Advisory Opinion No. 99-24

Re: Anne S. Schwer

QUESTION PRESENTED

The petitioner, a Westerly Town Councilor, a municipal elected position, requests an advisory opinion as to whether she may participate in the consideration of Community Development Block Grant applications submitted by 1) the Westerly Adult Day Care Center, given that she serves on its Board of Directors; and 2) the Westerly Armory Restoration Board, given that her daughter serves as its Vice President.

RESPONSE

It is the opinion of the Rhode Island Ethics Commission that the petitioner, a Westerly Town Councilor, a municipal elected position, may not participate in the consideration of the Westerly Adult Day Care Center’s Community Development Block Grant application given that she serves on its Board of Directors and, therefore, is its business associate under the Code of Ethics. However, her daughter’s relationship with the Westerly Armory Restoration Board does not create a conflict of interest which would require her recusal on that organization’s grant application.

The petitioner advises that the Westerly Armory Restoration Board, a non-profit organization, and the Westerly Adult Day Care Center intend to submit Community Development Block Grant (CDBG) applications to the Town Council. She indicates that the Council’s finance sub-committee, of which she is one of three members, exercises discretionary authority over which applicants receive grant awards. The petitioner further advises that she serves on the Day Care Center’s Board of Directors and her daughter is Vice President of the Armory Restoration Board.

Under the Code of Ethics, the petitioner 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. A substantial conflict of interest occurs if the petitioner has reason to believe or expect that she or any family member or business associate, or any business by which she is employed, will derive a direct monetary gain or suffer a direct monetary loss by reason of her official activity. See R.I. Gen. Laws §§ 36-14-5(a), 7(a). She is 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, a business associate or a family member. See R.I. Gen. Laws § 36-14-5(d). Section 5(f) of the Code requires the petitioner to recuse herself 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”.

Previously, the Commission has concluded that public officials are “business associates” of entities 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. If an official has such a leadership position, the Commission has required the official to recuse him or herself if the interests of the organization would be affected by an action to be taken by his or her public agency. See A.O. 98-44 (opining that a Commissioner of Fire Safety Code Board of Appeal and Review should not participate in appeals involving property owned by the International Association of Firefighters (Local 799) and the Providence Firefighters Realty Corporation since the petitioner, who held a position with both entities that would permit him to affect the financial objectives of the organization, had a business association relationship with the organizations that triggered the prohibitions set forth in R.I. Gen. Laws § 36-14-5(a)); A.O. 96-75 (advising three members of the General Assembly who also served as members of the Board of Directors of local hospitals to recuse themselves from hospital issues since they had a business association with the local hospitals); A.O. 95-59 (advising a member of the Smithfield School Committee to recuse himself from a vote concerning a community organization if the official’s association with the organization allowed him to affect the financial objectives of the organization); and A.O. 98-76 (concluding that a Narragansett Town Councilor should not participate in appropriating funding for the Chamber of Commerce since she served on its Board of Directors).

Here, the Commission concludes that the petitioner may not participate in the Town Council’s consideration of the Adult Day Care Center’s grant application. As a member of its Board of Directors, the petitioner has a business association with the Center that triggers the prohibitions set forth in R.I. Gen. Laws §§ 36-14-5(a), 5(d) and 5(f). Notice of recusal should be filed with both the Town Council and the Ethics Commission pursuant to R.I. Gen. Laws § 36-14-6.

The petitioner’s daughter’s relationship with the Armory Restoration Board, however, does not create a conflict of interest which would require her recusal as to that organization’s grant application. Here, the petitioner’s daughter, and not the petitioner, has a business relationship with the Armory Restoration Board. Any relationship the petitioner may have with that Board through her daughter is too remote to implicate the prohibitions set forth under the Code. See A.O. 97-36 (advising a Narragansett Town Councilor that the law allowed him to participate in matters concerning the South County Museum notwithstanding the fact that his wife served on the Board of that museum since the museum and its principals were the spouse’s, and not the Petitioner’s, business associates).

Code Citations:

36-14-2(3)
36-14-5(a)
36-14-5(d)
36-14-5(f)
36-14-6
36-14-7(a)

Related Advisory Opinions:

99-7
98-108
98-76
98-44
98-25
98-16
97-36
96-75
96-54
95-105
95-66
94-46
89-88

Keywords:

Business associate
Non-profit boards
Memberships