You are one of nine members of a state board ("Board"). Your principal occupation is President of the ABC Company ("Company"), which is involved in real estate development, general contracting and property management. As a result, the Company maintains a variety of relationships with real estate partnerships and financial institutions, which in turn may have a direct or indirect relationship with the Board.
What limitations does G.L. c. 268A, the state's conflict of interest law, place on your serving as Board member and Company president?
You will be subject to the limitations set forth below.
As a Board member, you are considered a state employee for the purposes of G.L. c. 268A. In view of your unpaid status, you are also a "special state employee", which means that the conflict law will apply to you less restrictively under certain circumstances. See G.L. c. 268A, 1(o). The sections of the conflict law relevant to your situation are sections 4, 6, 7 and 23.
1. Section 4
This section prohibits you from acting as agent or attorney for, or receiving compensation from, ABC Company or anyone else other than the state in relation to any particular matter[1] in which the state is a party or has a direct and substantial interest. Acting as an agent for ABC Company includes signing its contracts, acting as its advocate in application processes, submitting its applications, presenting support information on its behalf to any state agency or representing it in any way before a state agency. As a special state employee, these restrictions only apply to you in relation to particular matters which within one year have been a subject of your official responsibility,[2] or in which you have participated as a Board member.[3] For example, § 4 would prohibit you from signing a contract with the Board on behalf of ABC Company, or sharing in ABC Company's receipt of compensation for services from an ABC Company venture funded by the Board. Because in your case the § 4 restriction only applies to Board matters, you would not be prohibited from acting as ABC Company's agent before any other state agencies. Likewise, the fact that the Board has invested funds in an entity which has a joint venture with ABC Company does not, in and of itself, prohibit your involvement in the joint venture as ABC Company's representative. The § 4 restriction would apply to you if the Board specifically invested funds in the entity's joint venture with your Company, or the joint venture constitutes a majority of that entity's business (making the Board's investment with the entity rise to the level of a direct and substantial interest in the joint venture). Because the application of §4 in your case includes matters within your official responsibility as well as matters in which you participate on the Board, your abstention in a matter as a Board member would not exempt you from the provisions of § 4.
2. Section 6
This section prohibits your participation as a Board member in any particular matter in which, in relevant pare you or an organization in which you serve as an officer has a financial interest. The purpose of this provision is to eliminate in advance the pressure that otherwise might be brought to bear on public employees when faced with situations where there are competing public and personal considerations.[4] The Commission has previously held that any financial interest, no matter how small, is enough to trigger §19 (the municipal equivalent to § 6). See EC-COI-84-98.[5] However, that financial interest must be direct and immediate, or at least reasonably foreseeable. Id. Obviously, if the Board were to consider making an investment through ABC Company, you would be disqualified by § 6 from participating in the decision or vote.[6] This restriction on your participation would also extend to any Board investment decision in a group trust or partnership which involves a reasonably foreseeable financial interest on the part of ABC Company. Thus, if ABC Company is contemplating or actually negotiating a joint real estate venture with an entity in which the Board is considering investing funds, you would be precluded from participating as a Board member in that matter. Participation includes not only voting but also involvement in discussions relating to the decision or vote. When such matters arise, the safest course would be for you to leave the room. See Graham v. McGrail, 370 Mass. 133, 138(1976).
In addition to your disqualification from participating in the matter, you are subject to further requirements under G.L. c. 268A, § 6. Section 6 requires you to disclose in writing to your appointing authority and the Commission the nature of the matter before the Board and ABC Company's financial interest in the matter.[7]
3. Section 7
Section 7 prohibits state employees from having a financial interest, directly or indirectly, in a contract made by a state agency. Investments of the Board constitute contracts within the meaning of § 7. See EC-COI-84-58; 83-113. Notwithstanding these restrictions, however, the enabling statute creating the Board expressly allows the board to make investments in which you have an interest or involvement. Therefore, the Board's investment of funds with an entity with which ABC Company has a relationship would not place you in violation of § 7.
4. Section 23[8]
Finally, section 23 contains standards of conduct applicable to all state employees. This section provides that a state employee shall not:
- accept other employment which will impair his independence of judgment in the exercise of his official duties;
- use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others;
- 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 person;
- 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;
- improperly disclose materials or data within the exemptions to the definition of public records as defined by section seven of chapter four, and were acquired by him in the course of his official duties nor use such information to further his personal interests. For example, you would violate this section if you used to your personal advantage confidential information submitted to the Board. In borrowing from, depositing funds in, or maintaining investment relationships with banks, financial institutions or insurance companies, either personally or on behalf of ABC Company, you must take great care to abide by these standards whenever the Board has a relationship with such an entity. Any use of your Board membership to gain preferential treatment on ABC Company's or your own behalf, from such an institution would constitute a violation of § 23.[9]
The standards of conduct enunciated in s.23 extend beyond single actions which constitute conflicts and address both courses of conduct raising conflict questions and appearances of conflicts. Issues arising under § 23 normally involve a balancing of concerns and are fact specific.
A number of your questions raised potential § 23 issues on which the Commission finds it cannot advise you without specific facts before it. You are therefore encouraged to renew your opinion request at a later time when faced with a specific situation.
End Of Decision