CEO 95-21 -- August 31, 1995
CONFLICT OF INTEREST
STATE SENATOR CHAIRING BANKING AND INSURANCE COMMITTEE
AND SERVING AS DIRECTOR OF INSURANCE COMPANY
To: The Honorable John Grant, State Senator, District 13
A State Senator's service on a domestic insurance company's board of directors, for which he receives a minimal stipend amounting to less than one percent of his annual income, would not create a prohibited conflict of interest with his duties as a Senator and as Chairman of the Senate Banking and Insurance Committee. The company is not doing business with the Legislature and is subject to its regulation only through legislative action, and the Senator's duties do not involve personally engaging in lobbying activities and do not encompass any activities related to lobbying. Therefore, Section 112.313(7)(a), Florida Statutes, does not prohibit him from serving as a director of the company. Nor would the stipend constitute a gift, as all other outside directors receive the same stipend. CEO's 77-129, 80-7, 81-12, 90-8, 91-1, and 91-8 are referenced.
Does a prohibited conflict of interest exist where you, a State Senator who chairs the Banking and Insurance Committee, serve on the board of directors of an insurance company?
Your question is answered in the negative.
In your letter of inquiry you advise that, in addition to being involved in the private practice of law, you serve on the boards of numerous for profit and non-profit organizations. One of the boards on which you sit is that of a small domestic insurance company, which pays you a minimal stipend amounting to less than one percent of your annual income. Although you indicate that you file appropriate conflict statements pursuant to Senate Rules and Section 112.3143(2), Florida Statutes, when voting on legislation which could directly or indirectly have any effect on this insurance company, you question whether this situation creates a conflict of interest prohibited by the Code of Ethics for Public Officers and Employees.
The Code of Ethics 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. [Section 112.313(7)(a), Florida Statutes (1993).]
The first part of Section 112.313(7)(a) prohibits you from having an employment or contractual relationship with a business entity which is regulated by your agency. The second part of Section 112.313(7)(a) prohibits you from having an employment or contractual relationship which creates a continuing or frequently recurring conflict between your private interests and the performance of your public duties, or which impedes the full and faithful discharge of your public duties.
Your "agency" for purposes of the Code of Ethics is the Legislature, whose regulatory powers extend generally over every business entity in the State. However, members of legislative bodies are given a limited exemption from the application of Section 112.313(7)(a) by subparagraph (7)(a)2, which states:
When the agency referred to is a legislative body and the regulatory power over the business entity resides in another agency, or when the regulatory power which the legislative body exercises over the business entity or agency is strictly through the enactment of laws or ordinances, then employment or a contractual relationship with such business entity by a public officer or employee of a legislative body shall not be prohibited by this subsection or deemed a conflict.
Thus, in a number of opinions we have found that this provision exempts conflicts of interest where a legislator had an employment or contractual relationship with a business entity which could be affected by legislation enacted by the Legislature. See CEO 77-129, involving a state representative whose law firm represented condominium associations and who participated in condominium legislation; CEO 80-7, involving a state representative whose law firm represented a bank and who participated in banking legislation; CEO 81-12, involving a state representative whose law firm represented a housing authority and who participated in legislation affecting the housing authority; and, more recently, CEO 91-8, involving a state representative who served on the House Corrections Committee and was also an officer and shareholder in a corporation engaged in the business of developing detention facilities. Based on the rationale of these opinions, we conclude that your service as a director of the insurance company does not violate the first part of Section 112.313(7)(a).
In CEO 91-1, we advised that a continuing or frequently recurring conflict or impediment to the full and faithful discharge of public duties would be created, in violation of the second part of Section 112.313(7)(a), if a State Senator were to contract with a professional association that lobbied the Legislature to speak to its professional groups regarding legislative issues, to contribute articles on legislative issues to the association's publications, and to advise its executive committee and board of governors regarding legislative and political education activities of the association. There, we determined that the subject matter of the senator's proposed employment arose out of his public position and related directly to issues that might be expected to come before him in his official capacity. In other opinions, such as CEO 90-8, we have concluded that a member of the Legislature could be employed by an organization that engages in lobbying the Legislature so long as the member's duties do not involve personally engaging in lobbying activities and do not encompass any activities related to lobbying.
Here, you have advised that the insurance company does not retain a regular full-time lobbyist, although from time to time it has retained lobbyists for specific needs. The company is a member of the Florida Insurance Council, which does lobby the Legislature, you advice. However, you state that neither you nor any other director are retained to lobby the Legislature, that your duties as a director have absolutely no relationship or involvement in the lobbying process, that any lobbying is a part of the administrative functions of the company, and that there is no interface between the directors and any lobbying efforts. Therefore, we conclude that, as your serving as a director of the insurance company does not encompass any activities related to lobbying, that service would not pose a continuing or frequently recurring conflict or impediment to your public duties, in violation of the second part of Section 112.313(7)(a).
Finally, there may be a question about whether the stipend you receive for serving as a director is simply a gift to you. You advise that the stipend you receive is identical to the that received by all other outside directors of the company. Under Section 112.312(12)(a), Florida Statutes, a "gift" must be something "for which equal or greater consideration is not given . . . ." Our Rule 34-13.210(3)(b), Florida Administrative Code, specifically provides that one of the factors to be examined in determining whether a gift has been provided is "[w]hether persons performing similar services for the benefit of the donor received a comparable gift from the donor." Therefore, we conclude that the stipend you receive from the insurance company does not constitute a gift.
The opinions referenced above also discuss other ethics provisions of which you should be aware, including provisions within the "Sunshine Amendment" and its statutory counterpart which prohibit you from personally representing for compensation an entity before a state agency; the misuse of public position prohibition, Section 112.313(6), Florida Statutes; and the voting conflicts law, Section 112.3143(2), Florida Statutes. While these provisions may apply in specific circumstances, they do not preclude you from serving as a director of the insurance company while chairing the Banking and Insurance Committee.
Accordingly, we find that your compensated service on a domestic insurance company's board of directors would not create a prohibited conflict of interest with your duties as a State Senator and as Chairman of the Senate Banking and Insurance Committee.
ORDERED by the State of Florida Commission on Ethics meeting in public session on August 31, 1995, and RENDERED this _____ day of September, 1995.
William J. Rish