Docket No. 453

In the Matter of EUA Cogenex

October 4, 1992

Disposition Agreement




This Disposition Agreement (Agreement) is entered into
between the State Ethics Commission (Commission) and EUA Cogenex
(Cogenex) pursuant to Section 5 of the Commission's Enforcement
Procedures. This Agreement constitutes a consented to final order
enforceable in the Superior Court pursuant to G.L. c. 268B,
s.4(j).

On June 16, 1992, the Commission initiated, pursuant to G.L.
c. 268B, s.4(a), a preliminary inquiry into possible violations
of the conflict of interest law, G.L. c. 268A, by Cogenex. The
Commission concluded that inquiry and, on, September 10, 1992,
found reasonable cause to believe that Cogenex violated G.L. c.
268A.

Page 607

The Commission and Cogenex now agree to the following
findings of facts and conclusions of law:

1. Cogenex is a Massachusetts corporation engaged in the
business of energy management.

2. At the time here relevant, Boston Edison offered a
program entitled the Encore Program to assist large energy
consumers to significantly reduce their energy consumption costs.
Institutions that participate in the program select an electrical
contractor to retrofit and/or replace existing equipment. Boston
Edison incurs all expenses under the program.

3. Cogenex was the successful bidder under the Encore
Program for Worcester County[1] and the following municipalities:
Holliston, Newton, Walpole and Arlington. As such, Cogenex
receives a percentage of avoided costs for generation savings
realized from Boston Edison.[2]

4. On July 17, 1991, Cogenex hosted a Boston Harbor cruise
on a custom designed cruising yacht. The explicit purpose of the
cruise was for customer appreciation and to foster goodwill. The
cruise included cocktails and dinner. Cogenex spent approximately
$2,229 hosting the event at a cost of $79.06 per person.

5. Cogenex extended invitations to approximately 40
individuals, including seven public officials involved with the
aforementioned contracts.

6. Two of the 28 individuals who attended the cruise were
public officials.

7. Section 3 of G.L. c. 268A prohibits, otherwise than as
provided by law, the giving or offering of anything of
substantial value to any public official for or because of any
official act performed or to be performed by such employee.[3]
The Commission has found that private parties violate s.3 when
they entertain government officials (who are in a position to
benefit them) in an effort to generate good will. See e.g., In re
State Street Bank, 1992 SEC 580; In re Stone & Webster, 1991 SEC
552; In re Rockland Trust, 1989 SEC 416.

8. By providing a Boston Harbor cruise for public officials
with the intent to generate and maintain good will and good
customer relations with municipal officials, Cogenex violated
G.L. c. 268A, s.3.[4]

In view of the foregoing violation of G.L. c. 268A by
Cogenex, the Commission has determined that the public interest
would be served by the disposition of this matter without further
enforcement proceedings, on the basis of the following terms and
conditions agreed to by Cogenex:

1. that Cogenex pay to the Commission the sum of two
thousand dollars ($2,000.00) as a civil penalty for violating
G.L. c. 268A; and

2. that Cogenex waive all rights to contest the findings of
fact, conclusions of law and terms and conditions contained in
this agreement or any other related administrative or judicial
proceedings to which the Commission is or may be a party.

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[1] Unlike the three-way contracts under the Encore Program
(Boston Edison, Cogenex and the municipality), the Worcester
County contract was directly between the county and Cogenex.

[2] The present values of the contracts are as follows:
Holliston, $252,200; Newton, $1,171,100; Walpole, $471,800;
Arlington, $470,000 and Worcester County, $1,121,000. Cogenex
expects to realize a profit of 5 to 15 percent of the present
values of the contracts over the life of the contracts.

[3] In the past, the Commission has considered entertainment
expenses in the amount of $50 to constitute "substantial value."
P.E.L. 88-1. See Commission Advisory No. 8 (Free Passes)(issued
May 14, 1985).

[4] For s.3 purposes it is unnecessary to prove that any
gratuities given were generated by some specific identifiable act
performed or to be performed. In other words, no specific quid
pro quo or corrupt intent need be shown. Rather, the gift may
simply be an attempt to foster goodwill. It is sufficient that a
public official, who was in a position to use his authority in a
manner that would affect the giver, received a gratuity to which
he was not legally entitled, regardless of whether that public
official ever actually exercised his authority in a manner that
benefitted the gift giver. See Commission Advisory No. 8. See
also United States v. Standerfer, 452 F. Supp. 1178, (W.D.P.A.
1978), aff'd other grounds, 447 U.S. 10 (1980); United States v.
Evans, 572 F.2d 455, 479-482 (5th Cir. 1978).

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