This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on December 6, 1996, basing its approval solely on the facts and circumstances stated herein.

May a state university president accept a position on the board of directors of a telecommunications corporation when the telecommunications corporation has a state contract to provide a telecommunications service and the state university through the state contract uses the service?

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

Code Section 25-4-103 (a), (c), (d), (f)(i)(ii), (g)(v), (h), (k)(i)(ii), (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, a nonprofit 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 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).

(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."

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

The President of one of the institutions of higher learning has been contacted and requested to consider serving as a member of the Board of Directors of a corporation. The corporation is engaged in the business of providing global telecommunications services.

The corporation is a party to an agreement with the state's telecommunications agency to provide certain long distance services to agencies and institutions of the State of Mississippi. The contract was entered into following a competitive bidding procedure conducted by the state's telecommunications agency in which four (4) bidders submitted proposals. The corporation was determined to be the lowest and best bidder by the state's telecommunications agency and was awarded the contract by the state's telecommunications agency. Under the agreement, the corporation is required to offer specified long distance services to agencies and institutions of the State of Mississippi at rates specified therein. While State agencies and institutions are not required to obtain the specified long distance services from the corporation, they are encouraged to do so. In this case, the University did not accept or reject the proposed services but was notified by the state's telecommunications agency that the services of the corporation would commence and that the transition would be seamless, i.e., there would be no interruption in service.

The President of the University does not own more than two (2%) percent of the common stock outstanding in the corporation. The President has not been advised with regard to the amount of compensation payable to the President for services rendered as a Board member of the corporation. The President is willing to accept less than $5,000 in annual aggregate net income from the corporation for service as a Board member. Additionally, in consideration of the benefits that may ensure to the benefit of the university and the state from the President's service as a Board member, the President is willing to serve in that capacity without compensation.

As noted above, the President was not involved in the selection of the corporation by the state's telecommunications agency to provide telecommunications services to state agencies and institutions. The President would, likewise, not be involved in any future consideration of the corporation by the state's telecommunications agency for state-wide services, including services to be provided to the university by the corporation.

Please provide an opinion as to whether the President may accept the position as a director of the corporation without violating Section 109 of the Mississippi Constitution and the conflict of interest provisions of state law.

Code Section 25-4-105(3)(a), cited above, prohibits a public servant from having a material financial interest in a business that is a contractor, subcontractor or vendor with the public servant's governmental entity.

The university president is a public servant under Code Section 25-4-103(p)(ii), supra. Since the university is an authority of the state, the governmental entity in this instance means the state as set forth in Code Section 25-4-103(h), supra. The telecommunications corporation is clearly a business as defined in Code Section 25-4-103(c), supra.

Therefore, Code Section 25-4-105(3)(a) prohibits the university president from having a material financial interest in the telecommunications corporation that is a contractor with the state.

A material financial interest for purposes of this request is defined in Code Section 25-4-103(k)(i)(ii), supra. Specifically, Code Section 25-4-103(k)(ii) is the controlling definition. Since the university president has less than a two percent (2%) ownership interest in the telecommunications corporation, the president must have an aggregate annual net income of $5,000.00, or more, from the corporation to have a material financial interest.

Therefore, Code Section 25-4-105(3)(a) is not violated if the university president's aggregate annual net income from the telecommunications corporation is less than $5,000.00.

Notwithstanding the above, Code Section 25-4-105(4)(b)(d), cited above, provides limited exceptions to the prohibitions set forth in Code Section 25-4-105(3)(a).

Code Section 25-4-105(4)(b) allows a public servant to have a material financial interest in a business that is contracting with an authority of his or her governmental entity other than the authority of the governmental entity the public servant serves under certain circumstances. Those circumstances are where the 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.

Although the state's telecommunications agency received four (4) bids before awarding the telecommunications corporation the authority to contract with the state's authorities without them requesting bids, the state's authorities still must accept the telecommunications corporation's service and pay the telecommunications corporation directly for the service. This scenario results in the

university having a contract with the telecommunications corporation under the definition in Code Section 25-4-103(f)(ii), supra. Therefore, Code Section 25-4-105(4)(b) is not applicable to this circumstance since the university is contracting with the telecommunications corporation.

Code Section 25-4-l05(4)(d) allows a public servant to have a material financial interest in a business that is contracting with the authority of the governmental entity the public servant serves under certain circumstances. The pertinent circumstance here is 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.

The Code Section 25-4-105(4)(d) exception of "two (2) or fewer commercial sources" is not applicable in this circumstance since the service being provided by the telecommunications corporation to the university is available from at least three (3) other sources and the university is not required to use the bid awarded the telecommunications corporation by the state's telecommunications agency. The university is not required to use the state's telecommunications agency's bid because it has the option of requesting an exclusion from the state's telecommunications agency and advertising for bids itself. if it advertises for bids, the bid it accepts is not required to be at or lower than the cost of the service under the state's telecommunications agency's bid.

Should the university president accept the director position but not have a material financial interest in the telecommunications corporation, the university president still must remain keenly aware of the above cited Code Section 25-4-105(1).

Code Section 25-4-105(1) 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.

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, but also avoid discussing the subject matter with other staff members or any other person prior to and after the action. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

Therefore, the university must establish a formal policy and procedure to exclude the university president from being involved in the decision of selecting the service now being provided by the telecommunications corporation.

Ronald E. Crowe Executive Director