No. 08-I-7 State Ethics Commission Official Advisory Opinion September 2008
The Indiana State Ethics Commission (“Commission”) issues the following advisory opinion concerning the State Code of Ethics pursuant to IC 4-2-6-4(b)(1).
Summary
A member of the IRMDB questioned whether he would be permitted to apply for a loan from the Board for his family’s farm which was involved in composting and organic recycling efforts that comported with the goals the Board was trying to promote. SEC found that this presented a conflict of interest, and a screening mechanism would be inappropriate since the board member could not be adequately screened from involvement in the matter due to the lack of independent oversight over the application process and administration of the loan, if it were to be awarded to the board member.
Background
A state employee serves on the Indiana Recycling Market Development Board (“IRMDB”) and is a farmer from Lebanon. The IRMDB distributes grant and loan money to promote recycling efforts throughout Indiana by focusing on economic development efforts. The board member’s farm is involved in composting and organic recycling efforts that generally fit many of the goals that the IRMDB is trying to promote. To further the recycling efforts of his family’s farm, the board member would like to request a loan from the IRMDB.
Issue
Would a conflict of interest arise for the board member if he were to apply for a loan from the IRMDB?
Relevant Law
IC 4-2-6-9
Conflict of economic interests
Analysis
A conflict of interest would arise for the board member under IC 4-2-6-9 if he participates in the IRMDB’s decision or vote to make the loan he is requesting. Specifically, because the loan would be made to the board member for use on his farm, the board member would have a financial interest in the IRMDB’s decision to provide the loan. Accordingly, the board member would be prohibited from participating in the IRMDB’s decision or vote regarding his request for a loan.
Upon disclosure of a potential conflict of interest, the Commission is authorized to take two courses of action under IC 4-2-6-9(b). First, with the approval of a person's appointing authority, the Commission may recommend assigning the matter giving rise to the conflict of interest to another person and further recommend the implementation of all necessary procedures to screen the state officer, employee, or special state appointee seeking an advisory opinion from involvement in the matter. Second, the Commission may make a written determination that the interest is not so substantial that the Commission considers it likely to affect the integrity of the services that the state expects from the state officer, employee, or special state appointee. In this case, the Commission finds that the board member cannot be adequately screened from involvement in this matter due to the lack of independent oversight over the application process and administration of the loan, if it were to be awarded to the board member.
Conclusion
The Commission finds that a conflict of interest would arise for the board member if he were to apply for a loan from the IRMDB while serving on the board. The Commission further finds that the application of a screen mechanism would not be appropriate in this case.