Filing Number: 16-04
Subject: Appearance of Impropriety
Keywords: appearance of impropriety, business, business associate, compensation, conflict, County official, County policy, disclosure, elected official, Executive Office, financial interests, impropriety, outside employer, outside employment, private advantage or gain, private business, professional services, recusal
Decision By: Eric Monzo (Vice Chairperson), Beatrice Patton Dixon, Paula Jenkins-Massie, Sally Jensen, Robert Ralston and Christopher Simon
Contact Email: admin@nccethics.org
 
Status: Active

Question:

Whether an elected County official, while holding office, may receive remuneration from a professional limited liability corporation for work performed before he took office?   

Conclusion:

Under the facts presented here, yes, the requester may continue to receive remuneration from the professional limited liability corporation (“PLLC”) for work performed before taking office, provided that: (1) such PLLC does not do business with New Castle County and the remuneration received is not, in any way, related to business transacted with, or on behalf of, New Castle County; (2) the requester does not perform any services for payment for the PLLC once he has taken office; and (3) all appropriate and relevant information on this matter is disclosed in any Statements of Financial Interests filed with this Commission.  If any one or more of these conditions is or cannot be met, or the circumstances change from those provided to the Commission in requesting this advisory opinion, the requester must inform the Commission and further review and response.

Facts:

The requester, who is a recently elected official, performed professional services for a PLLC before he was elected to office.  The nature of the work performed provides the requester with an indefinite return in the form of monetary payment from the PLLC to the requester.  The PLLC has offices in three states in America, but not in Delaware.  The requester’s work for the PLLC has never involved the New Castle County government.  It is anticipated that the PLLC will not do business with New Castle County.  The requester, since his election, has not performed any new work for the PLLC, but he has received, and will continue to receive, remuneration for work previously performed for the PLLC prior to his election.  It is unknown at this juncture when his remuneration from the PLLC will cease for work already performed, and such end date is dependent on circumstances not within the requester’s control.

Code or Prior Opinion:

Relevant provisions in the definition section of the Ethics Code, Section 2.03.102, include the following:

Appearance of impropriety means conduct which is prohibited by Section 2.03.104A.

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.

Business with which he or she is associated means any business in which the person is a director, officer, owner or employee; or a business in which a member of the person's immediate family is a director, officer, owner or has a financial interest.

Closely held corporation means a corporation in which the stock is held by fewer than ten (10) investors and is not publicly traded.

Compensation means any money, thing of value or any other economic benefit of any kind or nature whatsoever conferred on or received by any person in return for services rendered or to be rendered by oneself or another.

Conflict or conflict of interest means conduct which is prohibited by Section 2.03.103.

Contract means an agreement or arrangement for the acquisition, use or disposal by the County of consulting or other services or of supplies, materials, equipment, land or other personal or real property. "Contract" shall not mean an agreement or arrangement between the County as one (1) party and a County official or County employee as the other party concerning his or her expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his or her current public employment with the County.

County means New Castle County and including any County Department.

County official means any person elected or appointed to any County office, board, commission or the New Castle County Council Audit Committee provided, however, that for purposes of Sections 2.03.103(B)(2), 2.03.103(C), and 2.03.104(C). "County official" does not include any member of a board or commission which operates solely in an advisory capacity, and whose members are not compensated, other than reimbursement for expenses.

Financial interest means any interest representing more than five (5) percent of a corporation, partnership, sole proprietorship, firm, enterprise, franchise, organization, holding company, joint stock company, receivership, trust, or any legal entity organized for profit.

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.

Governmental body with which a County official or County employee is or has been associated means the governmental body within County government by which the County official or employee is or has been employed or by which the County official or employee is or has been appointed or elected and subdivisions and offices within that governmental body.

Income means any money, thing of value or other pecuniary benefit received or to be received in return for, or as reimbursement for, services rendered or to be rendered. The term does not include gifts; governmentally mandated payments or benefits; retirement, pension or annuity payments funded totally by contributions of the County official or employee; or miscellaneous, incidental income of minor dependent children.

Person means a business, governmental body, individual, corporation, union, association, firm, partnership, committee, trust, joint venture, club or other organization or group of persons.

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.

Recusal means, including but not limited to, withdrawing from sponsorship, deliberation, vote, research, preparation, discussion, negotiation, contract formation, policy making, planning, decision making, and/or implementation of a matter. It also includes a prohibition on conducting, in an official capacity, any private or public discussion of a measure raising a conflict or improper appearance. As soon as a potential conflict or improper appearance arises or is recognized, an official or employee must end direct or indirect participation, advice, input, direction, recommendation, or discussion, as well as refraining from vote, if the person is a not an elected official. Elected officials may choose to avoid recusal and may vote if they follow the alternate process described in Subsection 2.03.103.A.2.

Regulated by New Castle County means that an entity operating in New Castle County as a business or nonprofit organization requires approval from or regulation by New Castle County in order to lawfully conduct one or more business activities.

Source means any person who is a provider of an item reportable under Section 2.03.107 and the term includes identification of all members of a group of persons who act in concert to provide the reportable item.

Code of Conduct Provisions

            Certain portions of the New Castle County Ethics Code are relevant to this opinion, including the following:

Section 2.03.101. - Purpose of Division.

A.  It is hereby declared that public office is a public trust and that any effort to realize personal financial gains through public office other than compensation provided by law is a violation of that trust. It is further declared that the people have a right to be assured that the financial interests of holders of or nominees to or candidates for public office do not conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this Division shall be liberally construed to promote complete financial disclosure as specified in this Division. Furthermore, it is recognized that clear guidelines are needed in order to guide public officials and employees in their actions. Thus, this Division intends to define as clearly as possible those areas which represent conflict with the public trust.

B.  It is recognized that many public officials are citizen-officials who bring to their public offices the knowledge and concerns of ordinary citizens and taxpayers. They should not be discouraged from maintaining their contacts with their community through their occupations and professions. Thus, in order to foster maximum compliance with its terms, this Division shall be administered in a manner that emphasizes guidance to public officials and public employees regarding the ethical standards established by this Division.

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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.

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Section 2.03.104. - Code of conduct.

A.  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.

B.  No County employee or County official shall acquire a financial interest in any private enterprise which such employee or official has reason to believe may be directly involved in a decision to be made by such official or employee in an official capacity on behalf of the County.

C.  Any County employee or County official who has a financial interest in any private enterprise which is subject to the regulatory jurisdiction of, or does business with, any County Department shall file with the County Human Resources Office a written statement fully disclosing the same. Such disclosure shall be confidential and the County Human Resources Office shall not release such disclosed information other than to the Commission and to the Department head of an employee, except as may be necessary for the enforcement of this Division. The filing of such disclosure statement shall be a condition of commencing and continuing employment or appointed status with the County.

D.  No County employee or County official shall use such public office to secure unwarranted privileges, private advancement or gain.

E.  No County employee or County official shall engage in any activity beyond the scope of such public position which might reasonably be expected to require or induce such County employee or County official to disclose confidential information acquired by such employee or official by reason of such public position.

F.  No County employee or County official shall, beyond the scope of such public position, disclose confidential information gained by reason of such public position nor shall such employee or official otherwise use such information for personal gain or benefit.

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Section 2.03.106. - Financial disclosure: statements required.

A.  Each designated County official and County employee shall file a statement of financial interests for the preceding calendar year with the Commission no later than May 1st of each year that he or she holds such a position and of the year after he or she leaves such a position. The General Manager or individual of equivalent rank of the Office of Human Resources shall provide the Commission with the names of the individuals required to file statements of financial interest by January 31st each year such statements are required to be filed. For purposes of this Section, the phrase "designated County official and County employee" shall mean:

1.  All elected County officials;

2.  All County officials who perform work that is nonministerial in nature;

3.  Members of the Board of Adjustment, Planning Board, Historic Review Board, Pension Board, License, Inspection and Review Board, Board of Assessment Review, New Castle County Financial Advisory Council, New Castle County Audit Committee, and the Ethics Commission. Members of any County Board or Commission not listed in this paragraph are not required to file statements of financial interest.

4.  The Chief of Police;

5.  All Department General Managers and personnel of equivalent rank;

6.  All Department Division Heads and persons of equivalent rank;

7.  All purchasing agents, public works contract officers and personnel of equivalent or higher rank;

8.  All assessors, assessment technicians, right-of-way agents and personnel of equivalent or higher rank;

9.  All Code Enforcement Officers, all inspectors, all plan examiners including architects and engineers, all permit processors, and personnel of equivalent or higher rank;

10. All housing rehabilitation specialists and personnel of equivalent or higher rank;

11. All land use planners and personnel of equivalent or higher rank within the Department of Land Use;

12. With the exception of the Chief of Police, no police officer shall be required to file a statement of financial interests within the meaning of this division unless the officer serves on one of the boards, councils, or commissions named in Subsection 3. of this section.

B.  Each candidate for County office shall file a statement of financial interests for the preceding calendar year with the Commission not later than seven (7) days after the last day for giving notice of candidacy pursuant to 15 Del. C. § 3106 (Filing of candidacy for nomination at a primary election).

C.  Each nominee for County office who is subject to confirmation shall file a statement of financial interests for the preceding calendar year with the Commission and with the official or body that is vested with the power of confirmation at least ten (10) days before the official or body shall approve or reject the nomination. Each nominee to the New Castle County Farmland Preservation Advisory Board, established under the authority of 3 Del. C. § 906 or its successor, shall file a statement of financial interests for the preceding calendar year with the Commission and with New Castle County Council at least ten (10) days before County Council shall approve or reject the nomination.

D.  No County official, candidate for County office, or employee shall be allowed to take the oath of office or enter or continue upon his or her duties, nor shall he or she receive compensation from County funds, unless he or she has filed a statement of financial interests as required by this division.

1.  If the Commission determines that a filing has not been made or that a filing is deficient, the Commission shall provide a written notice to the individual required to file, identifying the deficiency or delinquency and reciting the penalties for failure to file.

2.  The individual notified in accord with Subsection D.1. has ten (10) calendar days from the mailing date of the notice to correct the delinquency or deficiencies.

3.  If the individual fails to file or correct the noted deficiencies by the conclusion of the ten (10) day period, the Commission may issue a notice by certified mail to the individual that a civil penalty of ten dollars ($10.00) per day is being imposed for each calendar day the statement of financial interests remains delinquent or deficient beyond the ten-day period. The individual shall pay any such penalty before the Commission may accept a filing from the individual.

4. The penalty described in Subsection D.3. is in addition to other penalties provided by law and the filing of a statement of financial interests in compliance with this section does not otherwise obviate the failure to comply with Subsections 2.03.106.A, B, or C.

5. An individual who receives the notice described in Subsection 2.03.106.D.3 and who knowingly or willfully fails to pay the penalty imposed by the Commission shall be subject to the sanctions contained in Section 1.01.009.

6. An individual against whom a financial penalty has been imposed pursuant to Subsection D.3. may contest the imposition of the penalty in whole or in part by filing an appeal in writing with the Commission within thirty (30) days after payment of the assessed penalty. If the penalty amount is overturned in whole or in part, the Commission shall refund the appropriate amount of the penalty to the appellant. The successful appellant shall not be entitled to interest or any other costs.

E. All statements of financial interests by a County official, candidate for County office or nominee for County office pursuant to this Division shall be made available for public inspection and copying during regular office hours. All statements of financial interests by a county employee containing financial information of a privileged or confidential nature shall not be deemed a public record for purposes of 29 Del. C. Ch. 100 (Freedom of Information Act). Nothing in this subsection shall be construed as prohibiting access by the Commission to all statements of financial interests filed in accordance with this Division. Nothing in this subsection shall be construed as prohibiting access by any general manager or individual of equivalent rank to all statements of financial interests filed by a County employee in accordance with this Division.

Case Law and Commission Precedent

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.  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.

            In Advisory Opinion 04-11, the Commission was asked whether an elected official’s sponsorship and/or vote on rezonings favoring a client of his wife’s business creates a conflict of interest or appearance of impropriety.  In deciding that the elected official engaging in such activity created an appearance of impropriety, the Commission concluded that the elected official should immediately withdraw from sponsorship of the ordinances and recuse himself from voting on the matter, in accordance with the procedures set forth in Ethics Code Section 2.03.103.A (text set forth above.) 

In Advisory Opinion 05-19, a County official asked the Commission for guidance regarding his nondelegable responsibility for subordinates who are processing a regulatory matter for a private entity in which he and members of his immediate family have a pecuniary interest.  The Commission concluded that because the official has a nondelegable legal and/or statutory responsibility with respect to responsibility for the conduct of his subordinates even though he has a personal or private interest in the regulatory matter before them, the official may exercise responsibility with respect to such matter, provided that he recuses himself from any involvement in the matter as far as legally permissible and 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. 

In Advisory Opinion 07-09, an official who is an attorney employed by the County requested guidance from the Commission on whether she was permitted to engage in outside employment in matters in which the County is not a party and which will not come before the County as a plan, permit or application.  The Commission decided that the attorney could pursue outside employment if the outside legal activity has no nexus with the County but the attorney must make the County Attorney, her supervisor, aware of each specific representation so that matters pending before the Office of Law, about which she may be unaware, may be reviewed for conflicting representation, disclosure of confidentiality, or appearance of impropriety purposes.  Further, the Commission concluded that because the Office of Law represents the entire County government, the attorney may not represent clients who have other business presented to or which is pending before the County in any unrelated matter.  The employee must be careful to not use confidential information obtained in County employment for the benefit of her private clients.  In addition, the Commission noted that the attorney may be required to conform to more stringent rules imposed by the Delaware Supreme Court on practicing attorneys in the State of Delaware.    

Analysis:

The New Castle County Ethics Code recognized that County official and employees are members of communities and have concerns and activities beyond their lives as County employees, as discussed in  Section 2.03.101.B:

It is recognized that many public officials are citizen-officials who bring to their public offices the knowledge and concerns of ordinary citizens and taxpayers. They should not be discouraged from maintaining their contacts with their community through their occupations and professions. Thus, in order to foster maximum compliance with its terms, this Division shall be administered in a manner that emphasizes guidance to public officials and public employees regarding the ethical standards established by this Division. 

Nevertheless, every County official and employee must consider the ethical rules stated in the Code of Conduct to determine whether his or her “outside” activities create an actual conflict and/or an appearance of conflict with his or her County duties.

In Section 2.03.103.A of the Code, government conduct on the part of County employees or officials for personal or private financial benefit is prohibited. Further, Section 2.03.104.A.1 prohibits the creation of an impression in the reasonable mind of a member of the public that an official or employee’s official action is affected by personal interests which impairs his or her competence, integrity and honesty, or that the department in which he serves will look as though it is showing partiality in a given matter.    

            The question presented to the Commission in this request for an advisory opinion is a novel one, but prior Commission decisions are instructive on the issues raised here.  The requestor is a newly-elected official who used to work with an out-of-state PLLC, as an attorney.  Since his election, he has disassociated himself with the PLLC; however, the PLLC continues to handle matters which generate certain income to the requester even though he is no longer working with the PLLC. The matters for which the requester will be paid remuneration after he takes office do not involve New Castle County, and, as a result, the receipt of such remuneration will not affect his judgment in his service to New Castle County as an elected official.  While income to the requester may continue to be derived from work he performed for the PLLC before taking office, any type of work he once performed for the PLLC prior to becoming an elected County official will cease upon his taking office.  

            The Commission recognizes and commends the fact that the requester sought this opinion before taking office.  This decision of the Ethics Commission is conditioned on the accuracy of the information provided to the Commission,  and the proviso that the following conditions are met throughout his term in office:  (1) the PLLC does not do business with New Castle County and the remuneration received by the requester is not, in any way, related to business transacted with, or on behalf of, New Castle County; (2) the requester does not perform any services for payment for the PLLC once he has taken office; and (3) all appropriate and relevant information on this matter is disclosed in any Statements of Financial Interests filed with this Commission on an annual basis.  If any one or more of these conditions is or cannot be met, or the circumstances change from those provided to the Commission in requesting this advisory opinion, the requester must inform the Commission and further review and response.  The intent of this decision is to reduce potential for misinterpretation by County officials and employees, as well as the public, even when there is no inappropriate action on the part of the County official.  When relevant and necessary, should the PLLC and/or the matters from which the requester derives or has derived income from the PLLC become a topic of County concern, the recusal process outlined in the Ethics Code, and set forth above, must be employed by the requester.  Any such potential for confusion on the part of the public must be prevented or minimized through the dissemination of information through the Statement of Financial Interest or other disclosures, and the diligent exercise of the recusal mechanism provided in the Code.   

Finding:

Under the facts presented, the requester may continue to receive remuneration from the PLLC for work performed before taking office, provided that: (1) such PLLC does not do business with New Castle County and the remuneration received is not, in any way, related to business transacted with, or on behalf of, New Castle County; (2) the requester does not perform any services for payment for the PLLC once he has taken office; and (3) all appropriate and relevant information on this matter is disclosed in any Statements of Financial Interests filed with this Commission.  If any one or more of these conditions is or cannot be met, or the circumstances change from those provided to the Commission in requesting this advisory opinion, the requester must inform the Commission for further review and response.  Once in office, the recusal process included in the Ethics Code must be carefully followed at all times by the requester on issues involving the PLLC or matters worked on by the requester while associated with the PLLC.   

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

7TH DAY OF DECEMBER, 2016.

                             

                             Eric Monzo, ViceChairperson

                            New Castle County Ethics Commission

 

Decision:  Unanimous