CEO 77-49 -- March 9, 1977
CONFLICT OF INTEREST
COMMUNITY COLLEGE PRESIDENT SERVING AS MEMBER OF BOARD OF DIRECTORS OF BANK WHICH HOLDS FUNDS OF COMMUNITY COLLEGE
To: (Name withheld at the person's request.)
Prepared by: Phil Claypool
Based on s. 112.313(3), F. S. 1975, prohibiting a public officer or employee from doing business with his agency, it has previously been found that a school board member is prohibited from serving on the board of directors of a bank which is lending money to the board. See CEO 76-115. Construing that provision together with s. 136.02(5), F. S. 1975, however, no conflict of interest was found to be created where a member of a development authority is an officer and director of a bank with which the authority has checking and savings accounts. See CEO 76-20. Although s. 136.02(5) does not specifically apply to the present situation, in which a community college president seeks to serve as director of a bank which will submit a bid for the investment of temporary surplus funds held by the college, the provision nonetheless is deemed to provide the basis for a valid, limited exception to the prohibition contained in s. 112.313(3). Therefore, based upon s. 112.316, which provides that the Code of Ethics is not intended to prohibit private pursuits which present no conflict with public duty, no conflict of interest is deemed to exist where a community college president serves as a director of a bank with which the college invests surplus funds for a brief period of time, provided that it appears in the records of the college that the trustees have investigated and determined that no favoritism was shown, as mandated by s. 136.02(5), and further provided that there is no violation of s. 136.02(1).
Would a prohibited conflict of interest exist were I, a community college president, to serve as a member of the board of directors of a bank with which the community college has invested surplus funds for a brief period of time?
Your question is answered in the negative, subject to certain conditions specified in this opinion.
You have stated in your letter of inquiry that you are the President of ____ Community College. You have been asked to serve as a member of the board of directors of a national bank located in the area of the community college. While the college uses three local banks as depositories, the bank you would serve as director is not one of them. However, from time to time the college solicits quotations for investing its surplus funds for brief (30 day, 60 day, etc.) periods of time, and if the subject bank were to submit the best quotation, the college would invest its surplus funds with it for that length of time.
The Code of Ethics for Public Officers and Employees provides in relevant part:
DOING BUSINESS WITH ONE'S AGENCY. -- No employee of an agency acting in his official capacity as a purchasing agent, or public officer acting in his official capacity, shall either directly or indirectly purchase, rent, or lease any realty, goods, or services for his own agency from any business entity of which he or his spouse or child is an officer, partner, director, or proprietor or in which such officer or employee or his spouse or child, or any combination of them, has a material interest. Nor shall a public officer or employee, acting in a private capacity, rent, lease, or sell any realty, goods, or services to his own agency, if he is a state officer or employee, or to any political subdivision or any agency thereof, if he is serving as an officer or employee of that political subdivision. . . . [Section 112.313(3), F. S. 1975.]
We have found previously that this provision prohibits a school board member from serving on the board of directors of a bank which is lending money to the board. See CEO 76-115. We have also construed this provision together with s. 136.02(5), F. S. 1975, to allow a member of a development authority to serve as officer and director of a bank with which the authority has checking and savings accounts. See CEO 76-20.
In a telephone conversation with our staff, you stated that it is the dean of administrative services of the college rather than yourself who decides with which bank the college will invest its surplus funds. Accordingly, the first sentence of the above-quoted provision does not apply here because you would not be purchasing services for the college when its surplus funds are invested. However, we have determined that one acts in a private capacity when a business entity of which he is a director takes action. See CEO 76-12. Therefore, it would seem that you are prohibited from serving as director of a bank with which the college, your agency, has invested its surplus funds.
In addition, the Code of Ethics also provides:
CONFLICTING EMPLOYMENT OR CONTRACTUAL RELATIONSHIP. -- No public officer or employee of an agency shall have or hold any employment or contractual relationship with any business entity or any agency which is subject to the regulation of, or is doing business with, an agency of which he is an officer or employee . . . ; nor shall an officer or employee of an agency have or hold any employment or contractual relationship that will create a continuing or frequently recurring conflict between his private interests and the performance of his public duties or that would impede the full and faithful discharge of his public duties. [Section 112.313(7)(a), F. S. 1975.]
As you have informed our staff by telephone that you would be compensated for your services as director of the bank, we find that you would have a contractual relationship with that business entity were you to accept the position of director. Should the subject bank then hold the college's surplus funds and pay interest on them, you would have a contractual relationship with a business entity which is doing business with your agency.
However, in applying the Code of Ethics, we are mindful of the following provision:
Construction. -- It is not the intent of this part, nor shall it be construed, to prevent any officer or employee of a state agency or county, city, or other political subdivision of the state or any legislator or legislative employee from accepting other employment or following any pursuit which does not interfere with the full and faithful discharge by such officer, employee, legislator, or legislative employee of his duties to the state or the county, city or other political subdivision of the state involved. [Section 112.316, F. S. 1975.]
In previous opinions, we have found that s. 136.02(5), F. S. 1975, in certain situations controls over the provisions of the Code of Ethics. That section states:
The fact that a county or municipal officer or member of a public board or body, including a district school officer and an officer of any district within a county is a stockholder or an officer or director of a bank will not bar such banks from qualifying as a depository of funds coming under the jurisdiction of any such county or municipal officer, provided it shall appear in the records of the state or county agency that the governing body of such agency has investigated and determined that such county officer or member of a public board or body as aforesaid has not favored such bank or banks over other qualified banks and that there is no violation of subsection (1).
Although this section does not specifically apply to a community college president, and therefore does not directly apply to the question at hand, we are of the opinion that it provides the basis for a valid, limited exception to the standards of conduct provisions of the Code of Ethics within the intention of the construction section quoted above where a bank will serve as depository of agency funds or where, as here, the agency will be investing surplus funds with the bank. This exception is contingent upon the appearance in the records of the agency that the governing body of the agency (here, the trustees of the college) has investigated and determined that the officer has not favored such bank or banks over other qualified banks and that there is no violation of s. 136.02(1), F. S. 1975.
Accordingly, we find that the Code of Ethics for Public Officers and Employees does not prohibit you, the president of a community college, from serving as a member of the board of directors of a bank with which the community college has invested surplus funds for a brief period of time.