This Advisory Opinion concerns the following issue 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 February 8, 1996.
 
May a bank president serve on a community college board of trustees when as a community college trustee the bank president is also a member of the board of directors of the community college foundation which has certificates of deposits with the bank and also owns stock in 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 entities 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 25-4-103(c), (d), (f)(i)(ii), (g)(v), (h), (1) and (p)(i)(ii)(iii) 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:

(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.

(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 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), (2), (3)(a) and (4)(a) state:

"(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.

(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."

    Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as follows and considered apart of this opinion. The additional documentation provided by the requestor is not included herein because of its volume but is available for review in the Commission's office, absent identifying data.

A Board of Trustee member has been appointed to the board of the Community College who is president of a bank in our local area. The Community College does not have any funds on deposit in this bank, nor will we deposit any funds in this bank during the Trustee's term of office.

However, the Board of Trustees of the Community College composes the Board of Directors of the Community College Foundation Fund. The Community College Foundation Fund, a separate private organization, does currently have three (3) Certificates of Deposit with this financial institution. It is my understanding from my conversation with your staff; that at the time of maturity these Certificates of Deposit should be invested with another financial institution. Additionally, the Foundation Fund currently owns 118 shares of stock in this bank. These stock certificates were a gift to the Foundation Fund. The total value of the stock certificates at the time of gift is $5,015.00 and the annual dividend received from the stock is $59.00. Both the value of the stock and the respective dividends received from it are immaterial in comparison to the value of the Foundation Fund and its normal annual earnings. Your staff indicated to me in our phone conversation that holding the stock would not be a problem for the Community College Foundation Fund because it is such a minor part of the Foundation Fund's total investments and earnings.

    In addition to the above facts and circumstances, the requestor has provided documentation in the form of a Charter of Incorporation and the Bylaws of the Community College Foundation Fund. This additional documentation revealed that the Community College Foundation Fund is a not- for-profit corporation that was established solely to benefit and serve the Community College and that it is totally controlled by the Community College's Board of Trustees.

    Based solely on the facts and circumstances set forth above, the Commission's opinion is as follows.

    First, the Commission finds that the Community College Board of Trustees and the Community College Foundation Fund Board of Directors should not be considered separate entities for purposes of the conflict of interest laws. An appointment to the Community College Board of Trustees also is an appointment to the Community College Foundation Fund Board.

    Second, the Community College Foundation Fund is for all practical purposes the alter ego of the Community College. The Community College Foundation Fund is not independent of the control of the Community College but is in fact the instrumentality of the Community College.

    Therefore, under the facts and circumstances presented herein, the bank president/appointee is a public servant under the conflict of interest laws as a Community College Trustee and as a Community College Foundation Fund Director.

    As a Community College Trustee, the bank president/appointee is a public officer and a public servant and therefore, is prohibited from having an interest, direct or indirect, in any contract authorized by the Community College Board of Trustees during his term and for one year thereafter by the above cited Constitutional Section 109 and Code Section 25-4-105(2).

    The effect of the prohibitions imposed by Constitutional Section 109 and Code Section 25-4-105(2) is to preclude the bank president/appointee's bank from being designated as the depository of the Community College and/or being authorized in any way to handle its funds during his term and for one year thereafter.

    As a Community College Foundation Fund Director, the bank president/appointee is a public servant and therefore, is prohibited from having an interest, direct or indirect, in any contract authorized by the Community College Foundation Fund during his term and for one year thereafter by the above cited Code Section 25-4-105(2).

    The effect of the prohibition imposed by Code Section 25-4-105(2) is to preclude the bank president/appointee's bank from being designated as the depository of the Community College Foundation Fund and/or being authorized in any way to handle its funds during his term and for one year thereafter.

    The three (3) certificates of deposit referenced in the requestor's letter may mature with the bank president/appointee's bank as they were authorized to be deposited with the bank prior to his term. The Community College Foundation Fund may not purchase certificates of deposit with the bank once the bank president becomes a Director and for one year thereafter.

    In a like manner, the bank stock was obtained by the Community College Foundation Fund prior to the bank president's term. Therefore, the Community College Foundation Fund may retain ownership of that particular stock. The Community College Foundation Fund may not contract to obtain additional bank stock once the bank president becomes a Director and for one year thereafter.

    The bank president/appointee will not be prohibited by Code Section 25-4-105(3)(a), cited above, from serving as a Trustee or Director. This is based on the exception found in the above cited Code Section 25-4-105(4)(a).

    Notwithstanding the above, the requestor should advise the bank president/appointee to be 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.

    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. 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 detail 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.

    Therefore in order to avoid a violation of Code Section 25-4-105(1), the bank president should recuse himself from any matter concerning the bank that may come before the Community College Board of Trustees and the Community College Foundation Fund Board of Directors once he becomes a Trustee and Director.

    The requestor is cautioned to advise the bank president/appointee that a recusal or an abstention will not prevent a violation of Constitutional Section 109 or 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