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Commissioners: Dennis S. Clower, Loren Grober, Wendy Jamison, Stephanie McClellan, V. Eugene McCoy, John McMahon, Ernest Price


Order Text:

          Whether a County official violated the New Castle Code of Ethics when he authorized a grant for a non-profit agency in which he was a member of the corporate board of directors from an unrestricted New Castle County contingency fund over which he had sole discretion.1
          The conduct of the official did not violate the Code of Ethics. The official did not have a conflict of interest in making the grant because the corporation and agency were not organized for profit and neither he, any member of his family, nor a business with which he was associated had a financial interest in the agency or parent corporation. The authorization of the grant did not create an appearance of impropriety because the official was an inactive member of the board and did not participate in the management or operations of the corporation or agency, and did not have any personal, financial or other interest in the corporation or the recipient of the grant. The idea for and amount of the grant originated with state officials and the source of the grant funds was state moneys channeled through the County by state officials for the specific purpose of making the grant to the non-profit. The grant process was implemented according to regular financial procedures through the actions of employees in the lower levels of state and County government and the official's involvement was limited to the non-delegatable duty of providing final authorization so the grant could be made. The official did not seek private advancement by authorizing the grant because he took precautions to make clear to the recipient of the grant that the state, not the County, was the source of the funds.
Facts Substantiated by Investigation
          The Commission authorized an investigation into an allegation that the County official improperly authorized funds from a contingency fund which was at his sole discretion for a private agency in which he had an interest as a director. The investigation documented the following facts. At the time the grant was made in 2001, the official was a board member of the parent non-profit corporation of a private community agency located in New Castle County. The agency provides services to the citizens of the County and the State of Delaware and is not regulated by and does not contract with the County.2 The official functioned as an ex officio member of the board: he received no fee or reimbursement from the board or agency, he never attended any meeting, he never voted on any board or agency business, and he did not attend any board functions. He had no financial interest in the agency or corporation nor did any member of his family or business with which he was associated. He was not a member of the underlying community agency. The official is not currently a member of this board.
          The agency suffered an unexpected financial set back and sought funds from federal, state, and County government officials. The County official assisted the agency by calling his state and federal government counterparts to encourage financial help for the agency. State officials responded to the agency's request by conferring directly with the agency and promising to make a grant of a specified amount of state funds. The state officials did not include the County official in or inform him about these conversations. Because state restrictions precluded a direct grant to the private agency but permitted the transfer of funds to the County for a specific public purpose, state employees communicated with a County department manager and his employees about channeling the amount of promised funds to the County on the condition that the County would provide an equal amount of money to the non-profit agency. An authorized County official signed this agreement with the state in the official's name. A County finance employee determined that County regulations permitted the agreement to be fulfilled by making a grant from the unrestricted contingency fund controlled solely by the official. After the County received the state funds, an appropriation was directed by the official from the contingency fund. The appropriation was publicly disclosed in the regular manner to County Council. The official noted on a transmittal letter to the agency that the funds were attributable to the efforts of two particular State officials. The state officials have publicly taken credit for supplying the funds to the agency.3
Application of Relevant Ethics Code Provisions
          Three provisions of the Code of Ethics addressing conflicts of interest, appearance of impropriety and unwarranted private advancement are applicable to this complaint.
          1. New Castle County Code Sec. 203.103A - Conflict of Interest
          The conflict of interest provision, New Castle County Code section 2.03.103 A (1), (2), states in pertinent part:
(1)          No County official or County employee shall use the authority of his or her office or employment or any confidential information received through his or her holding County office or employment for the personal or private benefit of himself or herself, a member of his or her immediate family or a business with which he or she is associated . . .
(2)          In any case where a person has a legal and/or statutory responsibility with respect to action or nonaction on any matter where the person has a personal or private interest and there is no provision for the delegation of such responsibility to another person, the person may exercise responsibility with respect to such matter, provided that promptly after becoming aware of such conflict of interest, the person files a written statement with the Commission fully disclosing the personal or private interest and explaining why it is not possible to delegate responsibility for the matter to another person. If the matter is one in which the legal and/or statutory responsibility requires the person to vote upon the issue, the written statement filed with the Commission shall be read into the public record prior to the time the person's vote is cast. Any person choosing to abstain from voting on an issue where [he] or she has a conflict shall state the reasons for his or her conflict on the record; an abstaining voter need not file the written statement with the Commission required when acting on, rather than abstaining from, an issue involving a conflict.
          The official in question did not violate these sections of the Code because he authorized funds to a non-profit entity in which he had no demonstrable private interest and in which neither he nor his immediate family had a financial interest. Furthermore, even if his ex officio board status is deemed to be sufficient to associate him with the agency, he did not authorize funds for an "associated business" since Section 2.03.102 of the Code defines "business" as an " entity organized for profit".4 See also, Advisory Opinion 97-04 ("Where the employer is an entity which is not organized for profit, . . . there is no conflict of interest by virtue of the fact that the term 'business' excludes not-for-profit entities.") Although his authorization from the contingency fund was not delegatable to any other person, he did not have to use the subsection 2-disclosure procedure because he did not have a conflict of interest.
          2. New Castle County Code Sec. 2.03.104A - Appearance of Impropriety
          Section 104 A states:
No County employee or County official shall engage in conduct which, while not constituting a violation of Section 2.02.103(A)(1), undermines the public confidence in the impartiality of a governmental body with which the County employee or County official is or has been associated by creating a appearance that the decision or action of the County employee, County official or governmental body are influenced by factors other than the merits.
          The generally accepted procedure used to prevent an appearance of impropriety when an official or employee's private status is implicated with his or her County position is disclosure and recusal.5 An employee or official must reveal the conflict to both the private entity and the appropriate County authority and request that both the entity and the County remove him or her from the activities which cause the appearance of conflict. The recusal must be complete: the County official or employee may not participate in advising or planning for either the governmental or private entity over the matter presented for action by the County. If the official or employee finds that his or her County duties are non delegatable, he or she must utilize the conflict procedure described in Section 2.03.103A(2), recited above.
          In Advisory Opinion 92-02 the Commission previously found that mere position on the board of directors of a non-profit entity which is not regulated by or does not contract with the County does not create, in itself, an appearance of impropriety. Indeed, one of the enunciated purposes of the Code of Ethics, at Section 2.03.101 B, is that public officials and employees "should not be discouraged from maintaining their contact with their community through their occupations and professions". However, where the employee or official's County position figures prominently in the person's status with the non-profit there is a potential for such an appearance to arise. This is particularly true when a private organization seeks regulation, contract, or benefit from the County or in fund raising.
          Where such a potential exists, the Commission has determined that appropriate restrictions must be created to avoid an improper appearance. For example, Advisory Opinion 92-02 held that where a County official was a member of a non profit board, that official was required to disclose his relationship and recuse himself "whenever such official or employee must make a decision or take an action in his or her capacity as a County official or employee which concerns" the nonprofit. Similarly, in Advisory Opinion 97-01 the Commission advised that a County employee who was a member of a non-profit who wanted to assist the agency in planning that he had to abstain from participating in the processing or decision making made by any County department related to the plan. In Advisory Opinion 97-05 the Commission advised an official who was unable to abstain from any work which impacted upon a non profit organization, that she was not permitted to hold office, serve as a member of the board of directors, or be a member or chair of any committee of the agency dealing with the issues the official encountered in her County position. See also Advisory Opinions 97-09, 97-11, 99-04 for similar reasoning.
          However, the Commission, on occasion, has found exception to this rule of recusal. In Advisory Opinion 99-07 a County planner was permitted to review a plan for a club in which he was a member because numerous safeguards existed to prevent the appearance of impropriety: first and foremost, the plan review was largely ministerial since very little discretion was afforded to the planners under the UDC; the plan review was performed by the collective staff who also collectively made comments; all of the planner's correspondence was reviewed by his superior; the planner did not make the final decision; and all other staff involved in the project was advised of the relationship.
          The Commission has ruled in a similar manner in relation to fundraising for a non-profit. Advisory Opinion 96-07 held that a County official or employee may not seek contributions on behalf of a non-profit from persons or businesses regulated by their County department or area of County business over which they have authority. In Advisory Opinion 01-08 the Commission explained that an employee who was a director of a non-profit could participate in fund-raising, public relations, and facility development on behalf of the organization as long as he did not seek to use his County position to influence any applications or matters before the County and he recused himself and abstained from participating in any matter that the non-profit organization had with the County Department in which he was employed. Additionally, he was required to use other safeguards to insure that his County position was not publicly enmeshed with his fund raising duties for the non-profit. Other jurisdictions have reached similar conclusions. The Anne Arundel County Ethics Commission, in Advisory Opinion 96-109, ruled that a Maryland official could participate on a board of a charity as long as the official "avoid[s] any duties involving management or control of the [organization] or where he would be viewed as a responsible party as to its financial relationships . . ." The fundraising effort by the official who is the subject of the instant complaint was in accord with the Commission's prior directives because it was directed to co-equal government authorities and not at entities within the authority of the County official and, since the official did not participate in any duties involving the organization, he could not be viewed as a party responsible for the agency's financial relationships.
          In this case the decision about the amount and source of the funds was made solely by the state officials. Those state officials, not the non-profit, requested that the County assist in transmitting the money. The County official's contingency fund was involved only because County financial employees determined that the unrestricted County fund he controlled was appropriately used for the agreed upon transfer. The County official's status as a board member had no relation to the authorization for the transfer from that fund because such conduct was part the non-delegatable duties of his County position. The inescapable conclusion is that the County official's actions did not violate the Ethics Code provisions because he transferred to the non-profit only that amount of money the state officials authorized.
          Furthermore, even the potential for an appearance of impropriety was prevented in this case because the official did not participate in discussions with the state officials and did not involve himself in any way in the management, control, or planning for the non-profit organization. In effect, he recused himself from any delegatable duties concerning county activity involving the grant to the agency and took the extra precaution of noting on the transmittal letter to the agency that the funds were attributable to a state source.
          3. New Castle County Code Sec. 2.03.104D - Unwarranted Private Advancement
          Since the complaint also implies that the official authorized the grant to the non-profit to enhance his personal political future, Section 104 D must be addressed. That section states:
No County employee or County official shall use such public office to secure unwarranted privileges, private advancement or gain.
          Even though the Commission has not previously analyzed this section of the Code, it does not find it necessary to make an interpretation at this time. The substantiated facts show that in transmitting the grant the official took pains to make clear that neither he nor New Castle County was the true source of the funds. As stated above, he personally wrote the names of the state officials responsible for the benefit to the agency on the transmittal letter. Under these circumstances the complainant's inference is totally unsupported and unreasonable. In addition, the facts also substantiate that the official was successful in his communication: to this day, the non-profit agency credits only the state officials for the grant.
          Pursuant to the reasoning expressed in the findings of the Commission, the complaint is DISMISSED.
Dennis S. Clower, Chairperson
Decision: 6-1, Stephanie McClellan voting against


1New Castle County Code Section 2.03.102 defines "County official" as any person elected or appointed to any County office, board or commission. A "County employee" is defined as any person who receives compensation as an employee of a County Department or County row office.

2 The agency has a 99-year lease with the County which was not negotiated during the official's tenure on the board and which enables it to use adjacent County facilities for parking. As a result of the lease's origin and extended nature it is not relevant to the question before the Commission.

3Two months after the grant was made, the complainant made his written allegation of an ethics violation against the official for directing discretionary County funds to a private agency in which he had an interest as a director. A day after making that complaint, the complainant made a written request to the County administration for an explanation of the grant. A short time thereafter he received a responsee about the source of the grant funds which included a copy of the transmittal letter to the agency with the hand written note attributing the funds to two State officials. The complainant did not revise his complaint and never communicated information about the involvement of State officials and state money to the Ethics Commission until after the Commission undertook an investigation. This Commission has lingering question about the complainant's good faith in making his allegations in light of his failure to amend his complaint to include this obviously relevant information.

4Section 2.03.102 Definitions, in pertinent part:
           The following words, terms and phrases, when used in this Division, shall have the meanings ascribed to them in this Section, except where the context clearly indicates a different meaning:
.    .    .
Business means any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self-employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit.
.    .    .
Business with which he or she is associated means any business in which the person is a director, officer, owner or employee; or a business in which a member of the person's immediate family is a director, officer, owner or has a financial interest.

5 New Castle County Code Section 2.03.103B recites restrictions on representing another's interest before the County. It states in pertinent part:
1. No County employee or County official may represent or other wise assist any private enterprise with respect to any matter before the County Department with which the employee or official is associated by employment or appointment.
2. No County official may represent or otherwise assist any private enterprise with respect to any mater before the County. This prohibition is to be considered personal to the County official and is not, for the purposes of the New Castle County Ethics Code only, deemed to impact other members of a firm, business, or other employer by which the County official is employed.