CEO 80-88 -- December 4, 1980

CONFLICT OF INTEREST

PORT AUTHORITY MEMBER OFFICER AND SHAREHOLDER OF INSURANCE AGENCY SELLING INSURANCE POLICIES TO AUTHORITY

To: Edward M. Jackson, Attorney for Canaveral Port Authority, Cocoa

Prepared by: Phil Claypool

SUMMARY:

Under s. 112.313(7)(a), F. S., a port authority member would be prohibited from being employed by or having a contractual relationship with a business entity which is doing business with the authority. In previous advisory opinions this provision has been read together with s. 112.316 to imply a "grandfather clause" which would exempt from the prohibition business transactions occurring prior to the time that the subject official took office. See CEO's 77-37, 76-114, and 76-48. In light of this precedent, a member-elect of a port authority is not deemed to be prohibited from serving on the authority during the period of time that the authority is insured under an existing insurance policy purchased through an insurance agency of which the member-elect is a principal officer and shareholder. Neither would a prohibited conflict be created were the authority to purchase insurance through the member- elect's agency after his election to the authority but prior to the time that he assumes office. Once an active member of the authority, however, he would have a prohibited conflict of interest were any further insurance policies to be sold through his agency to the authority.

QUESTIONS:

1. Would a prohibited conflict of interest be created were an insurance agency of which a port authority member is a principal officer and shareholder to negotiate a multi-peril insurance policy with the authority?

2. Would a prohibited conflict of interest be created were an insurance agency of which a port authority member is a principal officer and shareholder to negotiate a workers' compensation insurance policy with the authority?

3. Would a prohibited conflict of interest be created were an insurance agency of which a port authority member-elect is a principal officer and shareholder to negotiate a casualty and liability insurance policy with the authority prior to the time the member-elect assumes office?

Question 1 is answered in the affirmative.

In your letter of inquiry you advise that the subject member- elect of the Canaveral Port Authority is a principal officer and shareholder of an independent insurance agency. You further advise that the authority purchased in 1979 a special multi-peril insurance policy through the member-elect's insurance agency. Under these circumstances, you question whether a prohibited conflict of interest would be created were the authority to negotiate another insurance policy with the member-elect's agency when the current policy expires in 1982.

The Code of Ethics for Public Officers and Employees provides in relevant part:

CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), F. S.]

This provision prohibits a port authority member from being employed by or having a contractual relationship with a business entity which is doing business with the authority. In previous advisory opinions, we have read this provision together with s. 112.316, F. S., to imply a "grandfather clause" which would exempt from s. 112.313(7) business transactions occurring prior to the time that the subject official took office. See CEO's 77-37, 76-114, and 76-48. In light of this precedent, we are of the opinion that s. 112.313(7)(a) does not prohibit the subject member-elect from serving on the authority while the authority is insured under the existing multi-peril policy.

However, as expressed in the above-referenced opinions, s. 112.313(7)(a) would prohibit the member-elect from serving on the authority were the authority to negotiate another policy with his insurance agency after the existing policy expires. No problem would arise if the authority purchases its next policy from an insurance carrier which is represented by the member-elect's agency, so long as his agency would receive no remuneration from that policy. See CEO 77-48. Accordingly, we find that a prohibited conflict of interest would be created were the insurance agency of the subject member- elect to negotiate a multi-peril insurance policy with the port authority after the member-elect assumes office.

Question 2 is answered in the affirmative.

In your letter of inquiry you advise that in August of this year the port authority purchased a workers' compensation insurance policy to expire in one year through the subject member-elect's insurance agency. You question whether a prohibited conflict of interest would be created were the authority to negotiate another policy with the member-elect's agency when the current policy expires.

Based on the rationale of our response to your first question, we find that no prohibited conflict of interest exists in the present situation, but that s. 112.313(7)(a), F. S., would prohibit the subject member-elect from serving on the authority were the authority to obtain workers' compensation insurance through his insurance agency in the future.

Question 3 is answered in the negative.

In your letter of inquiry and in a telephone conversation with our staff, you advise that in 1979 the port authority purchased a casualty and liability insurance policy through the subject member- elect's insurance agency, which policy will expire in December of this year. You question whether a prohibited conflict of interest would be created were the authority to negotiate another casualty and liability policy with the member-elect's agency before he assumes office in January.

At present the subject member-elect is not a public officer subject to the provisions of the Code of Ethics for Public Officers and Employees, as he has not taken office yet. Therefore, s. 112.313(7)(a) would not be violated were the authority to purchase through his insurance agency before he assumes office. At the time he becomes a public officer, the policy would be in effect and the rationale of our response to your first question will apply.

Accordingly, we find that no prohibited conflict of interest would be created were the insurance agency of the subject authority member-elect to negotiate a casualty and liability insurance policy with the authority prior to the time he assumes office as a member of the authority.