| Date: | 03/22/1983 |
|---|---|
| Organization: | State Ethics Commission |
A state employee who is an attorney in private practice and who participates in investing agency funds is subject to §§ 6 and 23 of the conflict of interest law if funds were invested with a Bank with which the state employee privately provides legal services.
You are a member of a state agency ABC and also an attorney engaged in the private practice of law. Among your statutory powers as an ABC member is the investment of ABC funds. In practice, the ABC staff will prepare investment guidelines and recommendations and will submit them to you and other ABC members for your review and approval. Since 1967 you have performed private conveyancing work for the XYZ Bank (Bank). You are one of approximately Q attorneys to whom the Bank refers conveyancing work, and you estimate that the income from the referrals represents ten percent of your income as an attorney. The Bank is interested in receiving investments from ABC.
Does G.L. c. 268A permit you to participate as an ABC member in deciding whether to invest funds in the Bank?
Yes, subject to certain limitations described below.
As an ABC member, you are a state employee for the purposes of G.L. c. 268A.[1] Under G.L. c. 268A, § 6, you are prohibited, in relevant part, from participating[2] in your ABC capacity in any particular matter[3] in which a business organization for which you serve as an employee has a financial interest. The Bank is a business organization for the purposes of § 6 and, by voting to invest ABC funds with the Bank, you would be participating in a particular matter in which a business organization has a financial interest. The Commission concludes, however, that your private attorney relationship with the Bank does not rise to the status of "employee" sufficient to invoke the participation prohibitions of § 6. This conclusion is based on the comparatively small portion of your income attributable to services which you perform for the Bank and the relative infrequency of those services. However, should your situation change and a more substantial portion of your time and income be attributable to the Bank, then you would be regarded as an employee for the purposes of § 6. Compare, Attorney General Conflict Opinion No. 101; EC-COI-80-43 (members of a group who, by their conduct, give the appearance of being partners will be treated as such for the purposes of § 6). This result would apply irrespective of whether the relationship is regarded as that of an independent contractor for other purposes.
Although G.L. c. 268A, § 6 does not preclude your participation as an ABC member in investment decisions involving the Bank, you should be aware that G.L. c. 268A, § 23 imposes restrictions on your activities. The first paragraph of § 23 prohibits a state employee from using or attempting to use his official position to secure unwarranted privileges for himself or others and from, by his conduct, giving reasonable basis for the impression that any person can improperly influence or unduly enjoy his favor in the performance of his official duties, or that he is unduly affected by the kinship, rank, position or influence of any party or person. You would not run afoul of these provisions just because the Bank received investments from ABC. However, if the Bank were the only recipient or were a recipient of a substantial portion of ABC's investments and if you were to have voted to make those investments, then § 23 issues would be raised. To avoid even the raising of such issues, the safest course on your part would be to refrain altogether from participating in such votes whenever the Bank is competing for those investments. Otherwise, it would have to be examined whether the investments were made on objective criteria applicable equally to all banks or whether your private relationship with the Bank played any role.
End Of Decision
