CEO 86-38 -- May 15, 1986

CONFLICT OF INTEREST

CITY FIREFIGHTERS' PENSION TRUST FUND BOARD MEMBER EMPLOYED BY BANK SERVING AS MANAGER OF FUND ASSETS

To: (Name withheld at the person's request.)

SUMMARY:

A prohibited conflict of interest exists where a member of a municipal firefighters' pension trust fund board of trustees is employed as a branch manager by a national bank, the trust department of which serves as manager of the assets of the fund. Section 112.313(7), Florida Statutes, prohibits a public officer from having any employment with a business entity which is doing business with his agency.

QUESTION:

Does a prohibited conflict of interest exist where a member of a municipal firefighters' pension trust fund board of trustees is employed as a branch manager by a national bank, the trust department of which serves as manager of the assets of the fund?

Your question is answered in the affirmative.

In your letter of inquiry you advise that Mr. Lester Garner serves on the board of trustees of a municipal firefighters' pension trust fund. You also advise that the board has jurisdiction over the beneficiaries of the fund, as well as the choice of managing the funds directly or by use of an asset manager. In July of 1982, the board selected the trust department of a national bank group located in another city to serve as the manager of fund assets.

At that time, the subject board member was employed by the bank of that bank group located in your city, which did not have a trust department. The bank group subsequently has been acquired by another national bank, which assumed the responsibility under the trust agreement to manage fund assets. The subject board member currently is the branch manager of that bank's branch within the city.

The Code of Ethics for Public Officers and Employees provides 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 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), Florida Statutes (1985).]

This provision prohibits a public officer from having any employment with a business entity which is doing business with his agency.

You have advised that the board member's responsibilities with the bank are totally separate from the bank's trust group and from the trust group's management of the pension trust fund. However, in a telephone conversation with our staff, the board member advised that the trust group is not a separate corporation and that all branch offices in the trust group are part of one corporation. In previous opinions we have treated each corporate subsidiary as a separate "business entity" in applying the Code of Ethics. For example, in CEO 79-55, we distinguished between a banking corporation and a trust company which was a wholly owned subsidiary of the banking corporation. We are unable to make this distinction here, as the board member is not employed by a separate corporation from that which is managing the fund assets.

As Section 112.313(7) does not address an official's responsibilities for his employer, we generally have not based our decision on whether one's private responsibilities relate to the business being done between his private employer and his agency. In one instance we did so where an airport authority member was employed as a pilot by an airline serving that airport. See CEO 78-27. There, however, as the pilot was one of thousands of persons employed by the airline, he had no management responsibilities, and he was protected by a union contract with appropriate grievance procedures, we found that his private interests were too remote from those of his employer to find that regard for those private interests would tend to lead to disregard of his public duties. Because the subject board member holds a responsible managerial position with the bank, we do not believe that this rationale should apply here.

Finally, we have "grandfathered-in" situations where a contract had been entered into between the officer's agency and his private employer prior to the officer taking office. For example, see CEO 80-88. However, the subject board member was a member of the board of trustees when the trust agreement initially was signed.

Accordingly, we find that a prohibited conflict of interest exists where a member of a municipal firefighters' pension trust fund board of trustees is employed by a bank, the trust department of which has contracted to serve as manager of the fund's assets.