CEO 79-29 -- May 17, 1979
CONFLICT OF INTEREST
SCHOOL BOARD MEMBER DIRECTOR OF BANK SERVING AS DEPOSITORY FOR SCHOOL BOARD AND MAKING LOANS TO SCHOOL BOARD
To: Richard S. Graham, Attorney, Daytona Beach
Prepared by: Phil Claypool
SUMMARY:
Reference is made to CEO's 75-195, 76-20, and 76-73. So long as s. 136.02(5), F. S., is complied with, a school board member may serve as a director of a bank which is a depository of school board funds.
In CEO's 75-195, 76-115, 76-118, and 77-36, it was advised that a local official may not serve as a director of a bank which lends money to his public agency; however, loans entered into between an official's agency and his bank prior to the time he became a member of the agency do not constitute violations of the Code of Ethics. Since the above- referenced opinions were issued, the Code of Ethics has been amended to provide several exemptions to the prohibitions contained in s. 112.313(3) and (7), F. S. See s. 112.313(12). Pursuant to those exemptions, a school board member may continue to serve as a director of a bank which makes loans to the school board only if the terms and conditions of one of the exemptions contained in s. 112.313(12) are met.
QUESTIONS:
1. Does a prohibited conflict of interest exist when a school board member serves as a director of a bank which serves as a depository of school board funds?
2. Would a prohibited conflict of interest be created were a school board member to serve as a director of a bank which lends money to the school board?
Question 1 is answered in the negative.
In your letter of inquiry you advise that Dr. Oswald Bronson, a newly appointed member of the Volusia County School Board, is a director of a local bank which has served and is serving as a depository of school board funds.
In several previous opinions we have advised that the Code of Ethics for Public Officers and Employees does not prohibit a local official from serving as an officer or director of a bank which acts as a depository for the funds of his agency, so long as the requirements of s. 136.02(5), F. S., are met. See CEO's 76-73, 76-20, and 75-195. Accordingly, we find that so long as s. 136.02(5), F. S., is complied with, the subject school board member may continue as a director of a bank which is a depository of school board funds.
As to question 2, in your letter of inquiry you advise that the subject school board member's bank presently has one outstanding loan to the school board, made prior to his appointment to the board. In addition, you advise that it is possible that the bank may make future loans to the school board.
In CEO's 77-36, 76-118, 76-115, and 75-195, we have advised that a local official may not serve as a director of a bank which lends money to his agency. However, in those opinions we further advised that loans entered into between the official's agency and his bank prior to the time he became a member of the agency did not violate the Code of Ethics or require him to resign either position.
Since the above-referenced opinions were issued, the Code of Ethics has been amended to provide several exemptions from the application of s. 112.313(3) and (7), F. S. See s. 112.313(12), F. S. 1977. Probably the most relevant of these exemptions occurs when:
The business is awarded under a system of sealed, competitive bidding to the lowest or best bidder and:
1. The official or his spouse or child has in no way participated in the determination of the bid specifications or the determination of the lowest or best bidder;
2. The official or his spouse or child has in no way used or attempted to use his influence to persuade the agency or any personnel thereof to enter such a contract other than by the mere submission of the bid; and
3. The official, prior to or at the time of the submission of the bid, has filed a statement with the Department of State, if he is a state officer or employee, or with the Clerk of the Circuit Court of the county in which the agency has its principal office, if he is an officer or employee of a political subdivision, disclosing his, or his spouse's or child's, interest and the nature of the intended business. [Section 112.313(12)(b), F. S. 1977.]
We have promulgated CE Form 3A, a copy of which may be obtained at the office of the clerk of the circuit court, for use in making the disclosure required by s. 112.313(12)(b)3.
Accordingly, we find that the subject school board member may continue to serve as a director of a bank which makes loans to the school board in the future only if the terms and conditions of one of the exemptions contained in s. 112.313(12), F. S., are met.