Settlement  In the Matter of Rockland Trust Company

Date:	07/24/1989
Organization:	State Ethics Commission
Docket Number:	372

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.

[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."