CEO 76-20 -- January 16, 1976

CONFLICT OF INTEREST

DEVELOPMENT AUTHORITY MEMBER EMPLOYED BY BANK DOING BUSINESS WITH AUTHORITY

To: C. Dean Lewis, Attorney, Suwannee County Development Authority, Live Oak

Prepared by: Gene Rhodes

SUMMARY:

Florida Statute s. 112.313(3)(1975) would appear to prohibit a local development authority from having checking and savings accounts in banks of which authority members are directors. However, Fla. Stat. s. 136.02(5)(1975) creates a partial exemption to s. 112.313(3), stipulating that a bank of which a public officer is a stockholder or officer may serve as a depository of funds for that officer's public agency so long as it is made a matter of record that, after investigation, it was determined that the bank was not favored over other qualified banks. This statute, in its specificity, is deemed to supersede the more general prohibition of s. 112.313(3).

QUESTION:

Does a prohibited conflict of interest exist where members of a local development authority are officers of banks which do business with the authority?

Your question is answered in the negative.

Your letter of inquiry advises us that it is the Suwannee County Development Authority's policy to have at least one officer from each of the area's three banks serve on the authority. No loans have been made by the authority from any of the aforementioned banks, but the authority does occasionally have checking and savings accounts in each of the three banks.

The Code of Ethics for Public Officers and Employees states in relevant part:

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 doing business with an agency of which he is an officer or employee excluding those organizations and their officers who enter into or negotiate a collective bargaining contract with any state, county, municipal, or other political subdivision of the state when acting in their official capacity; 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. [Fla. Stat. s. 112.313(7)(1975).]

The above-quoted standards of conduct provision prohibits generally business dealings between public agencies and private business entities in which officials of the agency are economically interested. However, consideration must be given in the instant case to another chapter of the Florida Statutes which creates a partial exception to the provisions of s. 112.313(7). That statute states in relevant part:

The fact that a county or municipal officer or member of a public board or body, including a county 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). [Fla. Stat. s. 136.02(5)(1975).]

This language, in its specificity, must control over s. 112.313(7), which is only a general prohibition against conflicting employment. See 82 C.J.S. Statutes s. 34(b), (1953). However it must be recognized that s. 136.02(5) applies only to a bank's acting as a depository of funds, and then only when the governing body of the agency has made an investigation and has determined that there has been no favoritism on the part of the public officer and that there has been no violation of Fla. Stat. s. 136.02(1).

Thus, providing that the above-noted conditions are met, there is no conflict of interest prohibited by the Code of Ethics where the development authority deposits funds in any of the subject banks.

This opinion does not address the permissibility of loans made to the authority by the banks in question, as that question was not submitted.