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Interpretative Opinion 96-10: Conflict of Interest

September 30, 1996

Charlotte Brookins-Hudson, General Counsel
Office of the General Counsel
Council of the District of Columbia
1350 Pennsylvania Avenue, NW
Washington, DC  20004

Re: Conflict of Interest

Dear Ms. Brookins-Hudson:

This responds to your request for an opinion concerning whether Councilmember John Ray’s [official] actions relative to Bill 11-158, the “Telecommunications Competition Act of 1996", more specifically, his favorable vote on June 4, 1996, constituted a conflict of interest.  You state that on May 28, 1996, Councilmember Ray became a member of the Board of Directors of First Union National Bank (First Union) which is purported to have a fiduciary as well as a financial relationship with Bell Atlantic - DC (Bell Atlantic).  You further state that Councilmember Ray informed you that he was unaware of any relationship between First Union and Bell Atlantic when Bill 11-128 was under consideration.  Additionally, you inquire as to the applicability of the exemption in DC Code § 1-1461(b)(1) concerning a vote by a public official on a matter affecting a class of at least 50 persons, where the public official is a member of such class, and where the financial gain to be realized is de minimus.

  DC Code § 1-1461(b) states 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.”  DC Code § 1-1461(i)(3) defines “[b]usiness with which he or she is associated” to mean “any business of which the person or member of his or her household is a director, officer, . . .”.

Further, District Personnel Regulations at 18 DPM §1800.3 provide that “[n]o employee of the District government shall engage in outside employment or private business activity or have any direct or indirect financial interest that conflicts or would appear to conflict with the fair, impartial, and objective performance of officially  assigned duties and responsibilities.”

In the instant case, Councilmember Ray introduced Bill 11-258 on May 16, 1996, affecting both residential and business consumers of telecommunications services in the District of Columbia, and providers of such services.  Notwithstanding the legislative intent of the Bill or its impact on Bell Atlantic, concurrent with the passage of this Bill, Mr. Ray became a member of the Board of Directors of First Union, which has, according to Bell Atlantic, a fiduciary and financial relationship with Bell Atlantic.

We concur that the nature and extent of the relationship between First Union and Bell Atlantic is unclear from the letter of Bell Atlantic’s General Counsel; and that Mr. Ray’s knowledge of this relationship is speculative at best.  However, as a practical matter, prospective Board members are generally aware when their memberships are imminent; and such members are generally authorized to exercise oversight and control over certain matters, including those of a fiduciary nature.  While Councilmember Ray’s relationship with First Union presents no direct financial gain, it could be argued that an indirect financial gain exists by virtue of his relationship with First Union, thereby creating an appearance of a conflict of interest.  Based on the foregoing, we conclude, in retrospect, that a prohibited appearance of a conflict of interest may have existed as a result of Mr. Ray’s participation in deliberations and in other official acts relative to Bill 11-258.

With respect to the applicability of DC Code § 1-1461(b)(1), we construe this exemption to apply to a vote by a public official  who is a member of a class of at least 50 persons on a matter affecting that class, where there are no intervening circumstances to affect his or her vote.  Here, Councilmember Ray is clearly a member of a class of not less than 50 persons, i.e., a resident of the District of Columbia and a consumer of telecommunications services provided solely by Bell Atlantic at this time in the District.

However, since we have no particulars regarding Mr. Ray’s services to First Union nor any remuneration accruing to him for such services as might relate specifically to Bell Atlantic, we are unable to determine whether the financial gain, if any, would be de minimus.  Nonetheless, Mr. Ray’s membership on the Board of Directors of First Union, a bank with a fiduciary relationship to Bell Atlantic, became effective during Council deliberations concerning Bell Atlantic’s activities in the District of Columbia.  Therefore, in this scenario, it is our view that the exemption in DC Code § 1-1461(b)(1) would not be applicable to Mr. Ray as a result of an intervening circumstance, i.e., the Councilmember’s membership on the Board of First Union.