OFFICIAL ADVISORY OPINION NO. 05-112-E

December 2, 2005

This Advisory Opinion concerns the following issue as formulated from facts and/or circumstances furnished by a requestor. The Commission approved this opinion on December 2, 2005, basing its approval solely on the facts and circumstances stated herein.

May an alderman accept an hourly employment position with a bank which holds city deposits?

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 25-4-103(d), (f)(i)(ii), (h), (k)(i)(ii)(iii)(iv), (l) and (p)(i)(ii)(iii) states:

“(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.

(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.

(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.

(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);

(iii) The income as an employee of a relative if neither the public servant or relative is an officer, director or partner in the business and any ownership interest would not be deemed material pursuant to subparagraph (i) or (ii) herein; or

(iv) The income of the spouse of a public servant when such spouse is a contractor, subcontractor or vendor with the governmental entity that employs the public servant and the public servant exercises no control,
direct or indirect, over the contract between the spouse and such governmental entity.

(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.

(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.”

Code Section 25-4-105(1), (2), (3)(a) and (4)(a) 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.”

Pertinent facts and circumstances provided by the requestor, absent identifying data, are set forth as
follows and considered a part of this opinion.

I have served as an alderman in a City for the past sixteen years and have been reelected to serve another term. During this time I have owned my own business and have since retired.

After several months of retirement I have decided to look for employment here in the City. I have been offered a part time currier position at a local bank with hopes of this becoming a full time position later. This job is an hourly fee position and will not include any management decisions. I will simply deliver paperwork from the main office to the branch banks and run various errands for the bank.

I spoke with Tom Hood, Assistant Director and Counsel, MS Ethics Commission on Wednesday, November 9, 1005 and was advised to consult with the Ethics Commission for their opinion on this matter. Mr. Hood emailed me a copy of the Official Advisory Opinion No. 05-012-E and he feels this opinion applies to my situation.

The city has a one hundred thousand dollar CD with the Bank. This CD has been a the Bank for several years and this is the only business connection the city has with this bank. As an hourly paid employee, I will not be financially interested, directly or indirectly, if the city enters a contract with this bank. If the city decides to cash the current CD, obtain another CD or considers any banking business with the Bank, I will promptly excuse myself from the boardroom and will not vote or offer my opinion to the board. I have an excellent working relationship with the Mayor and the other Aldermen and will inform them of this as soon as I receive your opinion.

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

Section 109, Miss. Const. of 1890, and its statutory parallel, Section 25-4-105(2), Miss. Code of 1972, both quoted above, prohibit a member of a public board from having any direct or indirect interest in a contract with the government authorized by that board during his or her term or for one year thereafter. Frazier v. State, ex rel. Pittman, 504 So.2d 675, 693 (Miss. 1987). Here the question is whether the requestor will have an interest in the contract between the city and the bank due to his hourly employment as a courier for the bank.

While Section 109 imposes a broad proscription, there is an “edge to [its] target.” Id. at 695. The Frazier Court further stated, “it would insult the common sense of the 1890 Constitutional Convention that they intended any interpretation of § 109 to trickle down to triviality.” Id. at 698. It is the Commission’s understanding that the requestor’s employment and pay as an hourly courier are not dependent upon the bank’s deposits. From these facts it appears the requestor will not receive any personal monetary benefit from the contract, regardless of whether the city continues to do business with the bank. Therefore, the Commission finds as a matter of fact that the requestor will not be financially interested, directly or indirectly, in a depository contract between the city and the bank, and no violation of Section 109 or Section 25-4- 105(2) will occur. This finding is consistent with Advisory Opinion No. 05-012-E cited by the requestor.

Nevertheless, if the requestor accepts this employment position with the bank, it will become a “business with which he is associated,” as that term is defined in Section 25-4-103(d), above. Consequently, Section 25-4-105(1), above, will prohibit the requestor from taking any action in his position as alderman which would create a pecuniary benefit for the bank. To comply, the requestor must recuse himself from any such matter, including any decision by the board to award or renew a depository contract to the bank.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during official meetings or deliberations, but also avoid discussing the subject matter with staff or any other person. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means. An abstention is considered a vote with the majority and is not a recusal. Furthermore, the minutes of the meeting should state the recusing member left the room before the matter came before the public body and did not return until after the vote.

Section 25-4-105(3)(a), above, also prohibits an alderman from having a “material financial interest” in a business which is a contractor with the municipality. Pursuant to the definition found in Section 25-4-103(k), above, the requestor will have a material financial interest in the bank if he receives an“aggregate annual net income” of Five Thousand Dollars or more. However, Section 25-4-105(4)(a) provides for an exception when the public servant is an employee of a depository bank. The exception may not apply to a bank providing other services, such as such as investment broker, paying agent, bond registrar, trustee or financial advisor. Thus, no violation of Section 25-4-105(3)(a) should arise from the current depository contract.

Scott Rankin
Executive Director