This Advisory Opinion concerns the following issues as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on February 4, 2000, basing its approval solely on the facts and circumstances stated herein.

ISSUE 1. Is an attorney for a board of trustees of a public school district a "public officer" within the meaning of Article 4, Section 109 of the Mississippi Constitution of 1890?

ISSUE 2. Is an attorney for a board of trustees of a public school district a "public servant" within the meaning of Section 25-4-103 of the 1972 Mississippi Code Annotated (amended)?

ISSUE 3. May a bank contract with a public school district to serve as its depository, or for any other reason, when the attorney for the board of trustees of the public school district is a member of the board of directors of the bank?

ISSUE 4. Would any laws other than the state conflict of interest laws prohibit a public school district from contracting with a bank when the attorney for the board of trustees of the public school district is a member of the board of directors of the bank?

Your opinion request to the Office of the Attorney General dated January 20, 2000, was referred by that Office to the Mississippi Ethics Commission on January 25, 2000, as your request involves the above issue that concern the Mississippi conflict of interest laws.

State law restricts the Mississippi Ethics Commission to interpreting and issuing opinions on Sections 25-4-101 through 25-4-119, 1972 Mississippi Code Annotated and Article IV, Section 109, Mississippi Constitution of 1890. Therefore, this opinion does not address the Mississippi laws outside the Commission's jurisdiction nor the governmental entity's internal rules and regulations.

The pertinent conflict of interest laws to be considered here are:

Constitutional Section 109 states:

"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."

Code Section 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103(c), (d), (e), (f)(i)(ii), (g)(iii), (h), (i), (k)(i)(ii), (l), (m), (o), (p)(i)(ii)(iii) and (r) states:

"(c) 'Business' means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, self-employed individual, joint stock company, receivership, trust or other legal entity or undertaking organized for economic gain, a nonprofit corporation or other such entity, association or organization receiving public funds.

(d) 'Business with which he is associated' means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(e) 'Compensation' mean money or thing of value received, or to be received, from any person for services rendered.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(iii) All school districts.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(i) 'Income' means money or thing of value received, or to be received, from any source derived, including but not limited to, any salary, wage, advance, payment, dividend, interest, rent, forgiveness of debt, fee, royalty, commission or any combination thereof.

(k) 'Material financial interest' means a personal and pecuniary interest, direct or indirect, accruing to a public servant or spouse, either individually or in combination with each other. Notwithstanding the foregoing, the following shall not be deemed to be a material financial interest with respect to a business with which a public servant may be associated:

(i) Ownership of any interest of less than ten percent (10%) in a business where the aggregate annual net income to the public servant therefrom is less than One Thousand Dollars ($1,000.00);

(ii) Ownership of any interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant therefrom is less than Five Thousand Dollars ($5,000.00).

(l) 'Pecuniary benefit' means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(m) 'Person' means any individual, firm, business, corporation, association, partnership, union or other legal entity, and where appropriate a governmental entity.

(o) 'Public funds' means money belonging to the government.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof, or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof, any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government.

(r) 'Securities' means stocks, bonds, notes, convertible debentures, warrants, evidences of debts or property or other such documents."

Code Section 25-4-105(1), (2), (3)(a), (4)(a), (5) and (6) states:

"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof, authorized by any law passed or order made by any board of which he may be or may have been a member.

(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(a) May be an officer or stockholder of banks or savings and loan associations or other such financial institutions bidding for bonds, notes or other evidences of debt or for the privilege of keeping as depositories the public funds of a governmental entity thereof or the editor or employee of any newspaper in which legal notices are required to be published in respect to the publication of said legal notices.

(5) No person may intentionally use or disclose information gained in the course of or by reason of his official position or employment as a public servant in any way that could result in pecuniary benefit for himself, any relative, or any other person, if the information has not been communicated to the public or is not public information.

(6) Any contract made in violation of this section may be declared void by the governing body of the contracting or selling authority of the governmental subdivision or a court of competent jurisdiction and the contractor or subcontractor shall retain or receive only the reasonable value, with no increment for profit or commission, of the property or the services furnished prior to the date of receiving notice that the contract has been voided."

Code Section 25-4-109(1) and (2) states:

"(1) Upon a finding by clear and convincing evidence that any elected public servant or other person has violated any provision of this article, a circuit court of competent jurisdiction may censure the elected public servant or remove the elected public servant from office or impose a civil fine of not more than five thousand dollars ($5,000.00) or both.

(2) Upon a finding by clear and convincing evidence that any nonelected public servant has violated any provision of this article, a circuit court of competent jurisdiction may censure, remove, suspend, or order a reduction in pay or demotion of the nonelected public servant or impose a civil fine of not more than five thousand dollars ($5,000.00) or both."

Code Section 25-4-113 states:

"The attorney general of the state of Mississippi or any governmental entity directly injured by a violation of this act may bring a separate civil action against the public servant or other person or business violating the provisions of this article for recovery of damages suffered as a result of such violation. Further, any pecuniary benefit received by or given by a public servant in violation of this article shall be declared forfeited by a circuit court of competent jurisdiction for the benefit of the governmental entity injured. In the discretion of the court, any judgment for damages or forfeiture of pecuniary benefit may include costs of court and reasonable attorney's fees."

Pertinent facts and circumstances in the form of the requestor's letter, absent identifying data, are attached hereto and considered a part of this opinion.

The Commission formally adopts Advisory Opinion No. 95-104-E in response to this request and by attachment incorporates it into this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

ISSUE 1. The prohibition set forth in Article 4, Section 109 of the Mississippi Constitution of 1890 concerns a "public officer" who is a member of a board authorizing any law passed or order made by said board. As the prohibition imposed by Constitutional Section 109 is applicable only to board members, it is not necessary to determine if an attorney for a school board is a "public officer."

ISSUE 2. An attorney for a board of trustees of a public school district who is paid monthly based on an hourly rate, plus reimbursement of expenses, is a "public servant" of the school district for purposes of Code Section 25-4-103(p).

ISSUE 3. An attorney for the board of trustees of a public school district serving simultaneously as a member of the board of directors of the school district's depository is prohibited by the above cited Code Section 25-4-105(3)(a), when the school district's board attorney has a "material financial interest" in the school district's depository as defined in the above cited Code Section 25-4-103(k)(i)(ii).

A "material financial interest" as defined in Code Section 25-4-105(k)(ii) includes an ownership interest of less than two percent (2%) in a business where the aggregate annual net income to the public servant is Five Thousand Dollars ($5,000.00) or more.

As stated in the attached advisory opinion, being a member of a bank's board of directors does not fall within the statutory exception found in Code Section 25-4-105(4)(a), cited above, which refers only to an officer or stockholder.

Therefore, a school district contracting with a bank to serve as its depository, or for any other reason, when the board attorney for the school district is a member of the bank's board of directors and has a material financial interest in the bank is prohibited by Code Section 25-4-105(3)(a). Further, the board attorney for the school district would be subject to the penalties imposed by Code Section 25-4-109, cited above, and the recovery of a pecuniary benefit received as set forth in Code Section 25-4-113, cited above.⁽¹⁾

In addition to the above, the requestor is advised to remain keenly aware of the above cited Code Section 25-4-105(1) and (5).

Code Section 25-4-105(1), cited above, prohibits public servants from using their official positions to obtain a pecuniary benefit for themselves, a relative or a business with which they are associated.

In order to avoid using their official positions to obtain a pecuniary benefit, the public servants must totally and completely recuse themselves from subject matters providing the pecuniary interests.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during an official meeting, but also avoid discussing the subject matter with board members, staff, employees or any other person prior to and after the official meeting. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

Also in order to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. The minutes of the governing entity's board should state the public servant left the meeting by showing him or her absent for that matter.

Code Section 25-4-105(5) prohibits a public servant from intentionally using or disclosing nonpublic information gained in the course of or by reason of one's official position that could result in a pecuniary benefit for the public servant, a relative or any other person. A person within the meaning set forth in Code Section 25-4-103(m), cited above, would include a bank.

The issues presented by the requestor also must be viewed as they relate to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as it is the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

Clearly, a board attorney for a school district serving on the board of directors of the school district's depository has the potential of creating suspicion among the public and reflecting unfavorably upon the school district. Therefore, such a circumstance should be avoided in order to comply with the public policy mandate set forth in Code Section 25-4-101.

Regarding Code Section 25-4-105(2), cited above, this section applies to board members in much the same manner as Constitutional Section 109.

Regarding Code Section 25-4-105(6), cited above, clearly a school district's board of trustees, as the governing body of the school district, is obligated to void any contract entered into in violation of Code Section 25-4-105. As stated above, the instance set forth by the requestor would violate Code Section 25-4-105. Assuming the bank entered into the contract not knowing that it was an illegal contract, the question of any reasonable value due the bank, absent any increment for profit or commission, would not alter any penalties imposed against or pecuniary benefit recoverable from the public servant having the conflict of interest.

An advisory opinion is not the proper process to determine whether or not a violation of the state conflict of interest laws has already occurred. An investigation is the only method whereby a determination can be made as to whether probable cause exists to believe that the state conflict of interest laws have been violated.
 
 
 
 
 
 
 
 
 
 

ISSUE 4. The Mississippi Ethics Commission does not have the authority to opine on any other state laws outside of the state conflict of interest laws.
 
 
 
 
 
 

Ronald E. Crowe

Executive Director

1. "The injury is the loss of public trust; the damages are the benefits wrongfully gained." ". . . monetary damages . . . are not necessary in order to show damages . . ." Hinds v. Muse, 725 So. 2d 207 (Miss. 1998)