Advisory Opinion No. 2017-45 Rhode Island Ethics Commission Advisory Opinion No. 2017-45 Approved: October 17, 2017 Re: Denise D. Sierra QUESTION PRESENTED: The Petitioner, a member of the Woonsocket City Council, a municipal elected position, requests an advisory opinion regarding the application of the Code of Ethics to her participation in matters before the City Council that involve or financially impact her former employer. RESPONSE: It is the opinion of the Rhode Island Ethics Commission that the Petitioner, a member of the Woonsocket City Council, a municipal elected position, is not required by the Code of Ethics to recuse from City Council matters that involve or financially impact her former employer, provided that there is no specific future business relationship anticipated. The Petitioner has been a member of the Woonsocket City Council (“City Council”) since November 2016. She represents that in August 2016, prior to her election, the City Council issued a Request for Proposals (“RFP”) for the sale of the Woonsocket Middle School (“School”) located at 375 Park Place. The Petitioner states that only two investors responded to the RFP. She further represents that in February 2017, the City Council voted to approve the award of the RFP to one of the investors, The Tai-O Group/Unisource (“The Tai-O Group”), subject to further negotiations and final approval of the sale by the City Council. The Petitioner states that she has a long-term friendship with Mr. Louis Yip (“Mr. Yip”), the Chairman and CEO of The Tai-O Group, whom she met in the mid-1990s when he and his partners hired the Petitioner as a General Manager for one of their restaurants. The Petitioner represents that she worked for Mr. Yip for three years but they remained friends thereafter. The Petitioner states that in late 2015 and early 2016 she persuaded Mr. Yip, whose company invests in real estate, to visit several sites in Woonsocket, including the School, for potential investment consideration. During that time, and prior to her election to the City Council, she was discussing with Mr. Yip the possibility of her opening a restaurant in one of his many commercial properties, including the School, if he was awarded the RFP. Ultimately, the Petitioner decided not to engage in business transactions with The Tai-O Group or Mr. Yip and ceased such discussions. The Petitioner states that none of her family members currently has any business relationship with The Tai-O Group and that neither she nor any of her family members is expected to financially benefit from the sale of the School to The Tai-O Group. The Petitioner represents that she did not participate in the creation of the RFP or in any of the City Council’s discussions or decision-making relative to the RFP and the selection of The Tai-O Group. However, given that she has neither a current nor anticipated future business relationship with Mr. Yip, The Tai-O Group or its subsidiaries, she is now seeking the guidance of the Ethics Commission regarding whether the Code of Ethics prohibits her from participating in City Council’s discussions and decision-making relative to the sale of the School. Under the Code of Ethics, a public official may not participate in any matter in which she has an interest, financial or otherwise, that is in substantial conflict with the proper discharge of her duties or employment in the public interest. R.I. Gen. Laws § 36-14-5(a). A substantial conflict of interest exists if an official has reason to believe or expect that she, any person within her family, a business associate or an employer will derive a direct monetary gain or suffer a direct monetary loss by reason of her official activity. Section 36-14-7(a). The Code also prohibits a public official from using her public office or confidential information received through her public office to obtain financial gain for herself, her family, her business associate, or any person by which she is employed or whom she represents. Section 36-14-5(d). Finally, a public official must recuse herself from any matter in which her employer or business associate appears or presents evidence or arguments before the municipal agency of which she is a member or by which she is employed. Commission Regulation 36-14-5002(a)(2). A “business associate” is defined as an individual or business entity joined together with another person to achieve a common financial objective. Section 36-14-2(3), (7). In past advisory opinions, the Ethics Commission has required public officials to recuse from consideration of a matter if the official had an ongoing or anticipated business relationship with an individual or entity appearing before her public body. See A.O. 2016-45 (opining that a member of the Tiverton Planning Board is prohibited from participating in the Planning Board’s discussions and voting relative to a matter in which her business associate appears as an expert witness, given that they have worked together professionally in the past on projects and often refer work and clients to each other); A.O. 2005-64 (opining that a member of the Burrillville Redevelopment Agency may not participate in discussions or votes on matters coming before the Agency regarding a nonprofit developer’s request for approval of a project, given that the petitioner is a partner in an accounting firm that provides accounting services to this developer on a “continuing basis”). However, while the Code of Ethics clearly prohibits a petitioner from participating in matters directly affecting her current business associate, the Ethics Commission has permitted public officials to participate in matters involving or impacting the petitioner’s former business associate or former employer, provided that the business relationship between the petitioner and the other party has ended and there is no specific future business relationship anticipated between the parties. See A.O. 2016-29 (finding that a member and Chairman of the West Warwick Arctic Village Redevelopment Agency must recuse from any matters before his agency that involve or financially impact his current business associates but was not required to recuse from matters that involve or impact his prior business associates, provided that there is no specific future business relationship anticipated); A.O. 2013-21 (opining that a member of the State Labor Relations Board, a private attorney, was not required to recuse from matters involving his former law client provided that the representation had concluded, that all outstanding legal fees were paid in full, and there was no reasonable likelihood of reestablishing an attorney/client relationship in the foreseeable future); A.O. 2005-56 (opining that the Executive Assistant in the Office of the Health Insurance Commissioner (“OHIC”) was not prohibited from participating in two matters related to Blue Cross & Blue Shield of Rhode Island, notwithstanding that he had previously represented Blue Cross in matters unrelated to those over which the OHIC had jurisdiction). Additionally, the Ethics Commission has concluded that a social relationship or personal acquaintance between a public official and a person appearing before her does not, in and of itself, trigger a recusal requirement under the Code of Ethics. See A.O. 92-72 (Middletown Zoning Board member could participate in matter where social relationship but no business relationship exists with applicant provided that the Council member could act in an impartial manner concerning that person’s application). Rather, in cases where there is no actual conflict of interest requiring recusal, a public official should attempt to balance a willingness to avoid even an appearance of impropriety[1] with the public official’s duty to his or her constituents or appointing authority to participate in all decisions, even those that are difficult or unpopular. Here, the Petitioner represents that she does not currently have nor does she anticipate to have any specific future business relationship with Mr. Yip, the Tai-O Group or its subsidiaries. Accordingly, it is the opinion of the Ethics Commission that the Petitioner is not prohibited by the Code of Ethics from participating in discussions and decision-making relative to matters that involve and financially impact her former employer, notwithstanding the personal relationship between the parties and provided that she can remain impartial regarding the matter. This Advisory Opinion is strictly limited to the facts stated herein and relates only to the application of the Rhode Island Code of Ethics. Under the Code of Ethics, advisory opinions are based on the representations made by, or on behalf of, a public official or employee and are not adversarial or investigative proceedings. Finally, this Commission offers no opinion on the effect that any other statute, regulation, ordinance, constitutional provision, charter provision, or canon of professional ethics may have on this situation. Code Citations: § 36-14-2(3) § 36-14-2(7) § 36-14-5(a) § 36-14-5(d) § 36-14-7(a) Commission Regulation 36-14-5002 Related Advisory Opinions: A.O. 2016-45 A.O. 2016-29 A.O. 2013-21 A.O. 2005-64 A.O. 2005-56 A.O. 92-72 Keywords: Business Associate [1] As is declared in the Ethics Amendment to the Rhode Island Constitution: “The people of the State of Rhode Island believe that public officials and employees must adhere to the highest standards of ethical conduct, respect the public trust and the rights of all persons, be open, accountable and responsive, avoid the appearance of impropriety, and not use their position for private gain or advantage.” R.I. Const. art III, sec. 7 (emphasis added).