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 March 1, 1996.

May a county board of supervisors accept a bank's bid on certificates of deposit for the purpose of investing excess county port commission funds when the bank's chairman of the board and president is one of the county's port commissioners?

    Your opinion request to the Office of the Attorney General dated February 20, 1996, was referred by that Office to the Mississippi Ethics Commission on February 21, 1996, as your request involves the above issue that concerns the Mississippi conflict of interest laws.

    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(a), (c), (d), (f)(i)(ii), (g)(i)(v), (h), (k)(i)(ii), (1), (m), 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 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:

(i) Counties; and

(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:

(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), (2), (3)(a), (4)(a)(b) and (5) 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.

(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.

(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.

(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.

    This office represents the County Port Commission. An individual was appointed as
a Commissioner to the County Port Commission for a four year term beginning
January 1, 1996. This individual is Chairman of the Board and President of a local
Bank.

The Bank has historically bid, from time to time, on certificates of deposit solicited by the County for the purpose of investing excess Port Commission funds. Now that this individual has become a Port Commission member, is there a conflict of interest or ethics violation if the Bank continues to bid on investments for such Port Commission funds.

    In addition to the above facts and circumstances, the requestor advised the Commission's staff that the State law under which the county port commission is established gives it the responsibility to make recommendations to the board of supervisors concerning expenditures to be made for the improvement, promotion, development, construction, maintenance and operation of the port facilities and to annually submit a budget for the port's operation and maintenance to the board of supervisors. These recommendations and the budget are then subject to the approval of the board of supervisors. The requestor also advised the Commission's staff that the port commission's funds are maintained in a separate fund in the county treasury, know as the "port fund," which is under the control of the board of supervisors. Therefore, it is the board of supervisors that accepts the bids and approves the depository to hold the monies from the "port fund," including any monies that are invested in certificates of deposit.

    The Commission formally adopts Advisory Opinion No. 95-104-E 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.

    The authorization of the contract with the bank to invest the monies from the "port fund" is made by the county board of supervisors and not the port commission. Therefore, the prohibitions set forth in Constitutional Section 109 and Code Section 25-4-105(2), both cited above, do not apply in this instance.

    The Commission's understanding is that the port commission does not have the authority to approve its own depository, however if the port commission did have the authority to do so, then the port commissioner would be in violation of Constitutional Section 109 and Code Section 25-4-105(2).

    Notwithstanding the above, there are other conflict of interest laws that are applicable to this situation.

    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 servants governmental entity.

    Code Section 25-4-105 (4)(a), cited above, provides certain exceptions to the prohibition set forth in Code Section 25-4-105(3)(a). One of these exceptions is that a public servant may be an officer or stockholder of a bank bidding on bonds, notes or other evidences of debt or for the privilege of keeping as depositories the public funds of a governmental entity. [Emphasis added]

    Notwithstanding the above, this Commission opined in the attached Advisory Opinion No. 95-104-E that a board member of a bank does not meet the statutory exception in Code Section 25-4-105(4)(a) which applies only to an officer or stockholder of a bank. [Emphasis added]

    Code Section 25-4-105(4)(b), cited above, also provides certain exceptions to the prohibition set forth in Code Section 25-4-105(3)(a). These exceptions apply when the public servant is a member, officer, employee or agent of one authority of the governmental entity and the business that the public servant has a "material financial interest" in is contracting with another authority of the governmental entity. The exceptions are "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."

    Even though the port commission makes recommendations to the county board of supervisors concerning the port's operation and the port's budget, the State laws still give the port commission broad decision making authority once the budget is approved. This includes, but it not limited to, employing personnel, carrying out projects once approved in the budget and owning certain facilities. Furthermore, the port commissioners are appointed for a four (4) year term and take an oath of office. These elements are sufficient to conclude that the port commission is a separate authority from the county board of supervisors.

    Based on the above, this Commission finds that the port commissioner as a public servant of the county and as chairman of the board of the bank would be in violation of Code Section 25-4-105(3)(a) should the county board of supervisors contract with his bank to keeps its funds on deposit, including investing in certificates of deposit. However since the port commission is a separate authority of the county board of supervisors, there would not be a violation if the county board of supervisors let the contract to the bank as the lowest and best bidder after competitive bidding and three (3) or more legitimate bids were received as allowed by Code Section 25-4-105(4)(b).

    The requestor is cautioned to also advise the port commissioner to remain keenly aware of the above cited Code Sections 25-4-105(1) and (5).

    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 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 requestor is cautioned to advise the port commissioner 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 port commissioner's vote, the authorization by the port commission board nonetheless results in a contract in which the port commissioner has a prohibited interest.
 
 
 

Ronald E. Crowe Executive Director