Filing Number: 07-11
Subject: Pension Board
Keywords: appearance of impropriety, appointed official, board member, conflict, consultant, educational, financial interests, gifts, industry, invitations, official business, outside employment, recusal, seminar, vendor
Decision By: Commissioners: John McMahon, Thomas Collins, Miguel Gonzalez, V. Eugene McCoy, Mark Murowany
Contact Email: admin@nccethics.org
 
Status: Active

Question:

           The Pension Board has requested guidance on three questions: 1) whether an individual Pension Board trustee may meet with a Pension Board manager/consultant; 2) whether a Pension Board Trustee and/or staff person may attend a conference sponsored by a vendor/consultant to which its clients are invited; 3) whether a Trustee may attend educational meetings which are sponsored by and or attended by his or her business associates who may reasonably be expected to seek contracts with or render services to the Pension Board.

Conclusion:

1)     An individual Pension board trustee may meet with a Pension Board manager or consultant on matters unrelated to the business of the Pension Board as long as circumstances surrounding a meeting would not lead the reasonable observer to conclude that prohibited topics concerning Pension Board business would inevitably be addressed.
 
2)     If the costs of transportation, subsistence and/or attendance at conferences or educational seminars sponsored by a vendor/consultant are wholly paid for by the County, there is no implication of the Code's gift laws. If the cost of transportation, subsistence and/or attendance is tendered as a gift from the conference sponsor, the specific surrounding circumstances must be carefully considered by the Commission in order to prevent an appearance of preferential decision making or other impropriety.
 
3)     If the attendance at meetings with business associates involves close association or joint endeavors with consultants/professionals who have or will attempt to have a relationship with the County, the question is governed by the recusal rule which prohibits the Board member from participating in any decisions regarding the retention or compensation of consultants/professionals for the County board.

Facts:

In this opinion the facts are stated below with the Code or Prior Opinion section.

Code or Prior Opinion:

Code Provisions
 
            Conflict of Interest and Conduct Rules
 
            Two provisions of the New Castle County code underlie the analysis of all of the questions posed by the Pension Board. The conflict of interest rules at Code Section 2.03.103(A)(1) restrict the use of official authority by a County official or employee, prohibiting exercise "for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated."1
 
            The Code's conduct rules at Section 2.03.104(A) also recite a prohibition on creating an appearance that the decisions or actions of a County employee, County official or governmental body are influenced by factors other than the merits of the matter before it, thus undermining the public confidence in the impartiality of the governmental body with which the individual is associated.2 That means that conduct may be prohibited not only when personal benefit is at issue but also in a situation where it would cause a reasonable member of the public, with knowledge of the relevant facts, to question the objectivity or fairness of an official, an employee, or of the department associated with the official or employee.
 
           
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Analysis:

Question 1: Whether an individual Pension Board trustee may meet with a Pension Board manager/consultant.
 
            Since some of the outside trustees on the Pension Board are required to hold employment in the financial services area, it is understandable that there may be potential for meetings between an individual trustee and a vendor/consultant in the ordinary course of his or her business.2 The Commission believes that Advisory Opinion 92-01 does not prohibit all contact between individual trustees and consultants but prohibits contact between an individual Board member and a vendor/consultant only if New Castle County business is discussed. However, there is a caveat - if the circumstances surrounding a meeting would lead the reasonable observer to conclude that prohibited topics would inevitably be addressed, the trustee must avoid putting himself or herself in the position of meeting with the manager or consultant in order to avoid creating an appearance of impropriety. Of course, if the trustee is officially authorized in advance by his or her Board as a member of a committee designated to meet with the manager or consultant about County business, the prohibition would be eliminated.
 
Question 2: Whether a Pension Board Trustee and/or staff person may attend a conference sponsored by a vendor/consultant to which its clients are invited.
 
            Although questions 2 and 3 do not provide specific information, the Code's gift rules may affect the analysis of those questions. If the cost of attendance at conferences or educational seminars is wholly paid for by the County, there is no involvement of the gift laws. Attendance is simply part of the Trustee's or Staff person's County duties and accepting money from the County does not raise any issue under the gift rules.
 
            The lack of specificity in question 2) regarding the particular conference at issue precludes a reasoned analysis of whether the acceptance of a gift from the sponsor would violate the Ethics Code. The Board is advised to provide more specific information to the Commission if, in fact, a gift of transportation, subsistence, and/or admission fees is being tendered. Such information should include the identification of the sponsor and its relationship to the County, the value of the gift, the purpose of the conference, the relationship of the other attendees to the County, the type and extent of vendor presentations included, if any, and the authority of the Board or staff member to affect the current or financial future of the sponsor.
 
Question 3: Whether a Trustee may attend educational meetings which are sponsored by and or attended by his or her business associates who may be consultants to the County, or be reasonably expected to seek contracts with or to render services to the Pension Board.
 
            The Commission has difficulty determining just what the Pension Board is asking in this question but, rather than rejecting the question for lack of specificity, will answer it with several alternatives:
 
a)     If this question does not involve a gift to the Trustee, but merely customary and usual meetings with associates at which County business is not discussed, see the Commission response to Question 1, above.
 
b)     If the question involves gifts of transportation, subsistence and/or attendance, see the response to Question 2, above.
 
c)     If the question involves close association or joint endeavors with consultants or professionals who have or will attempt to have a relationship with the County, the question is governed by the recusal rule recited in Advisory Opinion 92-05. In that Opinion, a board member had an outside business relationship with professionals and consultants to the County Board to which he was appointed. The outside business relationship generated income for the Board member and for the professionals. The Commission found that the outside relationship did not create a pecuniary conflict of interest because the income was not received as a result of any decisions or actions taken by the Board member in his official capacity. The Board member was also not prohibited from sitting on the consultant's advisory board or from attending that advisory board's annual meeting at the consultant's expense, but was barred from participating in any decisions regarding the retention or compensation of consultants to the County board.
 
            The Commission found that the member's special relationship with his Board's current consultant could create the appearance that his future decisions concerning the retention or compensation of any board consultants would be influenced by factors other than the merits. "Participation in any Board decisions concerning the retention and compensation of professionals would create an appearance of impropriety: it may appear to the public that the Board member's position regarding the retention or compensation of professionals is influenced by factors other than the merits". The Commission ordered the Board member to completely recuse himself from participation in all decisions regarding the retention or compensation of any professionals.

Finding:

Ouestion 1) An individual Pension board trustee may meet with a Pension Board manager or consultant on matters unrelated to the business of the Pension Board as long as circumstances surrounding a meeting would not lead the reasonable observer to conclude that prohibited topics concerning Pension Board business would inevitably be addressed.
 
Question 2) If the costs of transportation, subsistence and/or attendance at conferences or educational seminars sponsored by a vendor/consultant are wholly paid for by the County, there is no implication of the Code's gift laws. If the cost of transportation, subsistence and/or attendance is tendered as a gift from the conference sponsor, the specific surrounding circumstances must be carefully considered by the Commission in order to prevent an appearance of preferential decision making or other impropriety.
 
Question 3) If the attendance at meetings with business associates involves close association or joint endeavors with consultants/professionals who have or will attempt to have a relationship with the County, the question is governed by the recusal rule which prohibits the Board member from participating in any decisions regarding the retention or compensation of consultants/professionals for the County board. In issuing these Advisory Opinions, the Ethics Commission is applying the New Castle County Code of Ethics, which establishes the minimum level of ethical conduct required of County officials and employees.
 
            The Commission cautions, however, that each County department, board, or other unit of County government is free to, and may impose as part of its own policy, additional or greater restrictions on its officials and employees than those set forth in this Opinion.
 
            BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 8th DAY OF AUGUST, 2007.
 
________________________________
John McMahon, Chairperson
 
Decision: Unanimous

Footnotes:

1Section 2.03.103. Prohibitions relating to conflicts of interest, in pertinent part:
A.      Restrictions on exercise of official authority.
1.      No County employee or official knowingly or willfully shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated. This prohibition does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the County official or employee, a member of his or her immediate family or a business with which he or she or a member of his or her immediate family is associated. There will be a rebuttable presumption of a knowing or willful violation of this section if the action benefits the County official or employee, his or her spouse, or his or her dependent children (whether by blood or by law).

2Section 2.03.104. Code of conduct, in pertinent part:
A.     No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.03.103(A)(1) [conflict of interest], undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating an appearance that the decision or action of the County employee, County official or governmental body are influenced by factors other than the merits. 

3New Castle County Code Section 2.05.505 requires the appointment of specific categories of County employees as trustees by the Executive. Council appoints 4 non-employee trustees, 2 of whom must be in the banking or investment security business. One of the Council appointees becomes chair and all Council appointees serve three year terms. The Council appointees are sometimes called "outside members" or "outside trustees".

4 New Castle County Code Section 2.03.102 defines public gift log as "a public document kept by County Council, a County department, or County agency for the purpose of memorializing the acceptance of gifts by County employees and officials and which shall include entries for the date of receipt, the name, workplace or other address of the donor and recipient, a description of the gift and an approximate valuation.
            Section 2.03.107(B)(7) requires certain officials or employees who receive a gift valued at $200.00 or more, including certain transportation, lodging or hospitality payments and reimbursements exceeding $200.00 in the course of a single occurrence, to report that gift to the Ethics Commission on a Statement of Financial Interests form. The only exceptions are gifts received from a member of the immediate family which are motivated by that relationship and expense payments or reimbursements from governmental bodies or associations of governmental bodies. 

5See New Castle County Code Sections 2.03.102 (amended), 2.03.104 (H-J), and 2.03.107 (B)(7)(amended) (2006). 

6New Castle County Code, at Section 2.03.102, defines promptly as "within thirty (30) days when used in reference to recording the acceptance of a gift in a public gift log or returning such a gift to the donor." 

7New Castle County Code, at Section 2.03.102, defines reasonably forseeable as "an event which should be expected or anticipated based upon credible past and present facts known to a reasonable observer or participant at the time a decision is made or an action taken." 

8New Castle County Code, at Section 2.03.104(I) creates 9 categories of gifts which may be accepted as long as they do not represent a conflict of interest or appearance of impropriety.

9See New Castle County Ordinance 06-022, codified as New Castle County Code Sections 2.03.102 (amended), 2.03.104 (H-J), and 2.03.107 (B)(7)(amended) (2006).