Loading...
HomeMy WebLinkAboutMooreHarold Affidavit Disclosure 1971 Aead by Councilman Moore 7/19/71 July 19, 1971 My Attorneys, and specifically LESTER N. TURNER of SIN-AS, DRAMIS, BRAKE & TURNER, have filed a legal response to the opinions of the City Attorneys which clearly demonstrates that there is no legal basis requiring my resignation from the City Council or from my private employer, NATIONAL CABLE COMPANY. Among other things, the opinion points out that the Michigan Legislature has recognized that elected officials are frequently confronted with a conflict of interest question between their public office and their private employment, and realized that rules and regulations had to be adopted to govern these situations. Thus in 1968 it passed the Conflict of Interest Law,,which states in language that any layman can understand, that if there is a conflict of interest it is corrected and the public is protected by the public servant doing two things: First--Make a full disclosure of the facts ; Second-- Refrain from participating in the official proceedings. This I have done even before the Statute was enacted and will continue to do so. The significant point is that the law under no circum- stances requires the elected official to resign his public office or his private employment. ` The legal opinion, if you wish to call it that, of the City Attorneys, is in direct conflict with the latest statute, passed in 1968, dealing with Conflict of Interest. Therefore, I shall not resign from my position on the City Council nor shall I resign from my position of private employment, but I shall continue to serve in the best interest of the people of the City of Lansing. I shall continue the practice of not participating in the official and unofficial matters concerning C.A.T.V and I shall make additional disclosures if the fact and circumstances change. f, SINAS. DRAb1IS. BRAKE AND TURNER, P. C. ATTORNEYS AT LAW 515 NORTH CAPITOL AVE^WIJE LANSING.-42CHIGA2V 48 14 AREA CODE 517 487-3748 TROMA9 G. SINA9 Josx A.L.HDGHEB IIII I C. D.A.I. 19.1-I.., RICHARD J. BRAHE LESTER N.TDRNER BARRY D.BOUGHTON ICE NNETH G.MCINTYRE LEGAL OPINION Re: Alleged Conflict of Interest HAROLD A. MOORE A recent article in the Iowa Law Review points out the opposing considerations in the conflict of interest field concerning public servants . "As government at all levels continues to grow and play a more important role in the economy of the Country and private life of the individual citizen, concern for honesty on the part of elected govern- ment officials becomes increasingly important. This concern for the integrity of elected public officials is manifested by various codes and standards of con- duct which have been adopted by state legislatures " , including Michigan. "In public life there is a growing need for qualified man and women, especially those who are peculiarly x qualified for �;� w' q public service because of their commer- c al or professional experience. But because the pay LO s ale for most elected public officials on the state aid local level is inadequate to attract many full-time cD ^`fiemployees, these persons may be unwilling to divest t emselves of their private business and professional i terests in order to enter public life. A strict rule -J prohibiting persons from holding public office while retaining these private interests would be unacceptable since it would deter those qualified people from enter- ing public service. " These conflicting principles were undoubt, considered by the Michigan Legislature when it passed Act 317, P.A. 1968, which became effective September 1, 1968 (M.C.L.A. 15 .321 et seq; M.S.A. 4.1700 (51) et seq) . Section 6 of Act 317 provides that Act 317 shall supersede all charter provisions and all other acts dealing with conflicts of interest in public contracts. Section 6 further provides that it shall constitute the sole law in the state on the subject. The pertinent sections of this Act are Section 2 (2) (c) and Section 3 . Section 2 (2) (c) provides: "No public servant shall directly or indirectly solicit any contract between the public entity of which lie is an officer or employee and. . . (c) any private corporation in which he is a stockholder owning more than 1% of the total outstanding stock of any class where such stock is not listed on a stock exchange or stock with a present total value in excess of $25, 000.00 where such stock is listed on a stock exchange or of which he is a director, officer or employee; . . .nor shall he take any part in the negotiations for such a contract or the negotiation thereof or amendment thereto or in the approval thereof; nor shall he represent either party in the transaction; except as provided in Section 3 . " Section 3 provides : "The provisions of Section 2 hereof shall apply to all public servants who are paid for working more than an average of 25 hours per week for a public entity, but such provisions shall not apply to any other public servant: (1) if he shall promptly disclose his pecuniary interest in the contract to the official body which has power to approve the same, which disclosure shall be made a matter of record in its official proceedings; and (2) if the -2- contract is approved by a vote of 2/3 of tha full membership of such approving body without the vote of a member thereof, if any, making such disclosure. " The state has therefore established those facts which cause a conflict of interest. Appreciating that these things are unavoidable in our expanding economy, they have recognized that they will never get qualified men to take part time jobs if they have to resign from the job which supports them and their family; therefore, resignation from the public job or the private job is not the answer. The legislature has decreed that the conflict is corrected and the public is protected if the public servant makes a disclosure and refrains from participating in the official proceedings. Several years ago, HAROLD A. MOORE became the local manager for NATIONAL CABLE CO. , a CATV Company which is installing a C.A.T.V. System in East Lansing. HAROLD A. MOORE is a salaried employee, not a policy making executive and he owns no stock in NATIONAL CABLE CO. The majority of NATIONAL CABLE's stock is owned by L.V.O. CABLE and L.V.O. CABLE is owned by L.V.O. HAROLD A. MOORE owns no stock in L.V.O. CABLE and only 500 shares of more than 5 million shares of L.V.O. , common stock. HAROLD A. MOORE 's 500 shares of stock is presently worth approx- imately $2,700 Dollars on the stock market. L.V.O. has applied for a C.A.T.V. franchise in Lansing. -3- In comparing those facts with Section 2 (2) (k-. 317, HAROLD A. MOORE does not have a conflict under the sto, holding portion since his interest is substantially less than $25, 000. 00 0£ a stock listed on a stock exchange. The only question is whether HAROLD A. MOORE has a conflict under that portion of 2 (2) (c) which covers employees of a corporation dealing with the City. HAROLD A. MOORE is employed by NATIONAL CABLE COMPANY and it is L.V.O. that has applied for the Lansing C.A.T.V. franchise. We have advised HAROLD A. MOORE that tech- nically that may not create a conflict under the Statute. How- ever, HAROLD A MOORE filed a disclosure on several occasions, the last bearing the date of June 7, 1971, when he learned that L.V.O. was filing an application for the Lansing franchise. At the times he filed his various disclosures, including the one dated June 7, 1971, he advised the City Council that he would not participate in C.A.T.V. matters and he has not. According to Section 3 of Act 317, HAROLD A. MOORE has done those things necessary to protect the public interest. He has filed a disclosure and has abstained from participating in C.A.T.V. matters. He even did both long before L.V.O. filed an application for the franchise. He has gone beyond the requirements of Act 317 because he has faithfully served the citizens of Lansing for many years and he did not want to be placed in a position where his integrity could be questioned. (by fair minded people) . -4- We have read the opinion written by ALBER'i on June 28, 1971, and officially adopted by the City Atto. when the two opinions were filed with the City Clerk Thursday, July 15 , 1971. Obviously, we do not agree with those opinions. A fair reading of those opinions show that if they are followed to a logical conclusion very few qualified citizens could serve their community in a part time position. It is apparent why the City Attorney did not attach a copy of the controlling Statute to his opinion because a cursory reading of that Statute would show that his opinion was ill founded. I am attaching a copy of the entire Statute to this paper and request that each of you read it in light of HAROLD A. MOORE' s position. Le t r N. Turner of ipas, Dramis, Brake & Turner, P.C. Attorneys for Harold A. Moore 515 North Capitol Avenue Lansing, Michigan 48914 487-3743 -5- 15.321 COMPILED LAWS a. CONDUCT OF PUBLIC SERVANTS—CONTR,_ - - - - ENTITIES (NEWT - . • ' - : -Caption editorially supplied -- library References 1 Counties ECorpor). - C.T.S.Counties§ I92. Municipal Corporations(`,.+'231(1-4). C.J.S. Municipal Corporations § i - Officers pile. seq. - States C;=95. C.J.S. Officers §i 110-118. . t - C.J.S.States §113. - t P.A.1968, No. 317, Elf. Sept. 1 AN ACT relating to the conduct of public servants in respect to eon- . _ tracts with public entities; to provide penalties forthe violation of this i - act; to repeal certain acts and parts of acts; and to validatecertain _ contracts. . . .. _ _ ... The People of the State of Michigan enact 15321 Definitions - See 1. -As used in this act. - - . (a) "Public servant" includes all persons serving any public entity, except mein- ( - - hers of the legislature and state officers who are within the provisions of see- i tion 14 of article 4 of the state constitution as implemented by legislative act_ _ . (b) 'Public entity" means the state including all agencies thereof, any public body corporate within the state, including all agencies thereof, or any non-incorpo- rated public body within the state of whatever nature, including all agencies a - thereof. .. . 1 - - - P.A.1968, No. 317, § 1, Eff. Sept. 1. Notes of Decisions - i 1. Conflict of interest that, from consideration of Public policy. it H - - Under Michigan common law, same Per. 1s improper for one person to retain both son may not occupy two public offices at Offices. Op.Atty.Gen. 1969, No. 4671. the same time if one office Is subordinate Same Individual may simultaneously serve to the other and subject in some degree to as a member of board of education in one Its supervisory power or It nature of duties school district and as a teacher in another and functions of the two offices are such district. OD.Atty.Gen-1969, No. 4598. s 15322 Public servant; limitations on conduct r _ See 2. (1) No public servant shall be a party, directly or indirectly, to any contract between himself and the public entity of which he is an officer or em- ployee, except as provided in section 3.1 .,a (2) 0 ubli ery nt 11 directly or indirectly solicit an contract between th ubhc entity of or emp ogee an n imse any firm (meaning a co-Partnership or other umncor association) of which be is a partner, member or employee; {c) any nri cate cornorati in 'r6 h is more than 1% of the total outstanding stock at. any class 'y where such stock is not listed on a stock exchange or stock with a resent total -e - 1 e in ex cc co- k i li�e�f nPa stock ex- hnn or o1 w ich he is a director, officer or employee; or {d) any trust o w i be is a beneficiary or trustee; nor shall he t^i:e Inv Hart in the necotia- ohs for such a con tfon thereof or amendment thereto or I the approval thereof• nor shall he re men rt in the transaction e•�'�' 'ySfat7aciTia">;ac�'ean 3 P.A.1968,No. 317, §2, ELL Sept.1. - - :. i Section 35.923. $6 j (_ L - M 4 COMPILED LAYS ANNOTATED 15.32COMPILED r. 15323 Public servant; application of act, exception - Sea 3. The provisions of sect to ^ r shall appi, to all nts o are aid or ti an an arernze of 25 hours per week ran+hlic - - entity tit such provisions shall not anoly in anv o e• nu; cc servant: (1) if he s a rom 111S teres in the contract to rhe_o�tficial body whit as power to approve the same whit i dcsc owre shaft he made a ma ter _ rd in its of fiCialprocecc in s; nne '? if the contract Is a roved by a vo e - - - oL of the u cLlu>m"n o such a roan^ o v wit lout the vote of a mem- - t am mak ^ such disclosure. P.A.1968,No.317, § 3,Eft. Sept.1. :;'..-: f - ISection 15.322' 15324 Public servant; nonapplicabillty of act - Ste. 4. The prohibitions of section 2 of this act shall not apply to (a) Contracts between public entities; - (b) Contracts awarded to the Iowest qualified bidder, other than a public sere- - - sat, upon receipt of sealed bids pursuant to a published notice therefor provided each notice does not bar, except as authorized by law, any qualified person, firm, corporation or trust from bidding. This subsection shall not apply to amend- _ ments or renegotiations of a contract nor to additional payments thereunder which were not authorized by the contract at the time of award: and \ - (c) Contracts for public utility services where the rates therefor are regulated - -by the state or federal government a - -P.A-1963,No. 317, §4,EfI. Sept 1. F. a Section 15.322. - 15.325 Purpose of act; effects of contracts, negotiable and nonnegotiable'Instru- ments under this act ! - See. 5. (1) This act is aimed to prevent public servants from engaging is ter- (� - fain activities and is not intended to penalize innocent persons. Therefore, no contract shall be absolutely void by reason of this act Contracts involving pro- - hibited activities on the part of public servants shall be voidable only by decree ? of a-court of proper jurisdiction In an action by the public entity, which is a par- ty thereto, as to any person, firm, corporation or trust that entered into the con- • tract or took any assignment thereof, with actual knowledge of the prohibited ac- - t tivity. In the ease of the corporation, the actual knowledge must be that of a per [� eon or body finally approving the contract for the corporation. All actions to avoid any contract hereunder shall be brought within 1 year after discovery of - circumstances suggesting a violation of this act. In order to meet the ends of justice any such decree shall provide for the reimbursement of any person, firm, corporation or trust for the reasonable value of all moneys, goods, materials, la- _ - bor or services furnished under the contract, to the extent that the public entity has benefited thereby. This provision shall not prohibit the parties from arriving at an amicable settlement (2) Negotiable and nonnegotiable bonds, notes or evidences of indebtedness,' ! whether heretofore oK hereafter Issued, In the hands of purchasers for value, shall t not be void or voidable by reason of this act or of any previous statute, charter ` or rule of law. - - - - P_&1963,No.317,§5,Eft.Sept 1. - '• i 15.326 Enforceability of contracts, notwithstanding conflict of Interest Sea 6. If any public entity has, prior to the effective date of this act, entered' Into any contract under which moneys, goods, materials, labor or services have - been actually received by the public entity, which was void or voidable under any act, charter or rule of law because of a conflict of interest on the Part of a public - t 37 f? 15.326 COMPILED LA«'S ANNOTATED ' servant at the time of the execution thereof, such contract shall be 1, forceable notrvithstanding such conflict of interest, by any party thereto o. than such public servant i P.A1968,No.317, §6,EfP. Sept 1. 71 f . Notes of Decisions .. . tt 7. Conflict of interest in one school district and as a teacher Same individual may simultaneously another district O➢A[ty.Gen.1969, S serve as a member of board of education 4598. t _ - 15.327 Penalty; misdemeanor 1 Sec.'Z An ". . .. I S Person violating the provisions of this act is guilty 'of a misd meanor. i P.A.1968, No. 317, § 7, Eff. Sept 1. i Cross References j Misdemeanor, see 11 750.8, 750.9. ' - Library References ,j Officers a121. - C.J.S. Officers 11 133, 147.. 15.328 Conflict of Interest; application of act. - See S. hi Irsede all local Pli _ ...I t,er into - - rated in Iecislative acts or loot *��•�.� t —'�-- ^' tch relate to tiro matter o confhc t .. �f mwrest It is t e intention that this act siml constttn a to so a aw In t . -stlte an shall i n res ect to conflicts of interest to a I. to u he contracts, im- ublic se rants o ur t an u i rs o + e an s ar`_ e O tmr 7 P Act u co i t cc ion o o 1 0 of the Public Acts of 1851, as amended, being section 40.30 of th, .. Compiled Lans of 1W 7 P.A.1968,No. 317, §8,Eft. Sept L t � .15.329 Repealer Sec. 9. The following acts and parts of nets�are't'epealed: . Year Public Section Of act Act A'o. "numbers - Compiled Lam ` - sections (1048) 1895:' 3 6 of chapter 5" 1895 215 10 of chapter 8 65'6 1931 32S 1 - 88.26 - -1955 328 - ._ .. 750.122 1966 317 .. - 9B8 P.A.1968,No.317, §_9,Eft, Sept,1 15.101 to 15.172, 15330 Effective data r - - See. 10. This act shall take effect September 1,1968 - P.A.1963, §.10, Eff. Sept 1. - - - Im- mediate eff ct'and became inns n*Ithout take the Sovernor'a approval, on July 3, 1968. '- CUMMINs, BUTLER & THORSURN ATTORNEYS AND COUNSELORS C HAR LES F.CUM MINS 301 CAPITOL SAVINGS AND LOAN BUILDING LESLIE S.BUTLER LANSING, MICHIGAN 48933 A.M.CUMMINS ALBERT J.THORBURN TELEPHONE 487-3613 AREA 517 (I888-1946) HARRY B.CUMMINS J.000GLAS COOK June 28 , 1971 Mr. Oskar M. Hornbach, City Attorney City of Lansing City Hall Lansing, Michigan 48933 Re: Councilman Harold A. Moore - Conflicts of Interest Dear Mr. Hornbach: You have requested my opinion as to whether Mr. Harold A. Moore as a member of the Lansing City Council and a management employee of National Cable Company , a principally owned subsidiary of L.V.O. Cable, Inc. , would have a conflict of interest inasmuch as of June 10 , 1971, L.V.O. Cable, Inc. applied to the City of Lan- sing for a franchise under the Lansing CATV Code to own and operate a CATV system in the City of Lansing. Such franchises are awarded by the City Council and the construction, installation and operation of a CATV System is subject to regulation by the City of Lansing and its departments as provided in the Lansing CATV Code. You have provided me with a copy of an affidavit of Mr. Moore, dated June 7, 1971, in which he sets out certain facts relating to National Cable Company, L.V.O. Cable, Inc. , and L.V.O. Corporation and states his opinion that there is no conflict of interest in his serving both National Cable Company as an employee and the City of Lansing as a Councilman. The fundamental questions , however, involve his relationship to L.V.O. Cable , Inc. , as a franchisee of the City of Lansing. L.V.O. Corporation owns 75% of the common stock of L.V.O. Cable, Inc. , which in turn owns 800 of the outstanding stock of National Cable Company, which facts are set forth in Mr. Moore's affidavit. Mr. Moore 's affidavit also indicates he owns an unspecified amount of the stock of L.V.O. Corporation. Mr. Moore does not indicate the extent to which, if any, employees of National Cable Company may par- ticipate in the employee benefits offered by L.V.O. Cable, Inc. It should be noted that L.V.O. Cable, Inc. , in 1971 has adopted both a Qualified Stock Option Plan and an Employees Stock Purchase Plan for officers and employees. It is unknown whether Mr. Moore is eligible or ineligible to qualify under or to participate in either of such plans . Mr. Oskar M. Hornbach, City Attorney Page 2 June 28 , 1971 A number of the officers and/or directors are common to L.V.O. Corporation, L.V.O. Cable, Inc. , and National Cable Company as noted in Mr. Moore's affidavit. Although Mr. Moore's affidavit does not state the extent of such interlocking it appears from other information available that a majority of the officers and directors of the sub- sidiary organizations are officers or directors of the parent L.V.O. Corporation. Mr. Moore's affidavit is deficient in that it does not set out the precise duties which he performs for National Cable Company and which may be expected to be performed by him for L.V.O. Cable, Inc. Certain published material of L.V.O. Cable, Inc. appears to indicate that it, not National Cable Company, is providing CATV service to the married student housing of Michigan State University at East Lansing which would place Mr. Moore as an employee in fact of L.V.O. Cable, Inc. Moreover, in its franchise application to the City of Lansing, L.V.O. Cable, Inc. describes the lease by National Cable Company of the site used for its antenna tower and headend equipment as "our" lease and further indicates such antenna tower and headend equipment to be that of L.V.O. Cable, Inc. In addition the franchise applica- tion of L.V.O. Cable, Inc. states in part: "All of the outstanding stock of National Cable Company is owned by L.V.O. Cable, Inc. (80%) and J. Harry Hen- derson (20%) of Alexandria, Louisiana. Mr. Henderson has a right, under the terms of our agreement in East Lansing, to participate in ownership (up to 20%) in other franchises in the East Lansing or Lansing area. It is not known at this time whether Mr. Henderson will participate in the Lansing system, however, if such participation is desired on the part of Mr. Henderson, L.V.O. Cable, Inc. porposes to form either a new company with 20% ownership by Mr. Henderson for operation of the Lansing franchise or will participate in t4he Lansing-franchise with National Cable Company . " Mr. Moore 's affidavit does not constitute a full and complete disclosure as to his status vis-a-vis L.V.O. Cable, Inc. , except that National Cable Company, his direct employer of record, is a principally owned subsidiary of L.V.O. Cable, Inc. with interlocking officers and directors. Further, such affidavit does not indicate Mr. Moore's status or participation,as an employee or otherwise, in any CATV system estab- lished by L.V.O. Cable, Inc./National Cable Company in the City of Lansing. Prior to April, 1970 , the name of L.V.O. Cable, Inc. was Gen Co E , Inc. , with the same ownership of National Cable Company as Mr. Moore's employer. Mr. Oskar M. Hornbach, City Attorney Page 4 June 28, 1971 ing to the regulation of CATV facilities and services by officials or employees of the City of Lansing. The conduct of a person occupying a position of public trust should not only be free from the fact of impropriety but as well from the appearance of impropriety . Mr. Moore as a member of the Lansing City Council should avoid the giving of ground for any reasonable suspicion that he is or could be utilizing the power or prestige of his office for the personal benefit or gain either of himself or of any private business venture by which he is employed. No public official or officer should enter into any busi- ness relation which in the normal course of events might reasonably be expected to bring his personal interest into conflict with the impartial performance of his official duties . In connection herewith, I have reviewed the provisions of Act 318, P.A. 1968 [Stat. Ann. 1969 Revised Vol. , §4.1700 (21) et seq] and Act 317, P.A. 1968 [Stat. Ann. 1969 Revised Vol. , §4 .1700 (51) et seq] as evidencing a legislative standard for determining conflict of interest. It is my opinion that the application of L.V.O. Cable, Inc. to the City of Lansing for a CATV franchise has created a situation wherein Mr. Harold A. Moore as a member of the Lansing City Council and as a management employee of L.V.O. Cable, Inc./National Cable Company has a conflict of interest between his public position and his private employ- ment. It is further my opinion that the single fact of abstaining from voting on CATV matters formally presented to the City Council will not remove such conflict of interest. The grant or denial of a CATV franchise and the continuing regulation by the Lansing City Council of CATV activities , services and facilities in the nature of public utility regulation are of such character and have such direct and con- tinuing economic impact upon the success or failure of a CATV enter- prise that no Councilman should be retained or employed by any CATV company serving or seeking to serve within the City of Lansing subject to the jurisdiction and control of the City Council during the time he is a member of the Lansing City Council. Any public officer or offi- cial occupying a position of regulation over the business or services of a private corporation employed or retained by such private business is in an immediate and continuing conflict of interest which can be resolved only by an election to retain either public office or private employment. Such conflict of interest cannot be resolved by merely refraining from carrying out the duties required by the public office which it is his obligation to fulfill. Very truly yours , CUMMI , BU LER THORBURN Albert Thorburn AJT:bd