CEO 75-122 -- June 2, 1975

DISCLOSURE OF CONFLICT

MUNICIPAL OFFICER SERVING AS BANK DIRECTOR

To: Harry M. Rosen, Mayor, City of Miramar

Prepared by: Carol Ann Turner

SUMMARY:

While a public officer is not prohibited from serving as a bank director, such directorship must be disclosed on CE Form 3 pursuant to s. 112.313(3), F. S. (1974 Supp.). Nor is such public officer prohibited from voting on issues concerning the bank of which he is a director; voting conflicts of interests must be disclosed, however, on CE Form 4. Where such public officer owns less than 1 percent of the stock in a bank, such ownership does not constitute a material interest pursuant to s. 112.312(5) and therefore the officer's agency is not prohibited from doing business with that bank. Inasmuch as a bank directorship carries with it strong obligations, however, discretion is encouraged in keeping with the spirit, as well as the letter, of the Code of Ethics.

QUESTIONS:

1. Am I, as Mayor of the City of Miramar, prohibited by the Code of Ethics from holding the position of Director of the Southeast Bank of Miramar?

2. May I, as mayor, exercise my right to cast the tie-breaking vote, or my right to veto, in matters which concern the Southeast Bank of Miramar in which bank I own less than 1 percent of the stock and serve as a corporate director?

3. Does my ownership of 1 percent or less of the stock of the Southeast Bank of Miramar prohibit said bank from doing business with the City of Miramar, of which I am mayor?

Question 1 is answered in the negative.

The Code of Ethics for Public Officers and Employees provides:

If a public officer . . . is an officer [or] director . . . of, . . . any business entity which is granted a privilege to operate, or is doing business with an agency of which he is an officer or employee, he shall file a statement disclosing such facts within forty-five days of becoming an officer or employee or within forty-five (45) days of the acquisition of such position . . . . [Section 112.313(3), F. S. (1974 Supp.).]

Therefore, while you are not prohibited by the Code of Ethics from holding the position of bank director, you are required to disclose your directorship by filing CE Form 3, Disclosure of Conflicts of Interest, a copy of which is enclosed for your convenience.

Question 2 is answered in the affirmative.

The applicable section of the Code of Ethics states:

No public officer shall be prohibited from voting on any matter in his official capacity. However, when the matter being considered directly or indirectly inures to the public officer's particular private gain, as opposed to his private gain as a member of a special class or creates a conflict between such officer's private interests and his public duties he may abstain from voting on the matter and shall file a statement explaining the conflict with the appropriate officials. [Section 112.3141, F. S. (1974 Supp.).]

We should like to point out that the phrase "public officer's particular private gain" includes within its meaning a particular private loss which may be suffered by the public officer. Abstentions from voting are thus anticipated under the terms of this law though, strictly speaking, that decision seems to be left to the discretion of the public officer. A policy of reasonable prudence would, in our view, encourage voluntary abstention in the circumstances of this case. Irrespective of this, however, where a conflict of interest of the type described in s. 112.3141, supra, exists, the facts are required to be disclosed on CE Form 4 and filed with both the city council and the Ethics Commission.

Question 3 is answered in the negative.

For purposes of part III, Ch. 112, F. S., a conflict of interest is created when a public officer owns a "material interest" in any business entity doing business with the agency of which he is an officer. "Material interest" is defined by s. 112.312(5) as "direct or indirect ownership of ten percent or more of the total assets or capital stock of any business entity." (Emphasis supplied.) Again, strictly speaking, neither your directorship nor your ownership of 1 percent of the stock of the Southeast Bank would prohibit business transactions between the bank and the City of Miramar.

We are of the opinion, however, that membership on the board of directors of a bank carries with it strong obligations in overseeing the successful operation of the bank, obligations which in instances such as you have described might tend, or appear to tend, to conflict with your public duties as mayor. The conflict, in our opinion, is substantial and, in keeping with the spirit of the Code of Ethics, we urge that the intent of the law be given due consideration.