Whether an employee who owns an outside business may secure financial services from institutions that have or currently contract with, or in the future may bid for business with, New Castle County.

            The employee owning the non-conflicting outside business may seek financial services from financial institutions that have or currently contract with, or in the future may bid for financial services business with New Castle County, as long as he avoids using his senior status with his County department to secure financial services for the outside business. He is also prohibited from entering into contracts with those institutions which create the appearance that he is using his County employment to secure unwarranted advancement for that business. He must disclose the fact and extent of his relationship to the selected institutions to his superiors and completely recuse from the exercise of County authority in relation to the institutions he selects and to his competitors.

             The requestor is a senior level employee in a county department which invests county revenues with outside financial institutions. The vendors are chosen through a request for proposal process (RFP) administered by another County department. The successful vendor is selected by a committee of County employees from several departments, including the requester.

 

            The requester is starting a new business located outside New Castle County. The business is not related to New Castle County in any way and will provide a service unrelated to the type of County job held by the requester. The new business will require financial services of a substantial nature. The requester wishes to secure these services at the lowest possible cost to the new business which could entail making application to institutions which provide, have provided, or, in the future, may provide financial services to the County.

 

            The requester understands that he will be required to recuse himself from any bidding process in which the financial institutions he has chosen for the business participates, either as a principal or a secondary vendor.

Ethics Code Provisions

 

            Ethics Code Section 2.03.103 prevents an employee or official from using his or her County authority for personal benefit. The Code also prohibits conduct which creates an appearance that a County employee or his department is not impartial. Code Section 2.03.104(D) forbids an employee or official from using his or her County office to secure unwarranted privileges, private advancement or gain.

 

            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). In determining the relevant circumstances, the courts advise the Commission to look at the totality of facts. The Commission has long applied this standard to the conduct of County officials and employees.¹

 

Prior Advisory Opinions

 

            A County employee may engage in outside private employment, without limitation, if that private business has no relationship to his official duties or to New Castle County. See Advisory Opinions 94-05, 98-08, 99-06. Nevertheless, an official may not use his public office to assist the private business: he may not solicit business from County customers for the private enterprise, Advisory Opinion 93-02; he may not refer clients of his County office to the private business, Advisory Opinion 94-02; he may not influence, even indirectly, the selection of the business or its associates for County work, Advisory Opinion 94-06; he may not use his position as a County official to advance his interests in the private business, Advisory Opinion 04-11.

 

            Even when the outside business itself is not a conflict, relationships stemming from it may be problematic under the Ethics Code. If another business jointly associated with his business comes before him or his agency, the requester must recuse himself from any act of authority regarding either business. See, Advisory Opinions 04-11, 04-09, 05-05. In Advisory Opinion 92-05, a board member was required to recuse himself from participation in decisions concerning consultants hired by the Board when he had a business relationship with some of them. In Advisory Opinions 94-04 and 06-06, officials were required to disclose and abstain from voting on matters which would affect their personal pecuniary interests. In Advisory Opinion 99-01, a County official was required to recuse himself from voting when a client of his employer had a financial interest in the matter. In Advisory Opinion 04-11, an official was advised to recuse himself entirely from sponsorship and vote on a matter concerning a client of his wife's business and in ,Order 05-04 an official was found to have inadvertently violated the Code when he failed to recuse himself in a matter brought by a client of his wife.

 

            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. For example, in Advisory Opinion 06-08, at p. 4, the Commission held that when a conflict exists, participation in research, preparation, discussion or implementation is barred; in Advisory Opinion 06-12, at p. 6, the Commission stated that a conflict requires the individual to recuse from policy making, planning or decision making; in Advisory Opinion 07-11, at pp. 9-10, the Commission stated that an official was barred from participating in decisions about a conflicting matter. In other published guidance, the Commission has stated "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". Commission Recusal Brochure at 2.

             The Ethics Code does not prohibit the requester from operating a business unrelated to both his County position and the County government itself. The Commission recognizes that funding is one of the necessary requirements for the business' success. That issue is only problematic here because of the senior level of authority the requester holds in his department, a department which has significant relationships with a variety of outside financial institutions.

 

            Certainly, the requester may make application for funding to financial institutions which hold themselves out for that purpose even if they have, may, or currently provide financial services to his department. To rule otherwise would prevent him from opening his non conflicting business. However, the requester must have a business justification for his application to them if they are current vendors or currently bidding for County work.

 

            The requester will have to disclose his employment with the County to the financial institutions but he must adopt stringent measures to avoid trading on his County status to advance the interests of the private business. He may not seek or accept any contracts or loans if a reasonable person would suspect that they bear any relationship to his level of County authority. He must be prepared to be transparent about his business relationships with the selected financial institution by keeping his superiors informed about both the existence and extent of them.

 

            The requester is aware that he would violate the Ethics Code conflict rules if he performs official acts related to the financial institution he selects for his business. However, he may not understand that official conduct regarding the competitors of his business or his official conduct regarding the competitors of the selected financial institution will also come under scrutiny. Depending on the factual circumstances, recusal may be necessary in those circumstances as well since his conduct may create an appearance of partiality when the competitors are disadvantaged by his actions. In such situations, if he does not recuse, he must consult the Commission for clarification prior to performing official acts.

             The employee owning the non-conflicting outside business may seek financial services from financial institutions that have or currently contract with, or in the future may bid for financial services business with New Castle County, as long as he avoids using his senior status with his County department to secure financial services for the outside business. He is also prohibited from entering into contracts with those institutions which create the appearance that he is using his County employment to secure unwarranted advancement for that business. He must disclose the fact and extent of his relationship to the selected institutions to his superiors and completely recuse from the exercise of County authority in relation to the institutions he selects and to his competitors.

 

            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.

 

 

______________________

Thomas P. Collins, Chairperson

 

Reconsideration was made on February 22, 2012 and certain changes were made to conceal the identity of the requestor.

 

Decision: Unanimous