May a city purchase land from the father of one of the city's aldermen when the alderman is employed by a corporation whose only shareholders are the alderman's father and mother?

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

"(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 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) '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.

(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.

(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."

The Commission formally adopts Advisory Opinions No. 94-009-E and No. 89-51-E in 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's opinion is as follows.

Constitutional Section 109 and Code Section 25-4-105(2), cited above, prohibit an alderman from having interest, direct or indirect, in a contract authorized by his or her board. This includes a contract with the alderman's father. As stated in Advisory Opinion No. 94-009-E, an interest can exist when the alderman/son is financially dependent on his father and, therefore, not free from the father's control and support.

In this instance, the alderman, although financially dependent on the corporation, certainly is not under the control and support of his father and not financially dependent on his father. The corporation is a separate legal entity from the father. Further, the Commission's understanding is the corporation has no interest in the land and will not benefit financially, or otherwise, from the father's sale of the land to the city.

Therefore, the father's selling of real property he personally owns to the city does not violate the conflict of interest laws, even though, the alderman/son is employed by a corporation whose only shareholders are the alderman's father and mother.

This finding is consistent with the attached Advisory Opinion No. 89-51-E. In the attached opinion' the Commission concluded that a community college's lease of property from the father of one of its trustees did not violate the conflict of interest laws, even though, the trustee was a sales manager for a manufacturing firm owned by the trustee's father.

Notwithstanding the above, Code Section 25-4-105(1), cited above, would require the alderman to avoid using his official position to obtain a pecuniary benefit for his father.

To avoid using his position as prohibited by Code Section 25-4-105(1), the alderman must totally and completely recuse himself from the city board's deliberation and action on the purchase of his father's land. An abstention is a vote with the majority of the governing entity's board and therefore does not qualify as a recusal.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during the official meeting, but also avoid discussing the subject matter with other board members, staff 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.

Al so 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.

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

Ronald B. Crowe Executive Director