CEO 91-50 -- September 13, 1991
CONFLICT OF INTEREST
CITY ACCOUNTANT SERVING AS ADMINISTRATOR
OF CITY PENSION PLAN
To: (Name withheld at the person's request.)
A prohibited conflict of interest exists where a city accountant is president and sole owner of a corporation which provides pension plan administration services to the city's pension board and is the person performing the administration services for the board on behalf of the corporation. The accountant would be selling services to an agency of her political subdivision contrary to the prohibitions of Section 112.313(3), Florida Statutes. Section 112.316, Florida Statutes, would not shield her from a violation of the former section because her private pursuit as administrator would interfere with the full and faithful discharge of her public duties as an accountant under the second part of Section 112.313(7)(a), Florida Statutes. No prohibited conflict is present under the first part of Section 112.313(7)(a), Florida Statutes, because the corporation with which the accountant has an employment or contractual relationship is not doing business with her agency (the city's finance department), but rather with the pension board, a separate agency. CEO 81-27 and CEO 85-18 are referenced.
Does a prohibited conflict of interest exist where a corporation whose president and sole owner is employed as a city accountant contracts with the city's pension board to administer the city's pension plan, where the accountant is the employee or agent of the corporation actually performing the services for the board?
Your question is answered in the affirmative.
By your letter of inquiry, telephone conversations between you and our staff, a telephone conversation between our staff and the person whom this opinion concerns, and additional materials sent by you to our staff, we are advised that . . . . is employed as an accountant with the City of Lauderhill in the City's finance department. We are advised further that she is president and sole owner of a corporation which provides accounting and secretarial services and which provides pension plan administration services to the Board of Trustees of the City's pension fund. The corporation has three employees, including the subject accountant, who is the person actually performing the administration services for the Board on behalf of the corporation. The Board maintains its own actuary, evaluator, and investment advisor, separate from the City, and has investment and management control of the fund.
As an accountant for the City, the subject employee's duties include supervision of one full-time and two part-time cashiers, preparation of daily cash reports, reconciliation of cash and checks from City Hall and remote registers to cash register journal tapes and to computerized customer account postings, preparation of bank deposits, handling of inquiries regarding parking tickets, maintenance of files of parking tickets, writing letters on delinquent accounts and turning them over to the City Attorney as necessary, preparation of audit workpapers regarding the City's pension plan, and development of procedures to improve the City's automated cashiering system.
As plan administrator, the subject employee's duties include keeping all records of pensions and all records of retired employees, as well as enrolling new City employees in the pension plan. She has permission from her superiors to use City facilities and equipment in performing her duties as administrator, and any Board work done using City facilities and equipment is done after her working hours as an accountant. The corporation's business with the Board began after the employee began her service as an accountant with the City, and the business was not awarded pursuant to competitive bidding.
Section 112.313(7)(a), Florida Statutes, provides in relevant 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 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 provision prohibits a public employee from having or holding an employment or contractual relationship with any business entity or agency which is subject to the regulation of or which is doing business with the employee's agency. It also prohibits a public employee from having or holding an employment or contractual relationship that will create a continuing or frequently recurring conflict between the employee's private interests and the performance of the employee's public duties or that would impede the full and faithful discharge of the employee's public duties.
For purposes of Section 112.313(7)(a), "agency" is defined in Section 112.312(2), Florida Statutes, as follows:
'Agency' means any state, regional, county, local or municipal government entity of this state, whether executive, judicial, or legislative; any department, division, bureau, commission, authority, or political subdivision of this state therein; or any public school, community college, or state university.
It is our opinion that the Board, due to its independent functions in handling and managing pension assets, is an agency separate and distinct from the City's finance department for the purposes of Section 112.313(7)(a). Therefore, the subject employee's employment or contractual relationship with the corporation is with a business entity doing business with the Board, which is a separate agency from her agency, the City's finance department.
However, due to the nature of the employee's duties as an accountant for the City and in administering the pension plan for the Board, we do perceive her situation to be one that will create a continuing or frequently recurring conflict or impediment contrary to the second part of Section 112.313(7)(a). In coming to this conclusion, we in no way find that the subject employee is dishonorable or that she actually would compromise the duties of her public position. Rather, our decision is based upon our finding that her situation is one in which regard for her private interests would tend to lead to disregard for her public duties. See Zerweck v. State Commission on Ethics, 409 So.2d 57 (Fla. 4th DCA 1982). For example, the subject employee might be tempted to prepare audit workpapers regarding the pension plan in such a way that the workpapers helped give her work as plan administrator a favorable appearance or covered up errors, omissions, or dishonesties on her part as plan administrator, rather than preparing the workpapers in an objective manner mindful only of the public's interest in having correct records. By way of further example, the subject employee might be tempted, particularly because of her permitted access to City equipment for use as an accountant and as plan administrator, to perform plan administrator duties during time when she is obligated to perform her public duties as an accountant for the City.
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 prohibits public officers and certain public employees from purchasing services for their agencies from certain business entities. It also prohibits public officers and employees of cities from selling services to their city or any agency of their city, in their private capacities.
It is apparent from the information provided that the employee is not acting in her public capacity to purchase the services of her corporation. Therefore, she is not in violation of the first part of Section 112.313(3).
The second part of Section 112.313(3) prohibits a city employee from acting in a private capacity to sell services to an agency of the city, including situations when the employee is acting for a corporation. See CEO 81-27. However, Section 112.316, Florida Statutes, provides:
It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city, or other political subdivision of the state involved.
We have interpreted this provision to permit a city employee to sell services to an agency of the city where the employee was not in a position to supervise or regulate the provision of those services or to give advice or recommendations regarding contracts for those services. See CEO 84-43. We believe that the subject employee's duties with the City do not put her in a position to regulate the provision of, or advise and recommend, pension administration services provided to the Board. Nevertheless, Section 112.316 does not operate to shield her from a violation of the second part of Section 112.313(3) because Section 112.316 does not apply when there exists a conflict, such as that found above under Section 112.313(7)(a), wherein the private pursuit interferes with the full and faithful discharge of one's public duties.
Accordingly, we find that a prohibited conflict of interest does exist where a city accountant is president and sole owner of a corporation which provides pension plan administration services to the city's pension board, where the accountant is the person performing those services for the board on behalf of the corporation.