Advisory Opinion No. 2019-44 Rhode Island Ethics Commission Advisory Opinion No. 2019-44 Approved: July 16, 2019 Re: Stefan Pryor QUESTION PRESENTED: The Petitioner, the Secretary of Commerce for the State of Rhode Island, a state appointed position, who by statute also serves as the Chief Executive Officer for the Rhode Island Commerce Corporation, requests an advisory opinion regarding whether the Code of Ethics prohibits him from simultaneously serving as a member of the Board of Directors of the Rhode Island Chapter of the American Red Cross. RESPONSE: It is the opinion of the Ethics Commission that the Petitioner, the Secretary of Commerce for the State of Rhode Island, a state appointed position, who by statute also serves as the Chief Executive Officer for the Rhode Island Commerce Corporation, is not prohibited by the Code of Ethics from simultaneously serving as a member of the Board of Directors of the Rhode Island Chapter of the American Red Cross. The Petitioner currently serves as Rhode Island’s first Secretary of Commerce, having been appointed by the Governor and confirmed by the Rhode Island Senate in 2015 pursuant to R.I. Gen. Laws § 42-64.19-4. By statute, the Petitioner also serves as the Chief Executive Officer (“CEO”) for the Rhode Island Commerce Corporation (“Commerce Corporation”). See section 42-64-8(d). The Petitioner cites among his public duties the oversight and coordination of state agencies and offices responsible for economic development, business regulation, housing, and workforce development. He adds that, when there is a disaster in Rhode Island, he is tasked with reaching out to potentially affected as well as impacted businesses to inform them as to what storm conditions or other potentially emergency related conditions are expected or have been experienced and to inform them as to what resources may be available by way of aid. The Petitioner explains that the Commerce Corporation administers a number of programs by which applicants may be awarded funding or incentives (often in the form of tax credits or grants) including, but not limited to, the Rebuild Rhode Island Tax Credit Program, the Qualified Jobs Incentive Tax Credit Program, the Tax Increment Financing Program, the Innovation Voucher Program, the Network Matching Grant Program, and the Renewable Energy Fund. The Petitioner anticipates that his nomination to serve as a member of the Board of Directors (“Board”) of the Rhode Island Chapter of the American Red Cross (“Red Cross”) is imminent. The Red Cross is a volunteer-led humanitarian organization that provides immediate relief to individuals affected by disasters, and helps people prevent, prepare for and respond to emergencies.[1] The Petitioner states that Board members receive no stipend or remuneration. He explains that the role of the Board is advisory in nature, adding that the Board does not have control over financial matters or any official governance role in the local chapter of the Red Cross. The Petitioner represents that, while the potential exists for non-profit organizations to apply for programs administered by the Commerce Corporation, the likelihood of the Red Cross being an applicant is remote to non-existent given the particular mission of the Red Cross and its lack of intersection with the funding programs of commerce. The Petitioner states that, in his capacity as the Secretary of Commerce and CEO of the Commerce Corporation, he does not exercise any oversight of the Red Cross. He further states that, at times, in his capacity as the Secretary of Commerce, he has been and will likely be involved in state emergency response efforts that may also involve Red Cross assistance or efforts. The Petitioner explains that, in those circumstances, he has no supervisory authority over the assistance or efforts of the Red Cross, which works predominantly with the Emergency Management Agency (“EMA”). The Petitioner further explains that the EMA coordinates the emergency response of a variety of agencies, including the Red Cross, which provides a support function with respect to food and shelter that is overseen by the EMA. He adds that the EMA is not a subordinate of the Secretary of Commerce or the Commerce Corporation. Based on all these facts, the Petitioner seeks guidance from the Ethics Commission with regard to his ability to serve as a member of the Board of the Red Cross. Under the Code of Ethics, a public official shall not have an interest or engage in any business, employment, transaction or professional activity, which is in substantial conflict with the proper discharge of his duties in the public interest. Section 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that he, any person within his family, his business associate or employer will derive a direct monetary gain of suffer a direct monetary loss by reason of his official activity. Section 36-14-7(a). Additionally, the Code of Ethics prohibits a public official from accepting other employment which will either impair his independence of judgment or induce him to disclose confidential information acquired by him in the course of and by reason of his official duties. Section 36-14-5(b). The Code of Ethics also provides that a public official may not use his office to obtain financial gain for himself, his family member, business associate, employer, or any business that he represents. Section 36-14-5(d). A public official may not represent himself, or any other person, or act as an expert witness before any state or municipal agency of which he is a member or by which he is employed. Section 36-14-5(e)(1)-(3). Furthermore, a public official must recuse himself from participation when his business associate appears or presents evidence or arguments before his state or municipal agency. Commission Regulation 520-00-00-1.2.1(A)(2) Additional Circumstances Warranting Recusal (36-14-5002) (“Regulation 1.2.1”). A “business associate” is defined as any individual or entity joined with a public official “to achieve a common financial objective.” Section 36-14-2(3). The Ethics Commission has consistently concluded that public officials are “business associates” of entities, including non-profit organizations, for which they serve either as members of the Board of Directors or in other leadership positions that permit them to affect the financial objectives of the organization. See, e.g. , A.O. 2014-14 (opining that the Director of the Rhode Island Department of Environmental Management (“DEM”), who was also a Director of the Rhode Island Boy Scouts (“Boy Scouts”), was a business associate of the Boy Scouts and was, thus, required to recuse from participating in any DEM decisions that would financially impact the Boy Scouts, as well as from any matters in which a Boy Scout representative appeared to represent the organization’s interests). Accordingly, in the instant matter, the Petitioner would become a “business associate” of the Red Cross were he to join its Board of Directors. None of the above provisions of the Code of Ethics prohibit the Petitioner’s simultaneous service as the Secretary of Commerce/CEO for the Commerce Corporation and as a member of the Board of the Red Cross. See A.O. 2019-31 (opining that the Administrator of Operations Management for the Department of Administration, Division of Information Technology, was not prohibited by the Code of Ethics from serving as a member of the Board of Directors for the Greenwood Credit Union); A.O. 2017-29 (opining that a member of the Providence Historic District Commission was not prohibited by the Code of Ethics from simultaneously serving as a member of the Board of Directors of the Providence Preservation Society); and A.O. 2005-48 (opining that the Director of the Rhode Island Underground Storage Tank Financial Responsibility Fund Review Board could accept membership to the Board of Directors of the National Leaking Underground Storage Tank program). Specifically, because the Petitioner would be a “business associate” of the Red Cross, the Code of Ethics would prohibit him from sharing any confidential information with the Red Cross, or from representing the organization’s interests before the Executive Office of Commerce or the Commerce Corporation. Furthermore, the Petitioner would be required to recuse from participating in any Executive Office of Commerce or Commerce Corporation discussions or decision-making, if any, that financially impact the Red Cross, as well as from any matters in which Red Cross representatives appear or present evidence or arguments. See Regulation 1.2.1(A)(2). For all of these reasons, it is the opinion of the Ethics Commission that the Petitioner is not prohibited by the Code of Ethics from serving as a member of the Board of Directors for the Red Cross, provided that he remains vigilant in identifying and managing any conflicts of interest that may arise between his public and private duties. The Petitioner is advised to seek further guidance from the Ethics Commission when faced with a specific situation not covered by this general advisory opinion. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(3) § 36-14-5(a) § 36-14-5(b) § 36-14-5(d) § 36-14-5(e) § 36-14-7(a) 520-RICR-00-00-1.2.1 Additional Circumstances Warranting Recusal (36-14-5002) Other Citations: § 42-64.8(d) § 42-64.19-4 Related Advisory Opinions: A.O. 2019-31 A.O. 2017-29 A.O. 2014-14 A.O. 2005-48 Keywords: Business associate Memberships Non-profit boards [1] https://www.goprovidence.com/listing/american-red-cross/24210/. Last accessed on June 20, 2019.