Opinion

Opinion  EC-COI-85-47

Date: 05/28/1985
Organization: State Ethics Commission

A member of a quasi-public agency, who is also an officer of a bank, may in addition serve as an unpaid member of a municipal industrial development finance authority as long as he abstains from participation in matters overlapping any of the three entities and files appropriate disclosures.

Table of Contents

Facts

You are a senior vice president in commercial lending at the United States Trust Company (UST). You are also chairman of the board of the Massachusetts Community Development Finance Corporation (CDFC). CDFC is a state agency which, upon application of a community development corporation, invests funds in specific business projects within economically depressed areas of the commonwealth to stimulate the creation of jobs in those areas. See, G.L. c. 40F, § 1 et seq. You are one of two directors the Governor is required to appoint from the investment finance field to the nine-member CDFC board. G.L. c. 40F, § 2.

You have recently been approached for appointment to the board of the Boston Industrial Development Finance Authority (BIDFA). Pursuant to G.L. c. 40D, § 2, each municipality shall have a board to be known as the Industrial Development Financing Authority, provided that [in Boston's case] the city council, with the approval of the mayor, has by vote declared that such an authority is needed. The purpose of such an authority is to provide security against future unemployment and lack of business opportunity by attracting new industry to the municipality or substantially expanding existing industry in the municipality through industrial development projects. Id. The municipality, acting by or through such an authority, finances these development projects by issuing industrial development revenue bonds. See, G.L. c. 40D, § 9. As a member of the board of directors of BIDFA, you would serve without compensation but would be reimbursed for expenses.

You state that if appointed to BIDFA, you would abstain from voting or discussion on any matters that related to UST or CDFC, even if you were not directly involved in the matter.

Question

Does G.L. c. 268A permit you to serve on the board of directors of BIDFA in light of your employment at UST and your chairmanship of the CDFC board?

Answer

Yes, based on your self-imposed abstention from participation in matters where there is any overlap among any of the three entities.

Discussion

As chairman of the CDFC board, you are a "state employee" for the purposes of G.L. c. 268A, § 1(q). Your part-time and unpaid status renders you a "special state employee," however, which means that the conflict law will apply less restrictively to you under certain circumstances. G.L. c. 268A, § 1(o). If appointed to the BIDFA board, you would also be a municipal employee, which would subject you to the corresponding conflict law prohibitions at the municipal level. See, G.L. c. 268A, § 1(g). "Special" status as a BIDFA member, unlike at the state level, would require that the city council specifically designate the position of BIDFA board member as a "special municipal employee" position. G.L. c. 268A, § 1(n).

In view of your voluntary abstention in situations involving any overlap between UST, CDFC and BIDFA, it is unnecessary to discuss the applicability of § 6 (or its municipal counterpart § 19), which prohibits a state employee from participating in a particular matter in which, inter alia, a business organization in which he is serving as a director or employee has a financial interest.[1] As a special state employee in your CDFC position, you also would not run afoul of § 4 under the facts you present: Section 4(c) prohibits a state employee from acting as agent or attorney for anyone other than the commonwealth or a state agency in connection with any particular matter in which the commonwealth is a party or has a direct and substantial interest.[2] As a special state employee, this prohibition applies only to particular matters (a) in which you have participated as a state employee; (b) which are or within one year have been the subject of your responsibility or (c) which are pending in your state agency. A § 4(c) issue would only be raised where, for example, you signed a contract or otherwise acted as agent for BIDFA in connection with a funding proposal for a project which CDFC was also funding. Again, your voluntary abstention from participation in such instances obviates the potential conflict.[3]

You should be aware, however, that you are also subject to the standards of conduct set forth in G.L. c. 268A, § 23. That section provides that no state, county or municipal employee shall:

  1. accept other employment which will impair his independence of judgment in the exercise of his official duties;
  2. use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others;
  3. by his conduct give 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 persons;
  4. accept employment or engage in any business or professional activity which will require him to disclose confidential information which he has gained by reason of his official position or authority; or
  5. improperly disclose materials or data within the exemptions to the definition of public records as defined by section seven of chapter four, and which were acquired by him in the course of his official duties or use such information to further his personal interests.

The Commission concludes that your proposed dual board status does not inherently violate any of the § 23 provisions. However, because the two board positions and your UST position are involved with commercial lending, you must take great care to abide by these § 23 provisions. For example, § 23 issues would be raised if you were to discuss or recommend (as well as vote on) a direct loan proposal being considered by CDFC or BIDFA where UST was also participating in the deal. To dispel any impression of improper influence or the appearance of a conflict, you should;

  1. abstain from participating in discussions or votes on matters connected to the other entities you serve,
  2. go on record in that board's minutes giving the reason for your abstention (disclosing the overlap, e.g. that BIDFA and CDFC are considering a joint funding proposal of a project and that you serve on both boards), and
  3. leave the room while the matter is being discussed.

 

End Of Decision

[1] To assure your compliance with § 6, you should submit a written disclosure to the Governor, (your CDFC appointing official) and the Commission whenever matters come before you affecting the financial interests of UST or BIDFA.

[2] Section 4(a) prohibits a state employee from receiving compensation from any non-state party in connection with these same particular matters. The Commission has held that reimbursement of expenses does not constitute compensation under this section. See, e.g. EC-COI-85-2; 81-142. Because your CDPC board position does not entitle you to payment other than the reimbursement of expenses, the § 4(a) prohibition is inapplicable to your situation.

[3] For these same reasons, no conflict issues are raised under § 17, the municipal counterpart to § 4.

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