CEO 75-195 -- November 5, 1975
CONFLICT OF INTEREST
CITY COMMISSIONER EMPLOYED BY BANK DOING BUSINESS WITH CITY
To: George T. Dunlap III, City Attorney, Bartow
Prepared by: Gene Rhodes
A public officer is prohibited from holding any employment or contractual relationship with any business entity or any agency subject to the regulation of or doing business with his own agency [s. 112.313(7), as amended by Ch. 75-208, Laws of Florida.] Where a bank vice president and cashier sits on the city commission and the city makes loan transactions, time deposits, and checking accounts with the bank, business is being transacted in violation of the above-cited provision. However, s. 136.02(5), F. S. 1973, states that, where a county or municipal officer is a stockholder, director, or officer of a bank, such bank is not prohibited from qualifying as a depository of funds for such public officer's agency. The specific language of this statute controls over the more general prohibition of s. 112.313(7). Therefore, no conflict is deemed to exist where a city commission uses a bank of which a commissioner is an officer as a depository of funds, including checking accounts. A conflict would exist, however, were the commission to borrow money from a bank of which one of its members is an officer.
Would a prohibited conflict of interest exist if an employee of a local bank is seated on the city commission where the employer bank makes occasional loans to the city, provides a checking account for the city, and serves as a depository for the city's funds?
You have informed us that Mr. Michael J. Marchman, Bartow City Commissioner-elect, is vice president and cashier of a local state- chartered bank and owns approximately 2 percent of the bank's outstanding stock. He is also secretary to the bank's board of directors, but has no vote on that body. The City of Bartow obtains loans, makes time deposits, and has checking accounts with this and other banks. The loans are approved by the bank's board of directors. The commissioner-elect is also the department head supervisor of the installment loan department which handles only personal loans. All loans made to the city must first be authorized by the city commission.
A recent revision of the Code of Ethics for Public Officers and Employees states in pertinent 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 doing business with, an agency of which he is an officer or employee. [Section 112.313(7), as amended by Ch. 75-208, Laws of Florida.]
A city commissioner is a public officer pursuant to s. 112.313(1), Ch. 75-208, and a bank is a business entity within the meaning of s. 112.312(2), F. S. (1974 Supp.). On the basis of the loan transactions, time deposits, and checking accounts described above, it is clear that the bank is doing business with the City of Bartow. This being the case, the situation about which you inquire must be deemed conflicting employment per se under the provisions of s. 112.313(7), Ch. 75-208.
However, we believe that consideration must be given to another chapter of the Florida Statutes which creates a partial exception to this holding. That chapter states in relevant part:
The fact that a county or municipal officer or member of a public board or body, including a district school officer and an officer of any district within a county is a stockholder or an officer or director of a bank will not bar such banks from qualifying as a depository of funds coming under the jurisdiction of any such county or municipal officer, provided it shall appear in the records of the state or county agency that the governing body of such agency has investigated and determined that such county officer or member of a public board or body as aforesaid has not favored such bank or banks over other qualified banks and that there is no violation of subsection (1). [Section 136.02(5), F. S. 1973.]
This language, in its specificity, must control over s. 112.313(7), which is only a general prohibition against conflicting employment. See 82 C.J.S. Statutes s. 34(b), (1953). However, it must be recognized that s. 136.02(5) applies only to a bank's acting as a depository of funds, and then only when the governing body of the agency has made an investigation and has determined that there has been no favoritism on the part of the public officer. Accordingly, s. 136.02(5) does not affect our decision as it relates to loans obtained by the city from the employer bank. In our view, checking accounts should be treated as deposits for purposes of this statute.
As to loans already in existence at the time the commissioner- elect takes office, we see no conflict. One purpose of this provision [s. 112.313(7)] in the Code of Ethics is to prevent a public officer from using his official position to create business for his employer. In this situation the contracts would already have been entered into, and it would be extremely unfair to prohibit an elected official from being seated because of contracts in their executory stage.