Advisory Opinion No. 95-106

Re: Barry G. Hittner

A. QUESTION PRESENTED

Whether Barry Hittner, the Director of the Department of Business Regulation ("DBR") and a Commissioner of the Rhode Island Housing and Mortgage Finance Corporation ("RIHMFC"), may consider, in his capacity as the Director of DBR, an application to be submitted by a Rhode Island bank for a "certificate of public convenience and advantage" if RIHMFC, an agency in which the petitioner serves by operation of law, is an equity investor in the bank.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the petitioner, as Director of DBR, may consider the bank's application for a "certificate of public convenience and advantage" if RIHMFC, an agency in which the petitioner serves by operation of law, has an investment interest in the bank. This opinion is based on the petitioner's representations that he, in his capacity as a Commissioner of RIHMFC, has recused himself and will continue to recuse himself from all matters relating to RIHMFC's investment in the bank.

C. DISCUSSION

1. Facts

The petitioner, as Director of DBR, is responsible for issuing "certificates of public convenience and advantage" to any agency seeking to establish a new financial institution in the state.(1) In addition to his responsibilities as Director, under the provisions of R.I. Gen. Laws § 42-55-4(a), the petitioner (or his designee), must serve as a Commissioner of the Rhode Island Housing and Mortgage Finance Corporation, RIHMFC.(2)

The petitioner advises that he anticipates, in connection with the proposed merger of Fleet Financial Group ("Fleet") and Shawmut National Corp. ("Shawmut"), that Fleet will divest itself of a portion of Shawmut's deposit-taking branches located in Rhode Island. For this purpose, Fleet has agreed to sell certain of Shawmut's branches to an as yet unnamed, to-be formed Rhode Island community bank, ("Newco").

Officials from RIHMFC have discussed investing in Newco. The petitioner advises that he has recused himself from all of the Commissioner's discussions and votes relating to the decision of whether to invest in Newco. The petitioner further advises that he is fairly certain that, as Director of DBR, he will be called upon to consider whether to grant Newco a "certificate of public convenience and advantage." Given the potential conflict, the petitioner requests an advisory opinion as to whether he may consider Newco's application for such a certificate where he has recused himself from the Commissioner's consideration of whether to invest in Newco.

2. Analysis

Under the Code of Ethics, the petitioner may not participate in any matter as Director of DBR 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. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a).(3) Pursuant to R.I. Gen. Laws § 36-14-5(d), the petitioner is also prohibited from using his public position or confidential information received through his position to obtain financial gain, other than that provided by law. Additionally, under R.I. Gen. Laws § 36-14-5(b), the petitioner may not accept other employment which will either impair his independence of judgment as to his official duties or require him, or induce him, to disclose confidential information acquired by him in the course of his official duties.

After considering the petitioner's public positions and the steps he has undertaken to avoid a potential conflict, we conclude that the petitioner will not violate the Code of Ethics if he considers and ultimately decides whether to grant an application to be submitted by Newco for a "certificate of public convenience and advantage" even if RIHMFC, an agency in which the petitioner serves as a Commissioner by operation of law, invests in Newco. In reaching this conclusion, we rely on the petitioner's representations that he, in his capacity as a Commissioner, has recused himself and will continue to recuse himself from any discussions or votes relating to RIHMFC's decision to invest in Newco. It is our opinion that, since he has and will continue to recuse himself, the petitioner has not or will not be privy to any information which would improperly influence the decision he may be called upon to make as the Director of DBR, nor would his actions as the Director of DBR with respect to Newco otherwise trigger any prohibitions of the Code of Ethics.

Also, it should be noted that, in reaching this decision, we were guided by fairly analogous advisory opinions which have permitted a public official to participate and vote on matters involving another agency in which said official served by virtue of his or her state office. Cf. A.O. 89-65 (permitting the Director of Administration and the General Treasurer, both of who also served as ex-officio members of the State Investment Commission (SIC) and RIHMFC, to vote as members of SIC on matters which related to investing and purchasing bonds from RIHMFC where both officials served as members of said boards solely by virtue of their State positions, and that no personal benefits, financial or otherwise, accrued to either individual by virtue of their votes or official activities); and A.O. 87-1 (allowing a member of the Senate who also served on the Board of Directors of the Rhode Island Public Transit Authority ("RIFTA") as the Senate representative to participate and/or vote on matters involving RIFTA before the General Assembly).

Footnotes

(1) "Financial institution" is defined as any deposit-taking entity, including institutions commonly referred to as banks and community banks.

(2) RIHMFC has seven commissioners.

(3) 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. See R.I. Gen. Laws s. 36-14-7(a).

Keywords

Dual Public Roles

Confidential Information