CEO 90-17 -- March 8, 1990
CONFLICT OF INTEREST
CITY GAS SYSTEM EMPLOYEES SEEKING
TO PURCHASE CITY GAS SYSTEM
To: M. A. Galbraith, Jr., Clearwater City Attorney
No prohibited conflict of interest would be created were city gas system employees to submit a proposal to the city for purchase of the city gas system through an employee stock ownership plan. Section 112.313(3), Florida Statutes, would not apply, as the employees are purchasing from their agency rather than selling to it. Section 112.313(7)(a), Florida Statutes, would not prohibit the transaction where the employees are doing business with the city commission or other agencies of the city, rather than the city gas system which is their agency, and the employees have no involvement as part of their public duties with sale of the system.
Would a prohibited conflict of interest be created were city gas system employees to purchase the gas system through an employee stock ownership plan?
Your question is answered in the negative.
In your letter of inquiry, you have advised that the City of Clearwater is considering selling its natural gas distribution system. Proposals have been received from a number of interested parties, two of which would involve selling the gas system to City gas system employees under an employee stock ownership plan. The first of these proposals would sell the system to a corporation owned by non-management equity investors and gas system employees. The second would involve some form of profit sharing or joint ownership arrangement between gas system employees and interested business entities. You inquire whether this transaction would constitute a prohibited conflict of interest.
In materials submitted with your letter of inquiry, you cite five sections of the Code of Ethics for Public Officers and Employees as potentially applying to this situation. 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 section would prohibit the subject employees from purchasing for their agency from a business entity in which they held a specified interest, or from selling goods or services in their private capacity to their agency. In this case, the employees would be purchasing from the City rather than selling any goods or services to the City, so this section would not apply.
Secondly, Section 112.313(2), Florida Statutes, provides:
SOLICITATION OR ACCEPTANCE OF GIFTS.--No public officer, employee of an agency, or candidate for nomination or election shall solicit or accept anything of value to the recipient, including a gift, loan, reward, promise of future employment, favor, or service, based upon any understanding that the vote, official action, or judgment of the public officer, employee, or candidate would be influenced thereby.
This section would prohibit the subject employees from accepting a promise of future employment or other gift based on the understanding that their actions as public employees would be influenced thereby. You have provided no information which indicates that the subject employees have any role in the City's decision regarding sale of the gas system. Therefore, the promise of future employment inherent in the two employee ownership proposals would not prohibit a sale to one of these entities.
Thirdly, Section 112.313(6), Florida Statutes, provides:
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.
As with Section 112.313(2), there is no indication that the employees would have a role in the decision to sell the gas system. On this basis, it would not appear that the employees would have the opportunity to misuse their positions with regard to the sale decision. However, we would caution that, in the case of individual employees, violations of this section could occur if they were to use their position in a manner inconsistent with the proper performance of their public duties to influence or affect the sale with the intent to benefit themselves.
Fourthly, 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.
This section would preclude the subject employees from disclosing or using information acquired through their official positions and not available to the general public for the benefit of themselves or others. You have presented no facts which indicate that the employees would possess such information or would actually use it to benefit themselves as prospective purchasers. In addition, because this section requires actual use of the information, it cannot be determined prospectively that such use will occur. We would advise, however, that the subject employees be cautioned regarding use of information not available to the public and other interested bidders for their personal benefit.
Finally, 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.
This section would preclude the subject employees from having a contractual relationship with a business entity which is doing business with their agency. In CEO 89-61, we advised that a member of a subordinate department of a city could do business with another department of the city, because his "agency" for purposes of this provision would be the subordinate department. See also CEO 86-84. Applying the rationale of these opinions, the subject employees may do business with the City Commission or other departments of the City, so long as they do not do business with the department which employs them.
In addition, Section 112.313(7)(a), would preclude the proposed transaction if the resulting contractual relationship would impede the full and faithful discharge of public duties. In CEO 83-24 we found no impediment to public duties where county employees bid on surplus county property where they had no involvement with the disposition of that property. See also CEO 89-49. From the facts presented, the gas system employees would have no participation in the decision to sell the gas system, and the actual business dealings would be with the City Commission or agencies of the City other than the department which includes the gas system. On this basis, no impediment to public duties would be created under this provision.
Accordingly, we find that no prohibited conflict of interest would be created were employees of the City gas system to submit a proposal to the City Council for purchase of the City gas system.