Advisory Opinion No. 2000-62

Re: Richard V. Simone, III

QUESTION PRESENTED

The petitioner, the Deputy Director of the Providence Tourism Council, a state employee position, who also is a minority (i.e., 16%) stockholder in Café Renaissance, requests an advisory opinion as to how he may avoid conflicts of interest given that given that his employment often requires him to make recommendations of and/or arrangements at restaurants for out of town tours.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, the Deputy Director of the Providence Tourism Council, a state employee position, who also is a minority (i.e., 16%) stockholder in Café Renaissance, may not participate in any Tourism Council matters affecting his restaurant and/or the financial interests of his business associates. See R.I. Gen. Laws § 36-14-5(a), (b) and (d). Further, consistent with the requirements of Section 5(h) of the Code, his restaurant may not enter into a contract with any state or municipal agency unless the contract has been awarded through an open and public process. Finally, the petitioner may not appear before the Tourism Council or negotiate with its representatives on behalf of Café Renaissance. See R.I. Gen. Laws § 36-14-5(e).

The petitioner is the Deputy Director of the Providence Tourism Council, a quasi-public entity through which the Providence Convention Authority (PCA) presently operates. The purpose of the Tourism Council is to promote tourism, conventions, exhibitions, banquets and similar events in Providence. The Tourism Council is comprised of an Executive Director, the petitioner and two administrative staff members. The PCA Board of Director’s personnel subcommittee hired the petitioner. He advises that he has a private financial interest as a minority stockholder (i.e., 16%) in Café Renaissance, a Providence restaurant that is scheduled to open on Federal Hill in August of 2000. He represents that he often is called upon to make restaurant arrangements and recommendations for out of town tours. Further, the Tourism Council occasionally places advertisements to promote Providence and shares the cost with various local businesses that are mentioned in the advertisement. He indicates that the Executive Director has sole authority regarding the advertisements and which businesses participate, but that participation of all businesses within the city is invited. Finally, the petitioner advises that participation in promotional events is open to all Providence businesses. Notices inviting event participation are sent to, for example, all hotels, all taxi companies and all restaurants located in Providence.

Under the Code of Ethics, the petitioner may not participate in any matter in which he has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of his duties in the public interest. Substantial conflict is defined as a “direct monetary gain” or a “direct monetary loss” that accrues, by virtue of the public official’s activity, to that individual, a family member, a business associate, an employer, or any business which the public official represents. R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a). He may not accept other employment that will either impair his independence of judgment as to his official duties or induce him to disclose confidential information acquired by him in the course of and by reason of his official duties. R.I. Gen. Laws § 36-14-5(b). He also may not use his office to obtain financial gain for himself, his family, his employer, a business associate, or a business that he represents, other than as provided by law. R.I. Gen. Laws § 36-14-5(d). Section 5(f) of the Code requires an official to recuse himself from voting or otherwise participating in the consideration and/or disposition of a matter involving a business associate. See R.I. Gen. Laws § 36-14-5(f). Under R.I. Gen. Laws § 36-14-2(3), a “business associate” is defined as any individual or entity joined with a public official “to achieve a common financial objective.”

In his public employment, the petitioner presumably will be in a position to consider matters that could result in a financial benefit to Café Renaissance. This does not preclude the petitioner from participating in matters that have the general aim of promoting tourism in Providence, even though such general promotion may have the residual effect of benefiting the restaurant in which he is a partner. Rather, the petitioner is precluded from acting only where the matter at issue would confer a direct financial benefit on Café Renaissance, whether through specific promotion or otherwise, including but not limited to recommendations or arrangements with relation to any restaurant within which the petitioner has an interest.

The petitioner may participate in matters involving the restaurant industry in Providence, or individual members of that industry, as long as those matters do not directly impact his restaurant and/or his personal financial interests. In previous advisory opinions, the Commission has held that the Code does not prohibit members of town and city councils with interests in restaurants/liquor establishments from serving on the town or city council and, generally, from considering matters relating to the zoning or licensing of restaurants and bars. However, an official would be required to recuse from participation when an issue came before the council involving a competing business that was in reasonably close proximity to the official’s own, or that otherwise directly impacted the business in which the official had an economic interest, recusal was required. See e.g., A.O. 99-9 (advising a member of the Narragansett Town Council who owns a restaurant holding a liquor license that he should not participate in matters that directly affect his business and further advising that a direct impact is presumed for any establishment within a close proximity to or otherwise in direct competition with his restaurants); A.O 96-70 (requiring a member of the Newport City Council and the Board of License Commissioners who owns a restaurant holding a liquor license to recuse himself from zoning or licensing matters that concern competitors); A.O. 96-24 (recognizing that an Alternate Member of the Newport Zoning Board of Review who is part owner and operator of a hotel and landlord to a restaurant and dance club, may not participate in matters affecting other hotels or matters affecting restaurant, dance clubs, or bed and breakfasts that are located within 500 feet of the petitioner’s businesses). See also A.O. 98-151.

Pursuant to Sections 5(a) and (d) of the Code, the petitioner also may not take any official action that could financially impact his business associates. Given that his partners in Café Renaissance may have financial interests in other Providence restaurants, the petitioner must take particular care to recuse from participation in any Tourism Council matters that may financially impact his business associates in their private ventures. Further, the petitioner may not appear before the Tourism Council on behalf of Café Renaissance while he is employed by the Tourism Council and for a period of one year thereafter. See R.I. Gen. Laws § 36-14-5(e). Although he may not appear before the Tourism Council on behalf of his restaurant, to negotiate or otherwise, a business associate of his may do so, provided that they both disclose to the Tourism Council the nature of their business relationship and the petitioner does not participate in the agency’s consideration of the matter at issue. See R.I. Gen. Laws § 36-14-5(f). These prohibitions do not act as a bar to Café Renaissance doing business with the Tourism Council, which is a state agency as defined in the Code of Ethics. See R.I. Gen. Laws § 36-14-2(8)(i). However, it is likely that any business done between the Tourism Council and the petitioner's restaurant would constitute a contractual relationship within the meaning of section 5(h) of the Code of Ethics. Therefore any business transacted between the Tourism Council and his restaurant must comply with the open and public bidding requirements, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded, of section 5(h). See R.I. Gen. Laws § 36-14-5(h). Notices of recusal must be filed with both the Ethics Commission and the Providence Tourism Council, in accordance with R.I. Gen. Laws § 36-14-6.

Code Citations:

36-14-2(8)(i)

36-14-5(a)

36-14-5(b)

36-14-5(d)

36-14-5(e)

36-14-5(f)

36-14-5(h)

36-14-6

36-14-7(a)

Related Advisory Opinions:

2000-33

2000-12

99-122

99-105

99-72

99-59

99-9

98-151

98-149

98-137

98-112

98-86

97-103

97-72

97-34

96-101

96-70

96-58

96-24

95-67

Keywords:

Business associate

Business interest

Contracts

Financial interest

Recusal