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Interpretative Opinion 07-08: Conflict of Interest

December 10, 2007
 

Brian K. Flowers
General Counsel
Council of the District of Columbia
1350 Pennsylvania Avenue, N.W., Suite 4
Washington, DC 20004

Re: Conflict of Interest

Dear Mr. Flowers:

This responds to your request for an Interpretative Opinion concerning whether a potential conflict of interest exists with respect to the ownership of shares in a local bank corporation by at least two council members who could vote on a bill that will expand opportunities for such banks to receive District funds.

Specifically, you stated that Bill 17-73, the District Reserved Funds Act of 2007, allows the District government to reserve 1% of its funds for investment or deposit into insured, District financial institutions which have less than $350 million in assets, to allow the District Government to reserve 10% of its funds for investment or deposit into insured, District financial institutions which have less than $550 million in assets. You also indicated that one council member is the Chairman of the committee which reported out the bill and one councilmember who is a member of the same committee, abstained from the vote to report out the bill.

DC Official Code § 1-1106.01(b) (2001 Edition) provides that “[n]o public official shall use his or her official position or office to obtain financial gain for himself or herself, any member of his or her household, or any business with which he or she or any member of his or her household is associated with, other than that compensation provided by law for said public official. This subsection shall not affect a vote by a public official: (1) on any

matter which affects a class of persons (such a class shall include no less than 50 persons) of which such public official is a member if the financial gain to be realized is de minimis…”

D.C. Official Code § 1-1106.01(f) provides that “[n]o member or employee of the Council of the District of Columbia … shall accept an assignment to serve on a committee the jurisdiction of which consist of matters (other than of a de minimis nature) in which he or she or a member of his family or a business with which he or she is associated, has financial interest.”

The federal statute, 18 U.S.C. § 208, further restricts District employees and members of the Council from participating personally and substantially in government matters requiring decision-making and/or advice when, to their knowledge, they have a direct or indirect financial interest in the matter.

As you correctly noted, the factual situation in the current matter is similar to the factual situation in OCF Interpretative Opinion 99-02. The issue in that matter was whether a potential conflict of interest existed for a councilmember who owned 225 shares of AT&T stock while the Council was considering a bill to approve a proposed merger between AT&T and Telecommunications, Inc. (TCI) the parent corporation of TCI, DC, Inc., the limited partner of District Cablevision. OCF concluded that there was no evidence of a potential conflict of interest because there was no predictable effect on the holding of AT&T stock.

[A]n employee’s participation is personal and substantial when he or she directly takes part in the matter and his or her involvement is “of significance to the matter.” Moreover, an employee is prohibited from participating in an official capacity in a matter in which he or she has a financial interest “if the particular matter will have a direct and predictable effect on the interest.” The test for a direct financial interest is whether there is a “close causal link between any decision or action to be taken in the matter and any expected effect of the matter on financial interest.” A predictable effect is found where there is real, rather than speculative, possibility that the matter will affect the financial interest.

After a review of Bill 17-73, and the facts you provided, it does not appear that the bill will have a predictable effect upon the financial interest of a councilmember who owns stock in a bank that may or may not seek or accept deposits from the District Government. Therefore, based upon the information you have provided it is the opinion of the Office of Campaign Finance that no apparent disqualifying conflict of interest exists with regard to the ownership of shares in a local bank corporation by council members who may vote on a bill expanding opportunities for such banks to receive District funds.

Nonetheless, the council members are reminded that if they are presented with a situation as council members in which they are required to take an action or make a decision that would affect directly or indirectly their financial interest or the interest of any member of their household, they should follow the recusal procedures outlined in DC Official Code §1-1106.01(g) or remove or disqualify themselves from official action.

The foregoing is an Interpretative Opinion of the Director of the Office of Campaign Finance. Pursuant to D.C. Official Code §1-1103.05, you are entitled to request an Advisory Opinion from the Board of Elections and Ethics on this transaction or activity.

Should you have any additional questions, please contact William O. SanFord, Senior Staff Attorney at (202) 671-0550.

Sincerely,


Cecily E. Collier-Montgomery
Director


cc: Kathy S. Williams
General Counsel

William O. SanFord
Senior Staff Attorney