CEO 81-73 -- October 29, 1981

CONFLICT OF INTEREST

D.H.R.S. DEPUTY DISTRICT ADMINISTRATOR OWNING STOCK IN CORPORATION DOING BUSINESS WITH AGENCIES WITHIN THE DISTRICT

To: Mr. H. Squier Hanni, Deputy District Administrator, District Ten, Department of Health and Rehabilitative Services

SUMMARY:

Section 112.313(3), F. S., prohibits a public employee from acting in a private capacity to sell any goods or services to his agency. Therefore, a Deputy District Administrator would be prohibited from owning more than a five percent interest in a corporation which publishes employment advertisements for positions with a State hospital or county health department under the administration of the District. Section 112.313(7), F. S., prohibits a public employee from having a contractual relationship with a business entity which is doing business with his agency and therefore would prohibit a Deputy District Administrator from owning any stock in a corporation which is doing business with the District or with an agency administered by the District. Although Section 112.313(12), F. S. contains an exemption where the purchase or sale is for legal advertising in a newspaper, employment advertisements within a tabloid directed toward the interests of nurses and published bi-weekly are not legal advertising in a newspaper. However, another exemption contained in Section 112.313(12)(f), F. S. where the total amount of the subject transaction does not exceed $500, would exempt business between the District or its agencies and the nursing publication in amounts not exceeding $500 within any calendar or fiscal year.

QUESTION:

Would a prohibited conflict of interest be created were you, a Deputy District Administrator with the Department of Health and Rehabilitative Services, to own stock in a corporation which publishes employment advertisements for positions with a State Hospital or County Health Department under the administration of the District?

Your question is answered in the affirmative, with the exception noted below.

In your letter of inquiry you advise that you are the Deputy District Administrator of District X of the Department of Health and Rehabilitative Services. You also advise that you have purchased a 5.6 percent interest in a corporation which publishes every two weeks a tabloid directed to the interests of nurses. The publication, you advise, is supported financially by employment advertisements sold to employers seeking to fill nursing vacancies. You further advise that employers who might be solicited to buy advertisements include the South Florida State Hospital and the Broward County Health Department, both of which are under the administration of District X. However, you advise that you would not be involved, directly or indirectly, in soliciting business from operations of the Department.

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

DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(d) Beginning public employment.

[Section 112.313(3), F. S. (1979).]

This provision prohibits you from acting in a private capacity to sell any goods or services to your agency. As you are Deputy District Administrator for District X, your "agency" is that District. See CEO 81-2 and CEO 81-31. In previous opinions we have advised that one acts in a private capacity when a corporation of which he is an officer, director, or owner of more than a five percent interest sells any goods or services. See CEO 81-27, CEO 78-7, and CEO 76-23. Therefore, Section 112.313(3) would prohibit you from owning more than a five percent interest in a corporation which is selling its services to District X or any agency within the District.

The Code of Ethics also provides:

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. (1979).]

This provision prohibits you from having a contractual relationship with a business entity which is doing business with your agency. We previously have advised that a stockholder has a contractual relationship with the corporation in which he owns stock. See CEO 79-16. Therefore, Section 112.313(7)(a) would prohibit you from owning any stock in a corporation which is doing business with District X or any agency administered by the District.

The Code of Ethics contains certain exemptions to the prohibitions of Sections 112.313(3) and 112.313(7)(a), including an exemption where:

The purchase or sale is for legal advertising in a newspaper, for any utilities service, or for passage on a common carrier. [Section 112.313(12)(c), F. S. (1979).]

However, we are of the opinion that employment advertisements within a tabloid directed toward the interests of nurses and published bi- weekly are not "legal advertising in a newspaper." First, it does not appear that the publication is a "newspaper." A "newspaper" is defined by Black's Law Dictionary (5th ed. 1979) as

a publication, usually in sheet form, intended for general circulation, and published regularly at short intervals, containing information and editorials on current events and news of general interest.

It is apparent that the nursing tabloid published by your company is not intended for general circulation and does not contain information on current events and news of general interest, since it is directed towards the interests of nurses. Secondly, it does not appear that employment advertisements would constitute "legal advertising," that is, advertising required by law. We recognize that our interpretation of this exemption is a narrow one, but this is in accordance with the rule that exceptions to a general prohibition should be interpreted strictly. State v. Nourse, 340 So. 2d 966 (Fla. 3 D.C.A. 1976).

Another exemption is provided where "the total amount of the subject transaction does not exceed $500." Section 112.313(12)(f), F. S. (1979). In previous opinions we have interpreted this exemption to be limited to a single transaction of an amount not exceeding $500 or to a series of transactions totaling not more than $500 within any calendar or fiscal year. See, for example, CEO 77-182.

Accordingly, so long as the amount of business done between District X or any of its agencies and the nursing publication does not exceed $500 within any calendar or fiscal year, we find that no prohibited conflict of interest would be created were you to own stock in the publishing company which publishes employment advertisements for positions with the State Hospital or the County Health Department.