CEO 75-200 -- November 5, 1975

CONFLICT OF INTEREST

CITY COUNCILMEN DOING BUSINESS WITH THE CITY

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

Prepared by: Gene Rhodes

SUMMARY:

Although s. 112.313(3), F. S., as amended by Ch. 75- 208, Laws of Florida, prohibits a local officer from acting in a private capacity to do business with any agency of his political subdivision, it is further provided that contracts entered into prior to the effective date of the revised law, October 1, 1975, are not affected. Therefore, no prohibited conflict is created where a city councilman sold an insurance policy to the city prior to October 1. Pursuant to s. 112.313(9), as amended by Ch. 75-208, however, the fact that one is a general agent for an insurance company must be disclosed on CE Form 3, Disclosure of Specified Interests. Another city councilman who is employed by a company which sells to departments of the city is not in a conflicting situation pursuant to s. 112.313(7), F. S., as amended by Ch. 75-208, because transactions are not made with his own agency, the city council, but with other agencies of the city. Employment or contractual relationships are prohibited only between public officers and their own agencies.

QUESTIONS:

1. Would a prohibited conflict of interest exist if an insurance policy sold to a city by a councilman prior to October 1, 1975, remained in force until its expiration?

2. Must the city councilman/insurance agent who sold an insurance policy to the city prior to October 1, 1975, disclose the transaction?

3. Does a prohibited conflict of interest exist where a city councilman is employed by a corporation that is selling goods directly to departments of the city?

Question 1 is answered in the negative.

Your letter of inquiry advises us that Mr. ____, a ____ City Councilman and independent insurance agent, has an insurance policy with the city which will not expire for some months hence. We understand that said policy was sold to the city sometime prior to October 1, 1975.

The appropriate section of the recently revised 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 for his own agency purchase, rent, or lease any realty, goods, or services from any business entity of which he, his spouse, or child is an officer, partner, director, or proprietor, or in which such officer or employee, 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 if he is serving as an officer or employee of any political subdivision, to that subdivision or to any agency thereof. 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 nor be construed to prohibit contracts entered into prior to:

(a) The effective date of this act;

(b) Qualifications for elective office;

(d) Beginning public employment.

[Section 112.313(3), as amended by Ch. 75-208, Laws of Florida; emphasis supplied.]

The above-quoted portion of the Standards of Conduct Law prohibits a city councilman from selling insurance to the city; however, the emphasized portion exempts from this provision contracts entered into prior to the effective date of the act. This revision in the Code of Ethics took effect October 1, 1975. Accordingly, it is our view that the insurance policy in question may remain in force until its expiration date, at which time the city councilman will be prohibited from renewing the policy with the city.

Question 2 is answered in the affirmative.

Section 112.313(3), F. S. (1974 Supp.), provides in pertinent part:

DISCLOSURE OF CONFLICTS. -- If a public officer or employee of an agency is an officer, director, partner, proprietor, associate or general agent (other than a resident agent solely for service of process) of, or owns a material interest in, any business entity which is granted a privilege to operate, or is doing business with an agency of which he is an officer or employee, he shall file a statement disclosing such facts within forty-five days of becoming an officer or employee or within forty-five (45) days of the acquisition of such position or of such material interest . . . .

"Business entity granted a privilege to operate" is defined to include insurance companies. Section 112.312(6), F. S. (1974 Supp.). Because the councilman is an insurance agent, and because his insurance company was doing business with his agency, the city, the disclosure should have been made within 45 days of the transaction or within 45 days of his becoming a member of the city council. To rectify this oversight, CE Form 3, Disclosure of Specified Interests (copy enclosed), should be filed immediately.

The above-quoted section of the law was revised, effective October 1 as follows:

DISCLOSURE OF SPECIFIED INTERESTS. -- If a public officer or employee of an agency is an officer, director, partner, proprietor, associate, or general agent (other than a resident agent solely for service of process) of, or owns a material interest in, any business entity which is granted a privilege to operate in this state, he shall file a statement disclosing such facts no later than 45 days after becoming an officer or employee or after the acquisition of such position or of such material interest. . . . [Section 112.313(9), Ch. 75-208, Laws of Florida.]

The councilman, therefore, is now required to disclose on CE Form 3 only the fact that he is a general agent in an insurance company inasmuch as business transactions with his own agency are prohibited by s. 112.313(3), Ch. 75-208.

Question 3 is answered in the negative.

You have advised us that Mr. ____, a ____ City Councilman, is employed by ____, Inc., a corporation that sells electrical and plumbing supplies to departments of the city. The councilman is a salesman for this corporation, but he is not the salesman who handles sales made to the city departments.

The city manager has informed us that the city departments purchase from this supply company on an infrequent basis and that for this calendar year expenditures by the city to the supply firm amount to approximately $880.

The Code of Ethics for Public Officers and Employees provides in pertinent 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 . . . . [Section 112.313(7), Ch. 75-208, Laws of Florida.]

The above-quoted portion of the Code of Ethics prohibits a public officer from being employed by a business entity doing business with the agency in which he is serving. However, when a corporation sells to the various departments of the city, it is not selling to the city council, the councilman's agency. Rather, the corporation is selling to the various agencies that make up city government.

The term "agency" is defined in the Code of Ethics to mean "any state, regional, county, local, or municipal governmental entity of this state, whether executive, judicial, or legislative, and any department, division, bureau, commission, authority, or political subdivision of this state, therein, and any public school, community college, or state university." Section 112.312(1), Ch. 75-208.

The fact that the Legislature enumerated the specific governmental bodies which are to be considered agencies is significant. In doing this, they have indicated that each named body (a department, division, bureau, etc.) shall constitute a separate and autonomous agency in applying the provisions of the Code of Ethics. Based on this interpretation, the city council is an agency separate and distinct from the agencies to which the supply company is selling plumbing and electrical supplies, and, therefore, there is no conflict of interest in this situation.