CEO 90-12 -- January 24, 1990
CONFLICT OF INTEREST
STATE EMPLOYEES REPRESENTING DEVELOPMENT COMPANY BEFORE STATE CABINET
To: (Name withheld at the person's request.)
No prohibited conflict of interest would be created were four State employees to own a corporation which would be retained by a development company to provide expert witness testimony before the State Cabinet regarding economic impacts of a large development. Section 112.313(3), Florida Statutes, would not be violated, as the employees are selling services to the development company rather than to their agencies. Section 112.313(7)(a), Florida Statutes, also would not prohibit this activity, as neither the corporation nor the development company are regulated by or doing business with the employees' agencies, and the activities of the corporation would not involve the public duties of any of the subject employees.
Would a prohibited conflict of interest be created were State employees to form a private corporation which would be retained by a development company to provide expert testimony before the State Cabinet regarding the economic impacts of a large development?
Under the circumstances presented, your question is answered in the negative.
In your letter of inquiry, you advise that you are one of four owners of a private corporation which has been retained by a development company to produce an economic impact statement regarding a large development. Due to the size of this development, State Cabinet approval is required. As part of this approval process, two members of the corporation would testify before the Cabinet regarding the economic aspects of the proposed development. The four owners of the corporation also are employed full time as State employees. Two work in the Research Section of the Department of Revenue, one is an Assistant Division Director in the Comptroller's Office, and you are employed by the State Treasurer as Director of the Division of Treasury in the Department of Insurance. You inquire whether representation of this development company by the corporation would create a prohibited conflict of interest.
The Code of Ethics for Public Officers and Employees contains two sections which pertain to public employees' private business interests. Section 112.313(3), Florida Statutes, 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.
This provision would prohibit members of the corporation from selling services to their agencies. In CEO 86-70, we advised that an employee of the Comptroller's Office could establish a private communications consulting firm where his clients would be political candidates rather than his agency. In your case, services would be provided to a private developer rather than the agency of any owner of the corporation. Therefore, this provision would be inapplicable.
Section 112.313(7)(a), Florida Statutes, 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.
The first part of this provision would prohibit the subject State employees from holding a contractual relationship with the corporation if it is doing business with or regulated by their agencies. In CEO 85-34, the Commission advised that a water district employee could act as a private consultant for a firm which prepared draft permit applications for submission to the Department of Environmental Regulation, as his consulting firm was not subject to the regulation of the the water district. See also CEO 84-21. Similarly, you have provided no information which indicates that your corporation is regulated by or doing business with any of the agencies which employ the owners of the corporation.
The second part of Section 112.313(7)(a), Florida Statutes, would prohibit the owners of the corporation from holding contractual relationships with the corporation if that would create a continuing or frequently recurring conflict of interest, or would impede the full and faithful discharge of their public duties. In CEO 85-34, cited above, we found no prohibited conflict of interest under this provision. In that opinion, our concerns were that the public employee not be in a position to review the work of his private employer, that he not be placed in a position to review his own private work and that the employee not be placed in a position as a result of his private employment to testify against his own agency. From the information you have provided, none of these would be the case for any of the four owners of the corporation. There is no indication that the corporation or the developer in question would have any involvement with the subject employees' agencies. See also CEO 82-55, where no prohibited conflict of interest was found where an employee of the Public Service Commission contracted to provide consulting services for a client involved in litigation against the Department of Corrections. The only possible connection we see between your public and private interests is that the agency heads of two of the agencies employing owners of the corporation also serve on the Cabinet. However, the fact that the Treasurer and the Comptroller serve as Cabinet officers does not lead to the conclusion under these circumstances that the public duties of the two subject employees of these agencies would be involved. This interpretation may differ were these two employees to have some involvement in Cabinet affairs for their agencies; however, that situation is not presented here. See CEO 79-37. Therefore, this provision would not prohibit the four of you from appearing before the Cabinet regarding matters which are not within the jurisdiction of your public agencies.
You have provided no information indicating that any connection exists between your private interests in the corporation and your public duties or those of the other owners of the corporation. Should circumstances arise where this is no longer the case, two additional provisions of the Code of Ethics could be implicated. Section 112.313(8), Florida Statutes, provides:
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(6), Florida Statutes, states:
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.
Should a situation arise in which the corporation or its clients have any involvement with the public duties of an owner of the corporation, we would advise you to seek additional guidance in applying the Code of Ethics to that situation.
Please be advised of the disclosure provisions of Section 112.3145(4), Florida Statutes, which require certain persons, including specified State employees, to file a quarterly report of the names of clients represented for a fee or commission before agencies at their level of government. "Specified state employee" is defined at Section 112.3145(1)(b), Florida Statutes, to include division directors and assistant division directors. Under this section representation includes representation by any partner or associate of the professional firm of the specified State employee of which the employee has actual knowledge. Therefore, the owners of the corporation serving as Director of the Division of Treasury and Assistant Division Director in the Comptroller's Office would be required to file such a statement concerning representations by themselves or corporate associates before any State agency. Commission on Ethics Form 2, Quarterly Client Disclosure, is provided for the purpose of making this disclosure. With regard to the two Department of Revenue employees, it is unclear from the information provided whether they fall within the above definition. If some question arises as to their reporting status, please contact our office for further guidance.
Accordingly, we find that no prohibited conflict of interest would be created were the subject State employees to own a corporation which would be retained by a development company to provide expert testimony before the Cabinet, where the corporation and the development company have no involvement with the employees' agencies.