Filing Number: 10-12
Subject: Conflict of Interest
Keywords: appearance of impropriety, bidding, business associate, conflict, contract, County Attorney, County official, immediate family, impropriety, professional services, public bid, public notice, public policy, recusal, spouse
Decision By: Commissioners: Thomas Collins, Gerald Turkel, Miguel Gonzalez, James Keeley, V. Eugene McCoy, Vincent White
Contact Email: admin@nccethics.org
 
Status: Active

Question:

             The Commission received correspondence which it interprets as a request for guidance from County officials. One of the requesters has delegated his County authority to the County attorney in matters concerning the requester's spouse, clients and business. His written directive states that he is to be "completely excluded from any discussion or involvement of any kind about any matter involving the firm [of the spouse] when the firm is seeking action by the County on behalf of any client or representing anyone with interests adverse to the County." The requesters ask whether there are any other steps the Commission suggests to avoid a potential conflict of interest.

Conclusion:

            There is no precedent for the situation presented by the requesters and there seems to be no remedy within the Commission’s authority which will eliminate the potential for conflict of interests or appearances of impropriety arising from the relationship between the requester and his spouse. The order drafted by the requester delegating authority to the County Attorney is a second best solution. Delegation to someone who can be sanctioned by an outside authority, while not eradicating the possibility of conflict of interests, does reduce that potential. Nevertheless, the Commission should be consulted by the requester or County Attorney if delegation in a particular situation does not eliminate the possibility of a conflict or improper appearance.
 
            Furthermore, the delegation order should be amended to include the arena of policy. The requester must consult the County Attorney to determine in advance whether the scope of a proposed policy will affect his spouse, her clients, or her business in the same manner as the public, other similar businesses and clients. If the scope will affect those entities differently, the requester must effect complete recusal, as described in the Commission’s prior publications, and disassociate himself from the discussion or exercise of any authority regarding creation or approval of the policy. With this amendment, as long as the order is diligently followed by all County officials and employees, the order should prevent actual conflicts of interest from maturing since complete delegation will prevent the requester from exercising any County authority in the areas delegated. The potential for appearances of impropriety will also be somewhat minimized.
 
            Regarding contracts for which the spouse or associates of the spouse are competing or being considered, the Commission directs that a request for proposal (RFP) be timely and publicly advertised in order to comply with Section 2.03.103C.
 
 

Facts:

             The requester is responsible for the management of County departments to which his spouse, her clients and/or her business present plans and proposals. He is also the final County authority for authorizing policies which can affect clients of that business and has executive authority for contracts which may be sought by the business. Most of the County's operations do not involve the requester's spouse, her clients or her business. However, those areas which do involve those entities generally become matters of public discourse and frequently the subject of controversy. To some extent, this smaller area of County responsibility in which she conducts business seems to overshadow more numerous other activities conducted by the County.

Code or Prior Opinion:

Ethics Code Provisions
 
            Conflict of Interest: New Castle County Code Section 2.03.103 of the Ethics Code prohibits the exercise of County authority for the benefit of the employee or official, his or her immediate family members, or businesses associated with them unless that exercise of authority affects them in the same manner as the general public or a subclass consisting of an occupation or industry. If the official's authority is non delegatable and he or she decides not to recuse or abstain in the face of a conflict, he or she must notify the Ethics Commission in writing about the conflict and put the information about the conflict on the public record prior to exercising the non delegatable authority.1
 
            Appearance of Impropriety: New Castle County Code Section 2.03.204A prohibits conduct which creates an appearance of impropriety even when there is no actual conflict of interest. An improper appearance is created when a reasonable member of the public "with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, [would hold] a perception that the official's ability to carry out [official duties] with integrity, impartiality and competence is impaired." The standard for judging the creation of such an appearance for judicial public officials has been described in Delaware courts as "conduct [which] would create in reasonable minds, with knowledge of all the relevant circumstances that a reasonable inquiry would disclose, a perception that the official's ability to carry out [official duties] with integrity, impartiality and competence is impaired." In re Williams, 701 A.2d 825, 832 (Del. Super. 1997). The Commission has long applied this standard to the conduct of County officials and employees.
 
            Even when there is no financial gain at issue, every County official and employee must consider the additional ethical prohibition in Section 2.03.104(A) against creating an improper impression in the reasonable member of the public that his or her official action is affected by personal interests which impair his or her competence, integrity and honesty or that his agency or department will look as though it is showing partiality in a matter.2
 
            County Contracts: New Castle Code Section 2.05.502(B)(6)(b), exempts professional legal service contracts from notice and bid requirements if the Ethics Code conflicts of interest provisions are not involved.3 However, Section 2.03.103C prohibits the County from contracting with the spouse, associated business, or any official or employee in excess of $500.00 in the absence of public bid.4 In addition, State law requires that any County officer or employee who has a direct or indirect substantial financial interest in a County contract or the sale of services to the County must disclose that interest and refrain from participating about it or voting upon it under penalty of forfeiture of his or her position.5
 
Advisory Opinions
 
            In Advisory Opinion 10-05, the Commission held that the Code requires that a spouse's profits from business activity be imputed to an official. In that case, an ordinance affected a spouse's business in a manner different from the general public or the industry class that included the spouse. The Commission held that action by the official on the ordinance would constitute a conflict of interest. It advised that an official could avoid a violation of the Ethics Code by following either of two courses of conduct: complete and total recusal from any County matters associated with the spouse's business and abstention from vote, or making full written compliance with the disclosure provisions recited in subsection (2) of Section 2.03.103(A). [See, n. 1, supra.]
 
            In Advisory Opinion 05-04 the Commission found that the County would be prohibited from contracting for professional services in an amount in excess of $500.00 with a business associated with a County official unless a public and competitive procedure was used.
 
            Final Order C10-02 involved an official who presided over a meeting in which a business associate of his wife made a presentation. The Commission found that the Ethics Code was violated by that conduct and instruct the official to fully recuse from such situations in the future. "In various published opinions, the Commission has defined recusal as withdrawing from sponsorship, deliberations, vote, research, preparation, discussion, negotiations, contract formation, policy making, planning, decision making, implementation and prohibiting any private or public discussion of a measure raising a conflict or improper appearance. The Commission's brochure on recusal states at page 2: 'As soon as the potential conflict or improper appearance arises or is recognized, the official or employee must cease participation in the matter . . . Recusing from participation includes ending advice, input, direction, recommendation, or discussion, as well as refraining from vote'."

Analysis:

             Conflicts of Interest: The potential conflicts described in this case could be prevented by the resignation of the requester from County office. However, although not elected to the position he now holds, the requester properly holds the office by operation of law. The Ethics Commission has no authority to affect his tenure in that office, see, New Castle County Code Sec. 2.04.104 - Sanctions, but only has authority to prescribe the means to prevent conflicts of interest or improper appearances or to investigate complaints that alleged actual conflicts or improper appearances have generated.
 
            The potential conflicts could also be resolved by the resignation by the spouse from any business which represents entities subject to County regulation or which seek County contract. However, the Ethics Commission's authority under the Code extends only to County officials and employees. See, New Castle County Code Sec. 2.03.101. The spouse is not an appendage of her husband. See, e.g., Camas v. Delaware Board of Medical Practice, Civ.A. 95A-05-008, 1995 WL 717272 (Del. Super. Nov. 21, 1995). She has a legally distinct and individual right to pursue her chosen career even though her business associations are imputed to her husband for ethics conflict purposes.
 
            In drafting his order, it is clear that the requester recognizes the potential conflicts and proposes to avoid them as far as possible by delegating full authority for County actions or transactions with his spouse, her clients, or her business to the County Attorney, unless the County Code requires his approval on a document to render it legally operative. Even when his approval is mandated by the Code, it is assumed that the requester intends to rely on the County Attorney's advice for the approval and will use the procedure described in Section 2.03.103(2) to notify the Commission and the public of the specific conflict and his duty to act. (See, n. 1, supra.)
 
            Policy Development: The order does not mention delegation of responsibility for policy issues affecting the spouse, her clients and her business when those entities are affected in a manner different from the general public or her industry. The requester must be vigilant to recuse himself from such matters as well as in the more obvious circumstances when his spouse or her business associates are active participants in specific situations.
 
            Delegation: The current County Attorney serves at the pleasure of the requester but was initially appointed to the position six years ago by an elected official other than the requester. As a licensed Delaware Attorney, the County Attorney is subject to the supervision of the Delaware Supreme Court. See, generally, The Delaware Lawyers' Rules of Professional Conduct. That Court maintains a formal disciplinary arm and complaints against attorneys are investigated by the Office of the Disciplinary Counsel. The Court may take action against any Delaware attorney, up to and including disbarment, if the attorney transgresses the written code of conduct imposed by the Court. See, generally, Delaware Lawyers' Rules of Disciplinary Procedure.
 
            The County Attorney, although an appointed official, is not the personal attorney of the requester but is obligated to serve the best interests of his client, the County. Delaware Lawyers' Rules of Professional Conduct, 1.13. He cannot conduct the County business in an illegal or unethical manner without becoming subject to the Court's complaint and disciplinary process. Therefore, unlike other appointed County officials, his conduct is subject to review by an entity not controlled by the requester or the County political process. The Supreme Court requires him to use any County authority delegated to him for the benefit of his client the County, not for the requester, and he is subject to sanctions if he does not do so.
 
            Appearances: The current County Attorney has had a long and admired career as a Delaware attorney practicing in the area of government law. The requester is placing the public trust in the hands of an experienced person who throughout his long career has been known for his fidelity to the rules of the Court and the rights of the public. Although the order drafted by the requester cannot eliminate all potential for appearances of impropriety, as an alternative to resignation it appears to be the only means for dealing with the problem. The burden of avoiding such appearances now falls on the County Attorney.
 
            County Contracts: The Code does not require public bidding for most professional services contracts, the type of business associated with the requester's spouse. The selection of the provider for professional services is often made on the basis of particular expertise or prior service to the County. Use of a public request for proposals (RFP) process diminishes the risk that the award of a contract for which the spouse or her business was competing would create an appearance that unfair favoritism tainted the selection. Such a process is analogous to a public bid procedure and makes the grounds for selection more transparent for the citizens. Since New Castle County Code Sec. 2.01.103C requires a public process when a contract is awarded to a family member or business associated with an official, the RFP process or public bidding must be used when the requester's spouse or her business associates are competing or being considered for any County contract.

Finding:

             There is no precedent for the situation presented by the requesters and there seems to be no remedy within the Commission's authority which will eliminate the potential for conflict of interests or appearances of impropriety arising from the relationship between the requester and his spouse. The order drafted by the requester delegating authority to the County Attorney is a second best solution. Delegation to someone who can be sanctioned by an outside authority, while not eradicating the possibility of conflict of interests, does reduce that potential. Nevertheless, the Commission should be consulted by the requester or County Attorney if delegation in a particular situation does not eliminate the possibility of a conflict or improper appearance.
 
            Furthermore, the delegation order should be amended to include the arena of policy. The requester must consult the County Attorney to determine in advance whether the scope of a proposed policy will affect his spouse, her clients, or her business in the same manner as the public, other similar businesses and clients. If the scope will affect those entities differently, the requester must effect complete recusal, as described in the Commission's prior publications, and disassociate himself from the discussion or exercise of any authority regarding creation or approval of the policy. With this amendment, as long as the order is diligently followed by all County officials and employees, the order should prevent actual conflicts of interest from maturing since complete delegation will prevent the requester from exercising any County authority in the areas delegated. The potential for appearances of impropriety will also be somewhat minimized.
 
            Regarding contracts for which the spouse or associates of the spouse are competing or being considered, the Commission directs that a request for proposal (RFP) be timely and publicly advertised in order to comply with Section 2.03.103C.
 
            In issuing this Advisory Opinion, 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.
 
BY AND FOR THE NEW CASTLE COUNTY ETHICS COMMISSION ON THIS 12th DAY OF JANUARY 2011.
 
______________________
Thomas P. Collins, Chairperson
 
Decision: Unanimous
Reconsideration request submitted 1/19/11 - DENIED

Footnotes:

1New Castle County Code Section 2.03.103. - Prohibitions relating to conflicts of interest.
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).

2.     In any case where a person has a legal and/or statutory responsibility with respect to action or nonaction on any matter where the person has a personal or private interest and there is no provision for the delegation of such responsibility to another person, the person may exercise responsibility with respect to such matter, provided that promptly after becoming aware of such conflict of interest, the person files a written statement with the Commission fully disclosing the personal or private interest and explaining why it is not possible to delegate responsibility for the matter to another person. If the matter is one in which the legal and/or statutory responsibility requires the person to vote upon the issue, the written statement filed with the Commission shall be read into the public record prior to the time the person's vote is cast. Any person choosing to abstain from voting on an issue where or she has a conflict shall state the reasons for his or her conflict on the record; an abstaining voter need not file the written statement with the Commission required when acting on, rather than abstaining from, an issue involving a conflict.

2New Castle County Code Section 2.03.104 (A)(1) states:
No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.02.103(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 a 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 Code Section 2.05.502(B)(6)(b) states:
Procurement of legal services shall not be subject to bidding requirements in this Section unless the provisions of Section 2.03.103 [Ethics Code Conflict of Interest] are invoked. However, the County Attorney shall submit a written statement to the Chief Administrative Officer detailing the legal services required, the attorney and/or firm selected and the reasons therefore. This statement shall be available for public view.

4New Castle County Code Section 2.03.103C states:
No County official or County employee, his or her spouse, child, parent, step-parent or sibling of the whole or half-blood or any business with which the County official or County employee or his or her spouse, child, parent, step-parent or sibling of the whole or half-blood is associated or who has a legal or equitable ownership of more than five (5) percent (more than one (1) percent in the case of a corporation whose stock is regularly traded on an established securities market) shall enter into any contract with the County (other than an employment contract) or any subcontract with a County contractor unless such contract or subcontract was made or let after public notice and competitive bidding. Such notice and bidding requirements shall not apply to contracts not involving more than five hundred dollars ($500.00) per year if the terms of such contract reflect arms' length negotiations, if the subcontractor is a sole source provider, or if there are exigent circumstances. There will be a rebuttable presumption of a knowing and willing violation of the section only if the contract or subcontract is awarded to a spouse or child of the County employee or official.

59 Del. C. Sec.1182. Personal financial interest.
(a)     Any county officer or employee who has a substantial financial interest, direct or indirect or by reason of ownership of stock in any corporation, in any contract with the County or in the sale of any land, material, supplies or services to the County or to a contractor supplying the County, shall make known that interest and shall refrain from voting upon or otherwise participating in the making of such a contract or sale.
(b)     Any county officer or employee who willfully (sic) conceals such a substantial financial interest, or wilfully (sic) violates the requirements of this section, shall be guilty of malfeasance in office or position and shall forfeit his office or position.
(c)     Violation of this section with the knowledge express or implied of the person or corporation contracting with or making a sale to the County shall render the contract voidable by the County Executive or the County Council.