of the demands and needs for loans, maturities and withdrawals by placing the funds with accounts or obligations of other financial institutions, including Bank B, the supervisor would not have an interest, direct or indirect, in the contract with Bank A.

    However if Bank A has an expressed or implied understanding with the county that it is to share the county's deposits with Bank B, then the supervisor would have an interest in the contract with Bank A that would be prohibited by Constitutional Section 109 and Code Section 25-4-105(2).

    Further, the Commission has concerns whether the state laws addressing county depositories give a financial institution serving as a county's depository the authority to parcel out specific and identifiable county funds to other financial institutions to hold in accounts and/or as investments on behalf of the financial institution serving as the county's depository. This would be of greater concern if the financial institution serving as the county's depository was requiring these other financial institutions to provide it acceptable securities to provide the county for the county funds parcelled out to them.

    The requestor should immediately contact the State Attorney General's Office to request an official opinion on the proper interpretation of the county depository laws should the circumstance described in the above paragraph be under consideration by the county or its depository.

    The requestor is cautioned to advise the supervisor that the use of his or her official position as a county supervisor in order to cause Bank A to distribute funds to Bank B which employs his or her spouse in prohibited by the above cited Code Section 25-4-105(1).
 
 
 

Ronald F. Crowe Executive Director