CEO 98-12 -- May 28, 1998
DOING BUSINESS WITH ONE'S AGENCY;
MISUSE OF POSITION; AND CONFLICT OF INTEREST
CITY EMPLOYEES USING THEIR POSITIONS
TO MARKET DEBIT CARD TO OTHER AGENCIES AND RECEIVING
ADDITIONAL COMPENSATION FROM CITY FOR THEIR EFFORTS
To: Name Withheld At Person's Request (Stuart)
A prohibited conflict of interest would be created under Section 112.313(7)(a), Florida Statutes, where City employees contract with a bank to continue to market a debit card for the bank after they leave City employment. The City has determined that it is in its economic interest to develop, promote, and maintain the debit card program on behalf of the bank, and it will receive promotional fees from the bank for its efforts. Using City employees to achieve these efforts and compensating them from promotional fees that the bank pays the City would violate the Code of Ethics. The employees' desire to protect their future relationship with the bank while they remain employed by the City through an executory contract with the bank violates Section 112.313(7)(a), Florida Statutes.
Would a prohibited conflict of interest be created where a city enters into an agreement with a bank for a debit card, where two city employees assist the bank in marketing the card to other governmental agencies and the city provides them with supplemental compensation from promotional fees the bank pays the city, and where the employees enter into an executory contract with the bank that will become effective if the employees leave their positions with the City?
Under the circumstances presented, your question is answered in the affirmative.
In your letters of inquiry, you relate that the City of Stuart is contemplating entering into a contractual relationship with a Michigan bank to solicit local governmental agencies to participate in the bank's debit/credit card program. The premise behind the proposal, you advise, is that units of local government throughout the State purchase goods and services to enable them to function and that typically these purchases are paid for by check or draft drawn on the financial institution in which the agency deposits its funds. An alternative to the traditional way of making these purchases involves the use of a bank card/debit card service by authorized agency personnel. Under this arrangement, the bank would be authorized to periodically debit the agency's account to pay the card charges incurred by agency personnel and, after certain minimum levels of use are met, the bank would rebate a percentage of total purchases made back to the agency.
As an adjunct to the proposed debit card program, you advise, the bank would like to rely on the City to develop, promote, and maintain its program in the State of Florida. In consideration for its efforts, the bank would pay the City on an annual basis a percentage (five one-hundredths of one percent) of the aggregate dollar amount the participating agencies expended through their use of the card. You further state that the City believes that the promotional fees it could earn for developing, promoting, and maintaining the program would be significant and, for that reason, it is in the City's economic interest to participate in the program.
You also advise that the ability of the City to earn promotional fees would be dependent, to a large extent, on your combined efforts as Director of Administrative Services and as Purchasing Agent, respectively. Both of you have voluntarily been affiliated with various governmental associations for many years and, as a result of your affiliations, you both anticipate that your responsibilities as City employees would be expanded to include additional duties related to marketing the debit card program and the generation of promotional fees. Neither of you believes that these additional duties in any way would interfere with your current duties and responsibilities as employees of the City. To compensate you for your additional responsibilities, the City envisions passing an ordinance to create a supplemental employment compensation arrangement that would be calculated by a percentage of, and paid from, the actual promotional fees received by the City. No existing general fund or enterprise fund moneys would be utilized to pay your additional compensation, you state. Finally, you indicate that you are interested in continuing your compensated arrangement directly with the bank should you leave City employment and contemplate memorializing this intent by entering into executory contracts with the bank. In your view, the City would not object to these contractual relationships because they would only become meaningful if and when you no longer work for the City.
Your situations raise several issues under the Code of Ethics for Public Officers and Employees. Focusing first on Section 112.313(3), Florida Statutes, it provides in part:
Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to the office's or employee's own agency, if he or she is a state officer or employee, or to any political subdivision of any agency thereof, if he or she is serving as an officer or employee of that political subdivision.
In CEO 90-70, we construed this language not to be violated where sheriff's office employees functioned as jail contract monitors in addition to their other duties and received supplementary compensation for doing so. We stated in that context that we had never concluded that performing additional duties for one's agency would constitute acting in a private capacity.
What is unusual about the situation you describe is that promoting debit cards for a bank to other governmental entities is not a traditional governmental function. However, our staff informs us that the State of Florida has entered into a term contract with a bank to provide a debit card program known as the AFlorida Purchasing Card and that any governmental entity can use the State contract to obtain its own debit cards. We are advised that State employees who are involved with the contract do so as part of their regular public duties and do not receive, indirectly or otherwise, additional compensation for performing those duties. Notwithstanding, we assume that the City has determined that it is in its best interest to expand your duties and supplement your compensation. Even though your involvement in various governmental associations is viewed by you as voluntary, it is likely that the City encouraged you to participate and made it possible for you to participate in these organizations by approving your use of leave and paying travel expenses. Therefore, it also serves the City's interests for the you to exploit those contacts that the City helped you develop and, based upon the rationale of CEO 90-70, it would not appear that the proposed arrangement violates Section 112.313(3), Florida Statutes.
Another statute which must be examined is Section 112.313(6), Florida Statutes. It provides:
MISUSE OF PUBLIC POSITION.--No public officer, employee of an agency, or local government attorney shall corruptly use or attempt to use his or her official position or any property or resource which may be within his or her trust, or perform his or her official duties, to secure a special privilege, benefit, or exemption for himself, herself, or others. This section shall not be construed to conflict with s. 104.31.
For purposes of this provision, the term "corruptly" 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 or her public duties. [Section 112.312(9), Florida Statutes (1997).]
Section 112.313(6) prohibits public employees from using their public positions to obtain a special privilege or benefit for themselves or others, where their actions are undertaken with a wrongful intent and in a manner which is inconsistent with the proper performance of public duties.
In CEO 94-1, we considered whether Section 112.313(6) was violated where a city council voted to pay for the publication of a children's book written by the mayor, where the book contained pictures and a brief history of the city commission. As is our usual practice, we declined to conclude in CEO 94-1 that the actions violated Section 112.313(6), since the statute requires the determination of intent impossible to reach within the context of an advisory opinion. We also examined the constitutional issue of whether the expenditure satisfied the public purpose test since, if it did not, it might also be considered inconsistent with the proper performance of public duties. Here, we have not been provided with details describing how the concept was first developed, who approached whom, or whether you were responsible for ensuring City approval. Nonetheless, there is absolutely nothing to suggest that you did or would misuse your positions in pursuing this concept. Moreover, if the City has determined that the proposal is in the City's best interest, then it is hard to imagine how it could be considered inconsistent with the proper performance of your public duties to enlist other agencies to obtain their own debit cards through the bank. Therefore, although Section 112.313(6) does not appear to be applicable, no final determination is possible in this context of an advisory opinion.
With regard to the proposed executory contract, 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 or she 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 or her private interests and the performance of his or her public duties, or that would impede the full and faithful discharge of his or her public duties. [Section 112.313(7)(a), Florida Statutes (1997).]
Section 112.313(7)(a) prohibits public employees from having contractual relationships with a business entity doing business with their agency. It also prohibits them from having contractual relationships which create continuing or frequently recurring conflicts between their private interests and the performance of their public duties or which impede the full and faithful discharge of their public duties.
Prior to your formal opinion request, we are advised by our staff, City representatives contacted them to discuss whether you could have a contractual relationship with the bank whereby the bank would directly compensate you for your efforts to enlist debit cardholders on behalf of the bank. They were advised that Section 112.313(7)(a) prohibits City employees from having contractual relationships with an entity doing business with the City. Therefore, that idea was apparently discarded and the notion that you would expand your duties and increase their compensation was put forth. Although that arrangement by itself would not violate Section 112.313(7)(a), the notion that you would enter into an executory contract with the bank that would take effect if you were to leave City employment brings Section 112.313(7)(a) back into the equation. In our view, Section 112.313(7)(a) would be violated by that arrangement. Not only would the employees have a contractual relationship with the bank doing business with the City, which the first part of Section 112.313(7)(a) prohibits, but in our view the relationship would also create a conflict under the second part of the statute. The impossibility of simultaneously serving two masters is at the heart of this statute's prohibitions. While the interests of the City and the bank are similar in that they both prosper if the debit card venture is successful, their interests are not identical. For example, the City and the bank may disagree over the amount of future promotional fees to be paid to the City or may disagree over the amount of time the two of you are spending in promotional activities. Therefore, we are of the view that both parts of Section 112.313(7)(a) would be violated if you were to enter into an executory contract with the bank.
Finally, we observe that although Section 112.3185, Florida Statutes, contains post-employment restrictions that limit an employee's ability to work for an entity providing contractual services to his agency where he was involved in procuring that contract, this provision has no applicability here since it only governs State-level employees.
Accordingly, we find that a prohibited conflict of interest would be created were you, as part of your duties to the City, to market debit cards for a bank to other governmental entities, and were you to enter into an executory contract with the bank that would become effective if you leave City employment but continue to market the purchasing cards on behalf of the bank.
ORDERED by the State of Florida Commission on Ethics meeting in public session on May 28, 1998 and RENDERED this 2nd day of June, 1998.