Docket No. 372

In the Matter of Rockland Trust Company

July 24, 1989

Disposition Agreement




This Disposition Agreement (Agreement) is entered into between
the State Ethics Commission (Commission) and the Rockland Trust
Company (Rockland) pursuant to Section 11 of the Commission's
Enforcement Procedures. This Agreement constitutes a consented to
final Commission order enforceable in the Superior Court pursuit
to G.L. c. 268B, s.4(d).

On April 13, 1988, the Commission initiated a preliminary
inquiry, pursuit to G.L. c. 268B, s.4(a) into possible violations
of the conflict of interest law, G.L. c 268A, involving the Rockand
Trust Company. The Commission concluded its preliminary inquiry
and, on May 12, 1989, found reasonable cause to believe that
Rockland Trust Company had violated G.L. c. 268A, s.3.

The Commission and Rockland now agree to the following findings
of fact and conclusions of law:

1. Rockland is a Massachusetts Trust Company chartered under the
laws of Massachusetts to engage in the business of banking. Its
principal place of business is in Rockland, Massachusetts. Among
its clients are a number of municipalities located in Plymouth
County and elsewhere throughout the Commonwealth of Massachusetts.

2. As the Commission previously had occasion to note in Public
Enforcement Letter 89-1 (United States Trust Company), prior to
November of 1985, there was a widespread practice among banks of
paying for the entertainment of public officials who managed
municipal funds. However, on November 23, 1985, the Office of the
Inspector General issued a document entitled "Report on Municipal
Banking Relations" that was widely circulated throughout the
Commonwealth, warning that conduct of this type raised serious
issues of conflict of interest. Subsequently, the Commission
conducted an investigation into these practices by the United
States Trust Company and five municipal treasurers, concluding that
the entertaining of municipal treasurers and collectors by the bank
did constitute a violation of s.3 of G.L. c. 268A. The Commission
stated at that time that it had decided not to impose any fine on
the bank due to the mitigating factors that, up until 1985, the
practice had been widespread and generally accepted within the
industry, and that United States Trust Company had ceased its
practice of paying for the entertainment expenses of municipal
employees as soon as the Inspector General's report had issued.
The Commission specifically reserved the question of an appropriate
remedy if a bank were shown to have continued the practice of
providing entertainment to municipal officials after the Inspector
General's report became public in 1985.

3. Beginning at some point in the late 1960's, Rockland annually
sponsored a summer outing (usually including a harbor cruise) to
which it invited all of the members of the Plymouth County
Collectors and Treasurers Association and all of the Rockland
employees who serviced municipal accounts. The purpose of the
cruise was to generate and maintain good will and good customer
relations between Rockland and municipal officials with control
over the placement of substantial sums of public money. This
practice continued up until the issuance of the Inspector General's
report in 1985.

4. Following the publication of the Inspector General's report,
officials of the Rockland Trust Company Marketing Department met
to determine the impact the report should have on their annual
summer outing. Without consulting the Inspector General or the
State Ethics Commission, they concluded that the Inspector
General's report did not apply to their function. Accordingly, on
August 13, 1986, Rockland held its summer outing, to which it
invited all 52

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members of the Plymouth County Collectors and Treasurers
Association and treasurers from towns outside of Plymouth County
in which Rockland either had a branch banking facility or an
account relationship. Approximately 26 collectors and treasurers
attended the function, which included a cruise, cocktails, dinner
and entertainment. Most of those who attended brought a guest, as
they were invited to do. In addition to these municipal officials
and their guests, at least 35 bank employees attended the outing,
bringing the total in attendance to approximately 90. The cost of
the function was $6,943.00, or about $77.00 per person.

5. On August 25, 1987, Rockland held its 1987 summer outing,
again inviting all 52 members of the Plymouth County Collectors and
Treasurers Association and additional treasurers from other
communities either being serviced by a Rockland branch or
maintaining a municipal account with the bank. The number of
collectors, treasurers and their guests attending the outing was
approximately the same in 1987 as it had been in 1986; the number
of bank employee guests, however, increased to bring the total in
attendance to approximately 95. The cost of the function was
$5,801.00 for a cost-per-person of approximately $56.00.

6. In the spring of 1988, the State Ethics Commission contacted
Rockland and asked for the production of all records relating to
these outings and any other entertainment or gifts which Rockland
might have provided to public officials over the previous two
years. As a result of this request, Rockland cancelled its summer
outing for 1988.

7. Section 3 of G.L. 268A prohibits, other than as provided by
law, the giving of anything of "substantial value" to any municipal
employee "for or because of any official act performed or to be
performed by such employee." The Commission may impose a fine of
up to $2,000.00 for a violation of s.3.[1]

8. By providing a harbor dinner cruise in 1986 and 1987 for the
municipal treasurers with the intent to generate and maintain good
will and good customer relations with municipal officials in
control of substantial sums of public money, Rockland violated G.L.
& 268A, s.3.

In view of the foregoing violation of G.L. & 268A, s.3, 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 Rockland:

1. that it pay to the Commission the amount of four thousand
dollars ($4,000.00) as a civil penalty for its violations of
s.3; and

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

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[1] In the past, the Commission has considered entertainment
expenses in the amount of $50.00 to constitute "substantial value."
P.E.L 88-1. See, {Commission Advisory No. 8} issued May 14,
1985. Further, for s.3 purposes, it is unnecessary to prove that the
gratuities given were generated by some specific identifiable act
performed or to be performed. It is sufficient that the gratuities
are given to the official "in the course of his everyday duties for
or because of official acts performed or to be performed by
him and where he was in a position to me his authority in a manner which
could affect the gift giver." United States v. Standefer, 452 F.
Supp. 1178, 1183 (W.D. Pa. 1978) (aff'd on other grounds, 447 U.S.
10(1980)), citing United States v. Niederberger, 580 F.2d 63 (3rd
Cir. 1978). See also United States v. Evans, 572 F. 2d 455 (5th
Cir. 1978). As the Commission explained in Advisory No. 8:

In fact, even in the absence of any specifically identifiable
matter that was, is or soon will be pending before the official,
s.3 may apply. Thus, where there is no prior social or business
relationship between the giver and the recipient, and the
recipient is a public official who could affect the giver, an
inference can be drawn that the giver was seeking the goodwill
of the official because of a perception by the giver that that
public official's influence could benefit the giver. In such a
case, the gratuity is given for as yet unidentified "acts to be
performed."