CEO 76-124 -- July 26, 1976

CONFLICT OF INTEREST

CITY COUNCILMAN RECEIVING BONUS BASED ON EMPLOYER'S COMMISSIONS FOR SALES TO CITY

To: Howard W. Cox, City Councilman, Mount Dora

Prepared by: Gene Rhodes

SUMMARY:

No prohibited conflict of interest is deemed to be created in a city councilman's privately being employed by an equipment manufacturers' sales agent who does not personally sell goods but who receives commissions on sales made to the city, even though bonuses received by the councilman are based on his employer's commissions, including those received from sales to the city. As the councilman owns no interest in the employer company and personally makes no sales to the city, Florida Statute s. 112.313(3)(1975) is not applicable. Similarly, s. 112.313(7) is not violated, inasmuch as neither the councilman nor his employer sell to the city but, rather, receive commissions and bonuses based on sales made by others. Occasional voting conflicts may arise, however, as a purchase by the city from one of the manufacturers the councilman represents would inure both to his own gain and to that of his employer. See Fla. Stat. s. 112.3143(1975). Reference is made to CEO 76-62, which explains in detail procedures to be followed in determining and disclosing voting conflicts.

QUESTION:

Does a prohibited conflict of interest exist where I, a city councilman, am an employee of, and receive bonuses from, an electrical equipment manufacturers' sales agent who receives commissions on sales made to my city and where my bonuses are based, in large part, on the commissions received by my employer on sales made within my selling area?

This question is answered in the negative.

You have advised us that you work for a company that acts as a selling agent for several electrical equipment manufacturers. As a salaried employee of this company, it is your job to promote sales in the Orlando area. In addition to your salary, you receive periodic bonuses which are based, in part, upon the commissions received by your employer from the manufacturers for sales made in your geographical area. Your employer receives these commissions regardless of whether you or your employer had a part in the actual sale. We understand that, as selling agent for the manufacturers, your employer-company neither handles financial transactions nor the goods; instead, it merely promotes sales. Additionally, neither you nor your company attempt to make sales to the city of which you are a city councilman. However, the city does make purchases from the manufacturers which you represent, and your employer receives commissions on these sales.

The Code of Ethics for Public Officers and Employees states 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. The foregoing shall not apply to district offices maintained by legislators when such offices are located in the legislator's place of business. This subsection shall not affect or be construed to prohibit contracts entered into prior to:

(a) October 1, 1975.

(b) Qualification for elective office.

(c) Appointment to public office.

(d) Beginning public employment.

[Fla. Stat. s. 112.313(3)(1975).]

The first sentence of this provision prohibits a public officer from acting in his official capacity to purchase goods from a company of which he, his spouse, or child is an officer, partner, director, or proprietor or in which the public officer, his spouse or child, or any combination of them, has a material interest. This provision is clearly inapplicable as you do not hold any of the above-described positions or interest in the subject business entities.

The above-quoted provision goes on to prohibit a public officer from selling goods to his own agency. As previously stated, you sell nothing to the city. Rather, you receive a bonus based, in part, upon the commission received by your employer for sales made in your area by the manufacturers. This nexus is too remote for the above- quoted s. 112.313(3) to be applicable.

The Code of Ethics further provides as follows:

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. [Fla. Stat. s. 112.313(7)(a)(1975).]

This provision prohibits a public officer from holding employment with a business entity which is doing business with his public agency. While your employer does receive commissions on sales made to your city, it does not actually do business with the city; nor does it even promote sales to the city.

Having found both of the above-quoted sections inapplicable, we must conclude that the situation you describe presents no prohibited conflict of interest under the Code of Ethics for Public Officers and Employees.

Please be advised, however, that the situation you describe could present occasional voting conflicts for which you would be required to file a Memorandum of Voting Conflict, CE Form 4, as a purchase by your city from one of the manufacturers you represent would inure to your special private gain and to the special gain of your employer. Consequently, you would be required to file CE Form 4 if you were to make such a purchase from one of the manufacturers you represent. Please find enclosed a copy of a previous opinion of this commission, CEO 76-62, which explains the voting conflict situation in greater detail.