CEO 78-43 -- July 20, 1978

CONFLICT OF INTEREST

SHERIFF OWNS WHOLESALE GASOLINE COMPANY WHICH SELLS TO COUNTY BY COMPETITIVE BID AND TO RETAIL SERVICE STATIONS WHICH SELL GASOLINE TO SHERIFF'S DEPARTMENT

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

Prepared by: Phil Claypool

SUMMARY:

Section 112.313(3), F. S. 1977, prohibits a public officer from acting in his official capacity to purchase goods for his own agency from a business entity in which he or his spouse owns a material interest and from acting in a private capacity to sell goods to his public agency or to any agency within that political subdivision. This provision would not be violated, however, when a wholesale gasoline corporation owned by a sheriff and his wife sells gasoline to a retail service station which, in turn, sells gasoline to the sheriff's department, inasmuch as the department is not purchasing from the sheriff's business. See CEO 76-213. Section 112.313(7)(a) prohibits a public officer from having a contractual relationship with a business entity which is doing business with his agency. In the instant case, however, it is the corporation rather than the sheriff, personally, which has a contractual relationship with service stations doing business with the sheriff's department. But were any favoritism shown by the sheriff or the department toward only those stations which are supplied by the sheriff's company, a potential violation of s. 112.313(6) would be created.

As stated above, s. 112.313(3) prohibits a public officer from acting in a private capacity to sell goods to his agency or to any agency within the political subdivision which he serves. However, a limited exemption to this prohibition is provided in s. 112.313(12)(b) if the business is awarded under a system of sealed, competitive bidding to the lowest or best bidder; the official or his spouse or child has not participated in the specifications for or the awarding of the bid; the official or his spouse or child has exercised no influence on agency personnel relative to the awarding of the bid; and the official, prior to or at the time of the submission of the bid, has disclosed his or his spouse's or child's interest and the nature of the intended business. When a wholesale gasoline corporation owned by a sheriff and his wife has contracted with the board of county commissioners by competitive bid to furnish petroleum products to the county within the terms of the exemption, but without the sheriff's having filed the required disclosure statement, a violation of s. 112.313(3) must be deemed to exist. However, in view of the fact that the sheriff does not manage the gasoline company; the contract is with the board of county commissioners, an agency separate and distinct from the sheriff's department; the community had access to the knowledge of the sheriff's interest in the company through the local newspaper (thus fulfilling the purpose of the disclosure requirement); and the sheriff has agreed to file the disclosure statement, the violation is deemed to result from a technical omission rather than to constitute a significant violation of the Code of Ethics in this particular instance.

QUESTIONS:

1. Would a prohibited conflict of interest be created if a wholesale gasoline corporation owned solely by me, a county sheriff, and my wife were to sell gasoline to a retail service station which sells gasoline to the sheriff's department?

2. Does a prohibited conflict of interest exist if a wholesale gasoline corporation owned solely by me and my wife has contracted with the board of county commissioners by competitive bid to furnish petroleum products to the county?

Question 1 is answered in the negative.

In your letter of inquiry you advise that you are the Sheriff of ____ County and that you and your wife own all of the stock of a corporation which sells gasoline at wholesale. You also advise that your company, managed by your son, is the only wholesale gasoline business in the county and that, as a consequence, a large portion of the service stations in the county, some of which are the only stations in the county which are open nights and on holidays, purchase gasoline from your company.

The Code of Ethics for Public Officers and Employees provides 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. . . . [Section 112.313(3), F. S. 1977.]

The first sentence of this provision prohibits a public officer acting in his official capacity from directly or indirectly purchasing any goods for his own agency from a business entity in which he or his spouse owns more than 5 percent.

Even if you were considered to be acting in your official capacity when the department purchases gasoline from a retail service station, we are of the view that, based on an earlier advisory opinion, this provision is not applicable because the department is not directly or indirectly purchasing from your business, the wholesaler. In an analogous situation, we have found that a company owned by the spouse of a city councilman could subcontract with the general contractor working on a project for the city without directly or indirectly doing business with the city. See CEO 76-213. For the same reasons, there would be no violation of the second sentence of the above-quoted provision, which prohibits a public officer acting in a private capacity from selling goods to his agency.

Section 112.313(7)(a), F. S. 1977, which prohibits a public officer from having any contractual relationship with a business entity which is doing business with his agency, also does not apply to the facts you have outlined. Here, it is the corporation rather than you, personally, which has a contractual relationship with the service stations involved by selling to them.

Accordingly, we find that the Code of Ethics does not prohibit a wholesale gasoline corporation owned solely by you and your wife from selling gasoline to a retail service station which sells gasoline to the sheriff's department. However, we would like to call your attention to the following provision of the Code of Ethics:

MISUSE OF PUBLIC POSITION. -- No public officer or employee of an agency shall corruptly use or attempt to use his official position or any property or resource which may be within his trust, or perform his official duties, to secure a special privilege, benefit, or exemption for himself or others. This section shall not be construed to conflict with s. 104.31. [Section 112.313(6), F. S. 1977.]

While we do not have the slightest indication of impropriety on your part, we do wish to caution you that any particular favoritism shown by you and the sheriff's department toward purchasing gasoline only from those service stations which are supplied by your company might constitute a violation of this prohibition.

As to question 2, in your letter of inquiry you advise that on September 12, 1977, your wholesale gasoline corporation was awarded a contract from the board of county commissioners as the lowest competitive bidder to furnish petroleum products to the county for the 1977-1978 fiscal year. You also advise that the sheriff's department does not use any of the petroleum products which are furnished to the county under this contract and that the only connection between the board of county commissioners and the sheriff's department is the annual approval of your budget by the commission.

Section 112.313(3), F. S. 1977, which is quoted above relative to your first question, prohibits a public officer from acting in a private capacity to sell goods to his agency or to any other agency of the political subdivision which he serves. We have advised previously that a person acts in a private capacity to sell whenever a business entity of which he owns more than 5 percent sells. Commission on Ethics Opinions 75-196 and 76-23. However, a limited exemption from this prohibition is provided if:

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.]

Thus, if the requirements of this exemption section have been met, there would be no violation of s. 112.313(3).

In a telephone conversation with our staff, you advised that you had no role in determining the bid specifications of the contract which was awarded to your company, as that was done entirely by the county commission. You also advised that you made no effort to contact the county commission or its personnel about your company's bid, since it is your son who runs the business, and that your son merely submitted the bid for the contract. However, you advised that you have not filed the required disclosure statement with the clerk of the circuit court because you were not aware of the requirement. In response to further questions, you stated that you are reasonably sure that members of the county commission were aware that you owned the company when the bid was accepted because your community is small and because your purchase of the company in July of 1977 was publicized in the local newspaper. You also advised that the fact that the company received the bid appeared in the paper and that you will file the required disclosure statement with the clerk of the circuit court as soon as possible.

It appears that the requirements of the exemption section, above, have not been met in that the required disclosure statement was not filed prior to or at the time of the submission of the bid to the county commission. Accordingly, we must find that there has been a violation of s. 112.313(3) of the Code of Ethics on your part. However, in view of the fact that you do not manage the business of your company, the fact that the contract is with the board of county commissioners (an agency entirely separate from your department except for the approval of your budget), the fact that the community has had access to the knowledge of your interest in the company through the local newspaper (thus fulfilling the purpose of the disclosure requirement), and the fact that you intend to file the disclosure statement, we are of the opinion that the violation in the present case results from a technical omission on your part and does not constitute a significant violation of the Code of Ethics. Nevertheless, we caution you to comply strictly with the terms of this exemption section if your company intends to do additional business by competitive bid with the board of county commissioners in the future.