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Interpretative Opinion 07-05: Conflict of Interest

March 02, 2007
 

Benjamin M. Soto, Esq.
6326 16th Street, N.W.
Washington, D.C. 20011

Dear Mr. Soto:

Thank you for your letter of March 1, 2007 wherein you request a legal opinion regarding your proposed appointment to the Board of Directors of the Washington Sports and Entertainment Commission (WSEC) and a conflict therewith, if any, pertaining to a personal business transaction involving the owners of the Washington National franchise of Major League Baseball. Frankly, you wish “to ascertain whether [your] recusal from votes will eliminate any potential conflict or interest or appearance of any conflict.” Cecily Collier-Montgomery, the Director of the Office of Campaign Finance (OCF), advised me to designate your request as one for an interpretative opinion, pursuant to 3 D.C.M.R. §3305 (1998, as amended), so that you may have legal right of review, if necessary, by the D.C. Board of Elections and Ethics (Board).

Specifically, you stated that “B. Doyle Mitchell, Jr., an owner of the Washington National’s, is sole member of a Limited Liability Company that controls his Class A Membership Interest in the company that owns the Washington National’s Major League Baseball franchise[; and, that] Mr. Mitchell acquired his ownership interest by providing a capital contribution to the company that acquired the franchise.” You further stated that Mr. Mitchell secured $200,000 from a limited liability company, of which you are a member, as a part of the required funds for the “capital contribution.”

Based upon your representation, this limited liability company “controls [your] investment interest and will receive 33.3% of any distribution of funds made by the Washington National’s to Mr. Mitchell” due to his interest “in the company that owns the franchise.”

You also represented that you “have no direct or controlling ownership interest or contact with the Washington Nationals franchise[; and that you] do not have any voting rights whatsoever with respect to any matters pertaining to the team or its operations.”

D.C. Official Code §1-1106.01(b) (2001 Edition) provides, in part, 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.”

D.C. Official Code §1-1106.01(g) provides a process of recusal, by disclosure and abstention, for “[a]ny public official who, in the discharge of his or her official duties, would be required to take an action or make a decision that would affect directly or indirectly his or her financial interests or those of a member of his or her household, or a business with which he or she is associated, or must take any official action on a matter as to which he or she has a conflict situation created by a personal, family, or client interest.”

Whereupon, the public official must:

1. Prepare a written statement which describes the matter requiring action or decision, and the nature of the potential conflict of interest with respect to the action or decision; and,

2. Deliver copies of the statement to the Board and to his or her immediate superior.

See Id.

Then, the public official’s superior must assign the matter to another employee who does not have a potential conflict of interest. Id.

Notwithstanding that you do not have any direct or controlling interest in the franchise team and that you do not have any voting rights therein, it is apparent that you indirectly benefit from financial actions by the District of Columbia government with regard to the Washington Nationals. Because of the investment interest of the $200,000 contribution from the limited liability company, of which you are a member, and the expected receipt of 33.3% of any distribution from Mr. Mitchell’s interest, you may benefit or be adversely affected by certain WSEC actions.

Therefore, if you are appointed to WSEC, a conflict situation will be presented in each instance in which you would be required to take action involving the franchise. So, you would be required to follow the procedures for recusal or abstention, as outlined in D.C. Official Code §1-1106.01(g) on every occasion in which you are so confronted.

However, you pointed out in your request that, if appointed, to the WSEC board, you would “recuse [yourself] from any matters coming before the Board of WSEC that directly impact the Washington Nationals franchise.” If you were to expand that statement to also include “indirectly”, and in light of your disclosure of the affected interest, it would appear that you are taking the best course of action. Moreover, you are advised to follow the procedures for recusal or abstention, as outlined in D.C. Official Code §1-1106.01(g), for each franchise matter which you may confront.

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 on this transaction or activity. Should you have any additional questions, please contact me on 202/671-0554.