Opinion

Opinion  EC-COI-85-54

Date: 07/16/1985
Organization: State Ethics Commission

A president of a state educational institution may also serve as director of a bank. However, he may not receive compensation from or act as agent of the bank in matters such as bank audits and bank applications to state agencies, nor can he participate as president of the educational institution in maters in which the bank has a financial interest.

 

Table of Contents

Facts

You are the president of a state educational institution (ABC). Your responsibilities do not include decisions concerning where to deposit ABC funds. These decisions, which are based on a highest bidder process, are handled by the ABC Comptroller and Director of Auxiliary Services. You were recently elected as one of the twenty-five directors of a (Bank) and will receive compensation of fifty dollars per meeting. The Bank currently holds approximately $40,000 out of the two to three million dollars in accounts which ABC currently has on deposit with banks.

Question

Does G.L. c. 268A permit you to serve as a Bank director while you maintain your ABC presidency?

Answer

Yes, provided that you comply with the restrictions described below.

Discussion

In your capacity as ABC president, you are a state employee for the purposes of G.L. c. 268A. Three sections of the law are relevant to your situation.

1. Section 4

This section limits your activities as a Bank director. Under § 4(a) and (c), you may not receive compensation from or act as agent for the Bank in relation to any particular matter[1] in which the commonwealth or a state agency is a party or has a direct and substantial interest. For example, if the state Banking Division were conducting an audit of the Bank, you could neither act as the Bank's representative in relation to the audit, nor receive compensation from the Bank in relation to that audit. Similarly, you may not act as the Bank's representative in connection with Bank applications to state agencies, including state colleges, because the commonwealth would clearly have a direct and substantial interest in those applications. On the other hand, many matters will come before you at Bank director meetings in which the commonwealth will not be a party or have a direct and substantial interest, and § 4 does not limit your Bank activities with respect to those matters. You should therefore monitor the agenda of Bank director meetings and comply with the § 4 guidelines whenever matters come before you in which the commonwealth has a stake. You may contact the Commission staff if § 4 issues subsequently arise about which you are unsure.

2. Section 6

This section applies to your activities as ABC president. Because you are a Bank director and have loyalties to the Bank which may potentially conflict with your loyalty to the commonwealth, § 6 places certain limits on your official actions. Specifically, while you remain as a Bank director, you may not participate[2] in any particular matter in which the Bank has a financial interest. Based on the facts as you have described them, it is unlikely that § 6 issues will be raised because you have no official dealings as ABC president with either the Bank or the deposit process. Should your responsibilities change to include involvement with that process, § 6 will apply.[3]

3. Section 23(¶ 2)(3)[4]

This section prohibits you from, by your conduct, giving reasonable basis for the impression that any person can unduly enjoy your favor in the performance of your official duties, or that you are unduly affected by the position of any person. Issues under this section may arise because you have authority over those individuals who have official dealings with banks. You should therefore be aware of the § 23 provisions whenever you evaluate these employees job performance or otherwise participate in any personnel decision including those individuals. In particular, your decisions should not be affected by the amount of deposits which the Bank receives. While this restriction may be self-explanatory, and the process by which ABC deposits are made is based on a standardized procedure, you should remain aware of the § 23 standards in your official dealings with these employees.[5]

 

End Of Decision

[1] G.L. 268A § 1(k) defines "particular matter" as "any judicial or other proceeding, application, submission, request for a ruling or other determination, contract, claim, controversy, charge, accusation. arrest, decision, determination, finding but excluding enactment of general legislation by the general court and petitions of cities, towns, counties and districts for special laws related to their governmental organizations, powers, duties. finances and property."

[2] G.L. 268A § 1(j) defines "participate" as "participate in agency action or in a particular matter personally and substantially as a state, county or municipal employee, through approval, disapproval, decision, recommendation, the rendering of advice, investigation or otherwise."

[3] If this hypothetical situation should occur, you would be required to abstain from participation if the Bank were an applicant unless you received from your appointing official a written determination that the Bank's financial interest was not so substantial as to affect the integrity of your ABC services. See, G.L. c. 268A § 6.

[4] On July 9, 1985, the Supreme Judicial Court ruled that the commission does not possess the jurisdiction to enforce G.L. c. 268A. § 23. The discussion contained above is based on prior Commission rulings and is intended to provide guidance to you.

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