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Interpretative Opinion 01-01: Conflict of Interest

January 22, 2001

The Honorable Adrian Fenty
Councilmember – Ward 4
4712-17th Street, NW
Washington, DC  20011

Re: Potential Conflict of Interest

Dear Councilmember Fenty:

This is in response to your request for an opinion concerning three (3) distinct issues.  First, you ask whether it is necessary for you to recuse yourself from matters involving your wife’s employer, KPMG, LLC, a District of Columbia contractor, and in light of the 3,000 shares of stock she holds in the firm.  Second, you inquire concerning the appropriateness of your remaining a trustee of the Jos-Arz Academy, a public charter school in the District of Columbia, which receives funding from the District of Columbia.  Third, you ask whether it is appropriate for you to display art from a local art gallery in your Council office.  You state that the art would bear only the name of the gallery, and not pricing information.

  DC Code § 1-1461(b) 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 a member of his or her household is associated, 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 that 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 . . .”.

  DC Code § 1-1461( c) states, in pertinent part, “[n]o person shall offer or give to a public official . . . and no public official shall solicit or receive anything of value, including a gift . . . loan gratuity . . . where it could be reasonably inferred that the thing of value would influence the public official in the discharge of his or her duties . . .”.

  DC Code § 1-1461(f) states, “[n]o member or employee of the Council of the District of Columbia . . . shall accept assignment to serve on a committee the jurisdiction of which consists of matters (other than of a de minimis nature) in which he or she or a member of his or her family or a business with which he or she is associated, has a financial interest.”

  DC Code § 1-1461(g) provides, “[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 an official action on a matter as to which he or she has a conflict situation created by a personal, family, or client interest, shall:  (1) [p]repare a written statement describing the matter requiring action or decision, and the nature of his or her potential conflict of interest . . .; (2) [c]ause copies of such statement to be delivered to the Board of Elections and Ethics; (3) [i]f he or she is a member of the Council . . ., deliver a copy of such statement to the Chairman thereof . . .”.

18 U.S.C. §208 further restricts District employees 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 (emphasis added).  This federal statute has had longstanding applicability to officers and employees, including members of the Council, of the District of Columbia.  Pursuant to its implementing regulations at 5 CFR § 2640.103, an 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.”  Further, 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 the financial interest.”  A predictable effect is found where there is a real, rather than a speculative, possibility that the matter will affect the financial interest.  Further, this law imputes to the employee the financial interests of any organization with which the employee serves as an officer, director, trustee or general partner (emphasis added).

In the first instance, notwithstanding your wife’s employment with KPMG, a District Government contractor, you would be required to recuse yourself from participating in official matters relative to the firm only where there is a direct and predictable effect on your spouse’s financial interest.  Such determinations would be made by you on a case-by-case basis.  Therefore, as long as your official action results in no direct or indirect financial benefit to yourself or to your spouse, you would not be required to follow the recusal process.

Secondly, your participation as a Trustee on the Board of Directors of the Jos-Arz Academy would only present an issue where you would be required to take an official action relative to the school which would inure to your personal financial benefit, or to the benefit of the school pursuant to 18 U.S.C. § 208.  In such case, you would be required to recuse yourself from the matter, and follow the foregoing recusal procedures as outlined in DC Code § 1-1461(g).

Finally, the DC Campaign Finance Reform and Conflict of Interest Act, as amended, does not govern the display of art in official office space of a Councilmember.  However, you should be aware that DC Code § 1-1461 (c ) prohibits the acceptance of a gift or loan where there could be an inference that such was given to influence an official action.