Advisory Opinion No. 2003-36

Re: Peter Fogarty, CPA, CFE

QUESTION PRESENTED

The petitioner, an alternate member of the Smithfield Zoning Board, a municipal appointed position, requests an advisory opinion as to whether he may participate and vote in the Zoning Board’s consideration of a petition for a special use permit, given that the applicant’s attorney has previously engaged the petitioner’s accounting firm.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, an alternate member of the Smithfield Zoning Board, a municipal appointed position, may participate and vote in the Zoning Board’s consideration of a petition for a special use permit presented by an attorney who previously has engaged the petitioner’s accounting firm, provided that there is no ongoing business relationship between the petitioner’s firm and the attorney and no specific plans for representation in the near future.

The petitioner serves as the second alternate member of the Smithfield Zoning Board. He represents that he is privately employed as a certified public accountant (CPA) and is a partner in Hagan Streiff Netwon & Oshiro, a national forensic accounting firm that specializes in damage assessments, fraud investigations and litigation support services. The petitioner informs that a petition for a special use permit presently is pending before the Zoning Board. He indicates that the applicant’s attorney has previously engaged his firm to assist in the investigation of an estate fraud. He advises that both the estate matter and his firm’s engagement by the attorney have concluded.

The petitioner states that he does not believe that the applicant’s attorney will engage his firm again in the immediate future. He inquires as to his ability to participate in the Zoning Board’s consideration of the petition for a special use permit. Further, the petitioner seeks guidance as to whether he may participate in Zoning Board matters where 1) an applicant’s attorney and/or law firm previously engaged his firm in an unrelated and now concluded matter; and 2) an applicant’s attorney is opposing counsel in a present or concluded case handled by his firm.

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 and employment in the public interest. See R.I. Gen. Laws § 36-14-5(a). The petitioner will have an interest in substantial conflict with his official duties if he has reason to believe or expect that a “direct monetary gain” or a “direct monetary loss” will accrue, by virtue of his official activity, to himself, a family member, a business associate, or any business by which he is employed or which he represents. See R.I. Gen. Laws § 36-14-7(a). Additionally, the Code provides that the petitioner has reason to believe or expect a conflict of interest exists if it is "reasonably foreseeable" that he, a family member, employer, or business associate will be financially impacted. To be "reasonably foreseeable" the probability must be greater than "conceivable," but the impact need not be certain to occur. See Commission Regulation 36-14-6001.

Further, R.I. Gen. Laws § 36-14-5(d) prohibits an official from using his position or confidential information received though his position to obtain financial gain, other than that provided by law, for himself, a business associate or any person within his family. Also, an official may not participate in a matter concerning or presented by a business associate unless the associate first advises the official's agency of the nature of the relationship and the official recuses himself from voting or otherwise participating in his agency's consideration of the matter at issue. See R.I. Gen. Laws § 36-14-5(f). A business associate is defined as “a person joined together with another person to achieve a common financial objective.” R.I. Gen. Laws § 36-14-2(3).

In past advisory opinions, the Commission has required public officials to recuse from consideration of matters if the official had an ongoing or anticipated business relationship with an individual or entity appearing before his or her public body. See e.g., A.O. 98-142 (finding that a Coastal Resource Management Council member must recuse from participating in matters involving a law firm while he has an ongoing attorney/client relationship with a member of that firm); A.O. 98-117 (concluding that an Exeter Town Councilor may not participate in a zoning matter where she has had and will likely have an employment relationship with an attorney appearing before her on a zoning matter); and A.O. 94-60 (concluding that a member of the North Kingstown Planning Commission may not participate in the consideration of a subdivision proposal submitted by an engineer where the member planned to engage in business projects within the immediate future with that engineer).

The Commission consistently has found that no potential for a conflict of interest exists when a prior business relationship between a public official and a private party has ended and there is no ongoing or anticipated future relationship between the parties. In such instances, a public official may participate in matters involving his or her former business associate, assuming no other conflicts are present. See A.O. 98-25 (opining that a Bristol Planning Board member may participate in a matter in which an attorney represents an applicant before that Board, despite the fact said attorney previously represented the member on an unrelated matter); A.O. 97-112 (finding that North Providence Town Councilors may consider an application for Town Solicitor from an attorney who had represented them privately in complaint proceedings before the Ethics Commission, provided that the attorney/client relationship has ended). Also A.O. 97-7; A.O. 96-68; A.O. 96-62; A.O. 96-30.

Based upon the facts presented by the petitioner, no current business association exists between the petitioner’s firm and the applicant’s attorney that would bar his participation in the Zoning Board’s consideration of the subject petition. Additionally, they have no plans for further business dealings in the immediate future. Accordingly, the applicant’s attorney and his firm are no longer “business associates” pursuant to the Code of Ethics. Therefore, the petitioner may participate and vote in the Zoning Board’s consideration of the pending petition for a special use permit. See A.O.2003-17 (finding that an East Greenwich School Committee member may participate in the hiring of an attorney who has represented his businesses on a recurring basis for over 30 years, provided that there is no ongoing attorney client relationship between the petitioner and the attorney and no specific plans for representation in the near future); and A.O. 2002-61 (concluding that a Westerly Town Councilor may participate in matters involving Lewiss Law Associates provided that there is no ongoing attorney client relationship between the petitioner and the law firm and there are no specific plans for representation in the near future).

Finally, the petitioner seeks general guidance as to whether he may participate in the Zoning Board’s consideration of matters presented by attorneys and/or law firms with which his firm has had prior or current business dealings. In the absence of an actual controversy, and without sufficient, specific facts upon which to base an opinion, the Commission declines to enumerate hypothetical conflicts of interest that would warrant recusal under the Code of Ethics. The Commission urges the petitioner to seek further guidance from the Commission in the event that a specific matter appears before the Zoning Board involving an attorney and/or law firm with which his firm has had past or current business dealings.

Code Citations:

36-14-2(3)

36-14-5(a)

36-14-5(d)

36-14-5(f)

36-14-7(a)

36-14-5002

36-14-6001

Related Advisory Opinions:

2003-17

2002-61

2002-40

2001-4

99-95

99-78

99-11

98-159

98-142

98-141

98-117

98-25

97-112

97-7

96-100

96-68

96-62

96-30

95-81

94-60

Keywords:

Business Associate