Advisory Opinion No. 96-7

Re: Deborah T. Heath

A. QUESTION PRESENTED

A Woonsocket School Committee member requests an advisory opinion regarding disclosure requirements and potential conflicts of interest that she may face when the School Committee considers matters relating to a private non-profit social service agency that provides services to the Woonsocket School Department, given that her spouse is employed as the President/CEO of the agency.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that a Woonsocket School Committee member may not participate in or vote on any matter relating to a contract with a social service agency for services similar to those which are or could be provided by the agency employing the petitioner's spouse as its President/CEO. The Code of Ethics requires recusal and written disclosure of the nature of the conflict of interest whenever such a matter arises before the Committee.

C. DISCUSSION

1. Facts

The Petitioner is a member of the School Committee for the City of Woonsocket. As a member of the School Committee, she will be called upon to participate in decisions regarding contracts with City vendors.

The Petitioner's husband, Dr. Bernard H. Heath, Jr., is the President/CEO of Family Resources, a private, non-profit corporation/charitable organization governed by a Board of Directors. Family Resources provides the Woonsocket School Department with a) individuals to serve on community education committees; b) social services to students financed by third- party funding; and c) services to students through a direct contractual relationship with the Woonsocket Education Department.(1) As President/CEO, Mr. Heath is a salaried employee.

2. Analysis

At issue here is whether (and to what extent) the Petitioner may participate and vote as a member of the School Committee on matters involving contracts with social service agencies where her husband is employed by a company which provides such services to the School Department. Under the Code of Ethics, the Petitioner, as a member of the School Committee, may not participate in any matter in which she has an interest, financial or otherwise, which is in substantial conflict with the proper discharge of her duties in the public interest. See R.I. Gen. Laws §§ 36-14-5(a), 36-14-7(a).(2) Pursuant to R.I. Gen. Laws § 36-14-5(d), the Petitioner is also prohibited from using her public position or confidential information received through her position to obtain financial gain, other than that provided by law, for herself or a family member. Additionally, the Code of Ethics prohibits the Petitioner or any person within her family from entering into a contract with any state or municipal agency unless the contract had been awarded through an open and public process. See R.I. Gen. Laws § 36-14-5(h).(3)

After considering this request and the relevant provisions of the Code of Ethics, we conclude that the Code of Ethics will not permit the Petitioner to participate or vote in any matter relating to a contract with a social service agency for services similar to that which is provided or could be provided by Family Resources.(4) As to all such contracts, the Petitioner has an interest in substantial conflict with the proper discharge of her public duties since her husband's company, and therefore her husband (President/CEO), would likely benefit by the Petitioner's involvement with matters relating to other social service agencies doing business or attempting to do business with the School Department.(5) See R.I. Gen. Laws §§ 36-14-5(a), 7(a). This conclusion is consistent with past advisory opinions which have prohibited a public official from participating in matters affecting a business interest. Compare A.O. 91-60 (concluding that the Code of Ethics would not permit the Petitioner, the President of the North Smithfield Town Council, who was employed by Digital Equipment Corporation, to participate or vote in matters involving proposals submitted to the Town for municipal computer goods or services in the event that Digital Equipment Corporation submitted bids or proposals); with A.O. 93-28 (permitting a member of the Chariho School Committee to participate in matters relating to a contract with Galloway Bus Lines where the Petitioner, who did not have a private business interest in this company, employed a person whose spouse was employed as an area manager for Galloway Bus Lines). Accordingly, if an issue arises concerning Family Resources or any other social service agency, the Petitioner should a) notify the School Committee, in writing, of the nature of her interest in the matter; and b) refrain from participating in the discussion or vote on such matter.

Footnotes

(1) The Petitioner advises that, as to Family Resources, her husband does not a) have a vote on the Board of Directors; b) have an ownership interest; and c) receive any funds directly from the contracts with the City of Woonsocket.

(2) 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).

(3) R.I. Gen. Laws § 36-14-5(h) provides that "[n]o person subject to this Code of Ethics and or any person within his or her family or business associate of the person or any business entity in which the person or any person within his or her family or business associate of the person has a ten percent (10%) or greater equity interest or five thousand dollars ($5000) or greater cash value interest, shall enter into any contract with any state or municipal agency unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded; provided, however, that contracts for professional services which have been customarily awarded without competitive bidding shall not be subject to competitive bidding if awarded thought a process of public notice and disclosure of financial details."

(4) The Petitioner may participate in matters relating to contracts with social service agencies that provide services which Family Resources does not provide.

(5) The fact that her husband does not have an ownership interest in Family Resources, Inc. is not relevant to the determination of whether the Petitioner has an interest in substantial conflict with her public duties, as the term is defined in R.I. Gen. Laws §§ 36-14-5(a), 7(a). The question here is whether the Petitioner has reason to believe or expect that she or any person within her family will derive a direct monetary gain or suffer a direct monetary loss by reason of her official activity. As to this issue, the Petitioner has reason to believe or expect that her husband, a high-level officer/employee of Family Resources, will be affected financially by any decision involving that company or any other agency which provides comparable social services to the School Department. Concerning the ownership issue, whether her husband has an equity or cash value interest, is relevant to the issue of whether the provisions of R.I. Gen. Laws § 36-14-5(h) are applicable. Based on the petitioner's representations that her husband does not have an ownership interest, the provisions of § 5(h) appear not to apply to the contracts between Family Resources and the City of Woonsocket.

Keywords

Nepotism

Family: Private Employment