Filing Number: 15-08
Subject: Seminars
Keywords: appearance of impropriety, board member, business, conflict, County board, educational, expenses, financial interests, gifts, Human Resources Department, non-profit, pension, private advantage or gain, private business, private consulting, seminar, sponsor, training
Decision By: Johanna Bishop, Eric Monzo, Beatrice Patton Dixon, Paula Jenkins-Massie, Christopher Simon
Contact Email: admin@nccethics.org
 
Status: Active

Question:

          Whether a trustee of the New Castle County Employees Retirement System Board of Trustees may accept a gift of a conference registration fee waiver and travel stipend for a conference that is sponsored and offered by for-profit, private companies?

Conclusion:

          No. The New Castle County Ethics Code provides that a gift that covers training expenses, including reasonable transportation/lodging/subsistence costs, may be accepted by a County official or employee only when such payment or reimbursement of such expenses is from a governmental body or associations of governmental bodies. The conference in question is sponsored, organized, and run by three for-profit, private companies, all of which sell the kinds of professional services to public funds representatives that may be procured by the New Castle County Employees Retirement System Board of Trustees.
 

Facts:

          The Commission received virtually simultaneous requests for advisory opinions from a representative of the Office of Human Resources, as well as a trustee1 on the New Castle County Employees Retirement System Board of Trustees (hereinafter “Pension Board”). Both of the requests involve the 2015 Public Funds Forum. The email from the Office of Human Resources Office stated that “a number of trustees…have been extended an offer to attend an educational forum in September [the Public Funds Forum]. This forum covers many topics traditionally included in educational opps for trustees. … We are requesting a determination as to whether the trustees (and/or staff in future circumstances) are permitted to attend these programs when paid by program sponsors or other third parties.”
 
          A trustee requested and received notice that the 2015 Public Funds Forum had granted his request for a “conference registration fee waiver and travel stipend, including airfare and hotel, for the Protecting Portfolio Value 2015 Public Funds Forum from September 8-10, at the Montage in Laguna Beach, California, has been granted.” In the email, the trustee was instructed to provide additional information to the conference coordinator, so that travel arrangements and itinerary could be established. The minimum total value of the gift of registration, hotel accommodation, and airfare is approximately $2,100.

Code or Prior Opinion:

Relevant Ethics Code Provisions and Case Law
           In Section 2.03.102, the following relevant terms are defined by the Ethics Code, as follows:
 
Business means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self-employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit.
 
Fiduciary position means a paid or unpaid position imposing a legal duty to act primarily for another's benefit as an officer, director manager, partner, guardian, trustee, agent, or other position of responsibility for a legal entity or other person.
 
Gift means anything that is received without consideration of equal or greater value. … A gift is considered accepted upon receipt or control or direction unless it is promptly returned in its entirety. An email invitation, unless specifically accepted, is not considered a gift.
 
Governmental body means any department, authority, commission, committee, council, board, bureau, division, service, office, official, administration, legislative body, or other establishment in the executive, legislative or judicial branch of a state, a nation or a political subdivision thereof or any department performing a governmental function.
 
Private enterprise means any activity conducted by any person, whether conducted for profit or not for profit and includes the ownership of real or personal property. Private enterprise does not include any activity of the federal, State or local government or of any department, authority or instrumentality of the federal, State or local government.
 
Trustee means a person, business, or nonprofit organization which holds or administers property or assets for the benefit of a third party.
 
          The New Castle County Ethics Code prohibits conduct on the part of County officials or employees which either creates the appearance of impropriety even where no direct conflict of interest is present. Specifically, conduct which creates an appearance of impropriety is prohibited by Section 2.03.104(A) of the New Castle County Code.2 To determine if an appearance of impropriety exists, the Delaware courts have stated that “[t]he test is… if the conduct would create in reasonable minds, with knowledge of all relevant facts, a perception that an official’s ability to carry out [his or] her duties with integrity, impartiality and competence is impaired.” Hanson v. Delaware State Public Integrity Com’n, 2012WL3860732, at *16 (Del.Super. 2012), aff’d, 69 A.3d 370 (Del.Supr. 2013); and “[t]he test for appearance of impropriety is whether the conduct 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 [the official’s] responsibilities with integrity, impartiality and competence is impaired.” In re Williams, 701 A.2d 825, 832 (Del.Super. 1997). The courts have advised the Commission to look at the totality of the facts presented, and this Commission has historically applied this standard when reviewing the conduct of County officials and employees.
 
           It is a violation of the New Castle County Ethics Code if a County official or employee uses his or her office or employment for his or her personal or private benefit, the benefit of a member of his or her immediate family, or a business with which he or she is associated.3 Economic benefits thereby derived with a de minimus impact may be exempted.4
 
           The acceptance of gifts by New Castle County employees and officials can be complicated, and the acceptance of gifts by County employees and officials is discouraged.5 The Ethics Code must be consulted to determine the circumstances under which a gift may be accepted. The Code includes a description of the limited circumstances under which a gift may be accepted, and the “[p]ayment of training expenses, including reasonable transportation/lodging/subsistence costs or reasonable reimbursement for such expenses from governmental bodies or associations of governmental bodies may be accepted at any time without recording in a public gift log if approved by a department manager, agency head, or elected office holder.” Section 2.03.104.I.7. (emphasis added.) Section 2.03.104.I.9 of the Code states that “[a]n Advisory Opinion request shall be made to the Ethics Commission prior to the acceptance of any gift not described by or limited in Subsections I.1. through I.9.”
 
Prior Commission Opinions
           In Advisory Opinion 11-06, the Commission was asked whether an employee could accept an all-expense paid seminar trip from a vendor to attend a seminar offered by a manufacturer of products carried by the vendor. In finding that the proposed action would violate the then-newly adopted gift law, the Commission held that Section 2.03.104.H.46  would be violated by the acceptance of the gift.
 
          In Advisory Opinion 92-09, a County official wanted to participate in a training session held for representatives of a manufacturer of equipment for which the County employee drafts plans and specifications. The Commission held that an appearance of impropriety would not be created and the employee would not violate the Ethics Code by participating in the training session. The Commission held, further, however, that the employee’s transportation costs, lodging and hospitality expenses incurred in the attendance of the seminar must be disclosed on the employee’s next filing of the Statement of Financial Interests.
 
          In Advisory Opinion 04-07, an official asked whether he could accept a gift in the form of transportation and hotel expenses on behalf of an association of counties in which New Castle County was a member in order to participate in a forum sponsored by another non-profit organization to which the association of counties was invited. The Commission held that the official could accept the gift of reasonable transportation and hotel expenses from the non-profit association of counties because he was not acting in his official capacity as a County official and because the circumstances do not reasonably raise the potential for the appearance of impropriety. Both of the organizations involved were nonprofit, government–based entities.
 
          In Advisory Opinion 08-02, a County employee, who serves on a State board, asked whether he could accept gifts of reasonable costs of attendance at professional conferences given by the State board. The Commission approved, and stated:
Section 2.03.104.I.7 of the New Castle County Ethics Code gift law is determinative regarding this request. Unlike gifts, training expenses from private non-governmental sources which may not be accepted unless they are approved in advance by the Ethics Commission, gifts from governmental bodies or associations of governmental bodies of “training expenses, including reasonable transportation/lodging/subsistence costs or reasonable reimbursement for such expenses,” may be accepted at any time without the recording in a public gift log if approved by a department manager, agency head, or elected office holder.” (footnotes omitted.)
 
Other Relevant Code Provisions
          Section 2.05.505.A states that “[t]he pension program … shall be construed to be a trust separate and distinct from all other entities. The responsibility for the direction and operation of the program and for making effective the program is hereby vested in the Employees' Retirement System Board of Trustees.” The trustee in this request before the Commission, therefore, has a fiduciary responsibility to the Pension Board. As defined in the Ethics Code, and stated above, the word trustee means “a person, business, or nonprofit organization which holds or administers property or assets for the benefit of a third party.”7   Further, a fiduciary position is defined in the Code as “a paid or unpaid position imposing a legal duty to act primarily for another's benefit as an officer, director manager, partner, guardian, trustee, agent, or other position of responsibility for a legal entity or other person.”8

Analysis:

          The 2015 Public Funds Forum is sponsored and organized by three for-profit businesses who sell their services to representatives of public funds, such as the trustee in this instance. The three companies involved include: (1) a law firm that specializes in providing advice to public funds-keepers; (2) a partnership team that is an expert in legal settlements and claims administration; and (3) a company that advises clients on how to preserve portfolio value and diminish risk. While it is not known to the Commission whether any or all of these companies do any business with the County, the materials that advertise the Public Funds Forum states that the “networking activities are integral to the conference agenda.” It is noteworthy that the advertising materials also include the following notice:
 
Upon request and as legally permissible, the registration fee may be waived subject to applicable gift and gratuity limitations. Public officials in certain jurisdictions may accept all or part of conference benefits free of charge. Conference networking activities will be offered at fair market value for guests that may not accept participation free of charge. Public officials are encouraged to contact their ethics officials with questions.
 
          The email to the Commission from the Office of Human resources stated that the conference will cover “many of the topics traditionally included in educations opps for trustees.” According to the conference materials, the agenda of sessions include the following: New Economic Order, Capital Developments and New Initiatives from Washington, Attorneys General Roundtable, Building a Better Board, When All Else Fails: Protecting Your Assets Through Securities Litigation, Playing to Win and Lessons on Teamwork and Leadership, Interview with the Chairman, Engaging for Value and Effective Fund Governance, Shareowners Under Siege, Global Roundup on Capital Markets, and Closing Remarks. The featured speakers include: Mohamed El-Erian, who is the Chair of President Obama’s Global Development Council; Robert A. G. Monks, who is the Chairman and Co-Founder of ValueEdge Advisors LLC (one of the 3 program sponsors); Darren F. Robbins, who is a partner at Robbins, Geller (one of the 3 program sponsors); Michael Lewis, who is a journalist and author of Flash Boys, Moneyball, and The Blind Side; and Shaquille O’Neal, who is the 15-time NBA All Star, media personality, entrepreneur, and philanthropist.
 
          It can be deduced, therefore, that in addition to the objective of providing education to the conference attendees, another purpose of the sponsors of this conference is to make advantageous business connections, with or among the conference attendees, sponsors, and speakers. The facts here can be readily contrasted with the circumstances in Advisory Opinion 04-07 and Advisory Opinion 08-02, both of which involved professional conferences sponsored by non-profit or governmental organizations.

Finding:

          The for-profit sponsors and organizers of the conference appear to be very involved in the information that will be provided to the conference attendees and the planned, organized conference activities. While the conference is, as stated by the organizers, “designed to train public fund representatives on practices to best fulfill fiduciary duties, protect portfolio assets and create long-term value,“ it would be a violation of the Ethics Code for a County official or employee to accept a gift of this conference registration fee waiver and travel stipend because of the for-profit motivation that is presumed to exist in connection with any offer by the conference sponsors to waive costs and cover expenses to people in their target markets. Under these circumstances, the trustee and/or the County employees may not accept this gift without violating the Ethics Code. In making its ruling, the Commission is not suggesting that the requestors in this instance would be, or have been, influenced by the sponsors of this, or any other, public funds conference.
 
          In rendering this advisory opinion, this Commission has applied the New Castle County Ethics Code, which establishes the minimum level of ethical conduct required of County officials and employees.
 

BY AND FOR THE NEW CASTE COUNTY ETHICS COMMISSION ON THIS 8TH DAY OF JULY, 2015.
 
                                                        _______________________________
                                                        Johanna P. Bishop, Chairperson
                                                        New Castle County Ethics Commission
 
Decision: Unanimous
 
 

Footnotes:

1The trustee involved here is also a County employee.
2New Castle County Code Section 2.03.104(A) states: “No County employee or County official shall engage in conduct which, while not constituting a violation of Subsection 2.03.103(A)(1), 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 decisions or actions of the County employee, County official or governmental body are influenced by factors other than the merits.”
3New Castle County Code Section 2.03.103(A)(1).
4Id.
5See New Castle County Code Section 2.03.104.H.
6Section 2.03.104.H.4 states: “Gifts of greater than negligible value from entities doing business with, regulated by, or which may be reasonably foreseen to do business with or be regulated by the County within the next three years, with the exception of gifts described in Subsections I.5. through I.7. of this Division, shall not be accepted by officials, employees, or governmental departments unless a prior Advisory Opinion is sought from the Ethics Commission regarding compliance with the Code of Ethics. Any such gift or donation of other than negligible value which is accepted following the receipt of an Opinion of the Commission shall promptly be recorded by the recipient in a public gift log.”
7New Castle County Code Section 2.03.102.
8Id.