CEO 89-20 -- June 14, 1989
CONFLICT OF INTEREST
DEPARTMENT OF CORRECTIONS VOCATIONAL INSTRUCTOR'S
SPOUSE OWNING BUSINESS SELLING TO DEPARTMENT INSTITUTIONS
To: Mr. Hamilton Mathis, Superintendent, Mayo Correctional Institution, Region II, Department of Corrections (Tallahassee)
A prohibited conflict of interest was created under Sections 112.313(3) and 112.313(7), Florida Statutes, where the alarm and control company of the spouse of a vocational instructor with the Department of Corrections sold control panels and systems to correctional institutions within the Region of the Department within which the employee worked. Although the company may be owned by the employee's spouse, the employee's involvement with the company has been such that he is deemed to have an employment or contractual relationship with the company and to have been acting in a private capacity to sell when the business made its sales. Assuming that the employee did not misuse his official position in connection with his work for the company and that the company did not sell the same equipment he designed and built on duty, no prohibited conflict of interest was created when the company sold to correctional institutions outside the Region in which he was employed.
Does a prohibited conflict of interest exist where an alarm and control company owned by the spouse of a Department of Corrections vocational instructor sells to Department correctional institutions?
In your letter of inquiry you advise that Mr. Herman Frier is employed as a Vocational Instructor at the Mayo Correctional Institution, Region II, Florida Department of Corrections. In this position he is responsible for supervising and training inmates in specific vocations and assisting in the maintenance of the Institution. Approximately four years ago the Institution underwent a major construction program and the subject employee became involved in the development of fire alarms and locking systems for the Institution. After constructing several locking systems for the gates and confinement building, he submitted one of his designs to the Department awards program. Due to his knowledge and experience in alarms and locks, he was sought out to handle various projects for the Institution as well as other institutions within the Department.
You further advise that the employee's wife recently became the sole proprietor of an alarm and control company. Since its inception, the company has conducted business totaling over $9,000.00 with several institutions within the Department of Corrections, specifically, Madison Correctional Institution, Holmes Correctional Institute, Okaloosa Correctional Institute, Sumter Correctional Institute, DeSoto Correctional Institute, and the Mayo Correctional Institution.
You state that the subject employee does not have any purchasing powers or duties in behalf of the Institution or within the Department of Corrections generally. He is not reflected on company documents as owning an interest in his wife's company, is not listed as an employee of the company on the company's books, and receives no compensation from the company. Nevertheless, you indicate that purchase requests, bid sheets, and purchase order documents from various Department institutions reveal that he has provided telephone bids and quotes while on duty at the Institution. Also, he has been listed as a salesman for the company on several documents and has taken annual leave to personally install equipment for the company at Department facilities. On one occasion he brought an electrical control panel which he had developed "off-duty" into the Institution, without the knowledge or consent of the proper institutional or Departmental authorities, where it was worked on with the assistance of an inmate and was installed for testing purposes. You state that this control panel later was sold to the Holmes Correctional Institution by his wife's company. You also note that he was called upon as an employee to work on a piece of equipment which had been sold to an institution by his wife's company. Additionally, he has been in personal contact with an individual employed in Facilities Services for the Department's Office of Management and Budget, who has coordinated some of the company's business with the various institutions.
You ask about the application of Sections 112.313(3) and (7), Florida Statutes, to this situation. However, before addressing these questions we will comment on several preliminary issues raised by the facts presented here.
The Code of Ethics for Public Officers and Employees contains two provisions which limit the manner in which a public employee may use his public position, as well as property, resources, and information which may be within his trust as a public employee. These provide:
MISUSE OF PUBLIC POSITION.--No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31. [Section 112.313(6), Florida Statutes (1987).]
DISCLOSURE OR USE OF CERTAIN INFORMATION.--No public officer or employee of an agency shall disclose or use information not available to members of the general public and gained by reason of his official position for his personal gain or benefit or for the personal gain or benefit of any other person or business entity. [Section 112.313(8), Florida Statutes (1987).]
In previous opinions, such as CEO 85-10 and CEO 82-82, we have refused to make a final determination in an advisory opinion whether an individual has violated Section 112.313(6), Florida Statutes, because that law requires a finding that the public officer or employee has acted "corruptly," a term which is defined as follows:
'Corruptly' means done with a wrongful intent and for the purpose of obtaining, or compensating or receiving compensation for, any benefit resulting from some act or omission of a public servant which is inconsistent with the proper performance of his public duties. [Section 112.312(7), Florida Statutes.]
As we continue to believe that such a determination of intent is extremely difficult to make while rendering an advisory opinion, we will not depart from our previous policy here. Nevertheless, we feel obligated to point out that the use of public facilities and resources to conduct private business necessarily involves the use of one's public position, property, and resources to secure a special privilege or benefit for oneself or another. For this reason, we are of the opinion that the subject employee's apparent actions in having an inmate perform work on a control panel which was to be sold for private gain, in providing telephone bids and quotes while on duty, in testing equipment to be sold as part of a private business while on duty and using public resources, and in working as a public employee while on duty on equipment sold to an institution by his wife's business may have been violative of Section 112.313(6), above.
In addition, we have determined in past opinions that Section 112.313(8) prohibits a public official or employee from using a program designed as part of this job in private consulting work. See CEO 89-13, CEO 83-87, CEO 82-28, CEO 81-54, and CEO 80-21. Based on the information presented, however, we are not able to determine whether the control panels and systems which have been sold to the Department are the same as those developed by the subject employee as part of his responsibilities as a Department employee. We note that in the December 7, 1988 Special Investigation Report of the Department's Inspector General an employee in the Department's central office for Facilities Services is quoted as being aware of the control panels and systems developed by the subject employee and as having been advised that the control panels and other alarms and equipment would be sold through a private company. Although this statement indicates the possibility that the control panels and systems developed by the subject employee for the Department are being sold through his wife's company, the statement alone is not sufficient to enable us to conclude that he has used information gained by reason of his official position for the personal benefit of himself or another.
With respect to your initial question, the Code of Ethics provides:
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 of 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.
(c) Appointment to public office.
(d) Beginning public employment
[Section 112.313(3), Florida Statutes (1987).]
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), Florida Statutes (1987).]
The first part of Section 112.313(3) prohibits a public employee from acting in his official capacity as a purchasing agent to purchase any goods or services for his agency from a business entity which is owned by his spouse. Section 112.313(16), Florida Statutes, defines a "purchasing agent" as a public employee having the authority to commit the expenditure of public funds through a contract for, or the purchase of, any goods or services. Although this prohibition would be applicable in this situation were the subject employee to exercise powers associated with being a purchasing agent, you have advised that he has no purchasing powers or duties.
The second portion of Section 112.313(3) prohibits a public employee from acting in a private capacity to sell to his agency. We have found in previous opinions that ownership of a material interest in a business entity is sufficient to constitute "acting in a private capacity" on the part of the interest holder when the business contracts for sales or services, because that person would stand to benefit indirectly. See CEO 75-196, for example. We also have stated that being an officer or director of a corporation selling to an agency constitutes "acting in a private capacity" even if the person is not engaged personally in promoting the sale to his agency. See CEO 76-5 and CEO 76-12. We further have found that a public officer or employee will be "acting in a private capacity" to sell to his agency where he acts in an individual capacity as an agent to facilitate a sale to his agency from a business entity. See CEO 86-42, CEO 77-110, and CEO 77-64.
In a similar vein, Section 112.313(7) prohibits a public employee from having any employment or contractual relationship with a business entity doing business with his agency. Thus, a public employee is prohibited from having an employment or contractual relationship with a spouse's business which is doing business with his agency. Previously, we have advised that a person who is not paid for his services by an entity is not employed by or under a contractual relationship with that organization for the purposes of this provision. See, for example, CEO 76-21, CEO 80-90, and CEO 89-9.
Given the scope of the prohibitions of Sections 112.313(3) and (7), the policy established by the Code of Ethics is that, unless a public employee is acting as a purchasing agent, a business owned by his spouse may sell goods or services to the employee's agency so long as the employee is not involved in his spouse's business. This allows the spouse of a public employee to pursue a fully independent career without being limited by the ethical restrictions on the employee, unless the employee is placed in a position to decide whether to do business with his or her spouse.
On this basis we found in CEO 88-35 that no prohibited conflict of interest would be created were the correctional institution employing a maintenance/construction superintendent to purchase building and hardware supplies from a company owned by his wife. In that opinion we were advised that the employee had no ownership interest in the company and was neither employed nor paid by the company.
Apparently, the actions of the subject employee and of his wife were based on this opinion, which was issued to a fellow employee at the Institution where he works. In contrast to the situation which we understood to underlie CEO 88-35, however, the subject employee has maintained such an involvement in his wife's business that it appears that placing the business in his wife's name was done to evade his responsibilities under the Code of Ethics. While asserting that he owns no interest in the business and receives no compensation from the business, the employee has provided telephone bids and quotes for the business, may have represented himself as a salesman for the business, and has installed and worked on equipment sold by the business. It is clear that the business relies heavily upon the employee's expertise.
Most importantly, however, the Department has provided information indicating that the subject employee's license as an electrical contractor is the qualifying license for the business with the Department of Professional Regulation, Electrical Contractor's Licensing Board. Part of the law governing electrical contractors, Section 489.521(1), Florida Statutes, provides that when an applicant proposes to do business as a sole proprietorship, certification shall be issued only in the name of that applicant. Under Section 489.521(2), Florida Statutes, if the business proposing to engage in contracting takes some other legal form, the proposed qualifying agent must be legally qualified to act for the business in matters connected with its contracting business and must have the authority to supervise work undertaken by the business. Whichever case is applicable here, it is clear that the subject employee must have had sufficient involvement in and responsibility for the business to enable us to conclude that he was "acting in a private capacity" when the business sold to the Department and that he has had an employment or contractual relationship with the business.
Both Sections 112.313(3) and (7) address only sales made to a State employee's "agency," a term which is defined in Section 112.312(2), Florida Statutes. In CEO 88-79 we advised that the "agency" of an employee of the Department of Corrections who was working at a Department institution was the Region of the Department within which the institution was located. Similarly, we have found that a District of the Department of Health and Rehabilitative Services is the "agency" of a District employee. See CEO 88-23, for example. Therefore, we conclude that the "agency" of the subject employee is Region II of the Department. As sales made to the Mayo Correctional Institution and the Madison Correctional Institution were made to entities within Region II, while the other institutions were located in other Regions, we find that these sales were in violation of Sections 112.313(3) and (7), Florida Statutes.
Accordingly, assuming that the subject employee did not misuse his official position in connection with his work for the business and that the business is not selling the same equipment he designed and built on duty as part of his responsibilities with the State, we find that a prohibited conflict of interest was created where the alarm and control company of his spouse sold to correctional institutions within Region II of the Department, but not when the company sold to institutions located outside of that Region.