Conflicts of Interest Act

Conflicts of Conflicts of Interest ActInterest Act

Virginia Code § 2.2-3100 et Virginia Code § 2.2-3100 et seq.seq.

The rules set out by the The rules set out by the Conflicts of Interest Act Conflicts of Interest Act

really aren’t that really aren’t that difficult…difficult…

……but the situations but the situations that come up involving that come up involving

COIA usually are. COIA usually are.

Who does COIA apply to?Who does COIA apply to?

Officers and employees of state and local Officers and employees of state and local government (“officer” and “employee” government (“officer” and “employee” defined to include just about everyone).defined to include just about everyone).

Don’t have to be paid—unpaid elected Don’t have to be paid—unpaid elected

officials count. officials count.

Applies to both district employees and Applies to both district employees and directors.directors.

Three basic categories of Three basic categories of actions that COIA is actions that COIA is

interested in:interested in: Actions Generally Prohibited (“don’t Actions Generally Prohibited (“don’t

ever do this”)ever do this”)

Contracts (“when can/can’t you have a Contracts (“when can/can’t you have a business relationship with your agency”)business relationship with your agency”)

Transactions (“can you participate in a Transactions (“can you participate in a decision that your agency makes that decision that your agency makes that could affect you?”)could affect you?”)

Category 1: Generally Category 1: Generally Prohibited ActionsProhibited Actions

Don’t accept money in return for Don’t accept money in return for carrying out the duties of your office carrying out the duties of your office from persons or businesses other than from persons or businesses other than your agency (really means “don’t take a your agency (really means “don’t take a bribe”). bribe”).

Don’t accept money or anything of value Don’t accept money or anything of value

in return for getting someone hired, in return for getting someone hired, appointed, or promoted within your appointed, or promoted within your agency.agency.

Category 1: Generally Category 1: Generally Prohibited ActionsProhibited Actions

Don’t use any confidential information that Don’t use any confidential information that you obtain as a part of your position to you obtain as a part of your position to benefit yourself or anyone else economically. benefit yourself or anyone else economically.

Don’t accept gifts or other things (loans, Don’t accept gifts or other things (loans,

business opportunities, favors, etc.) that business opportunities, favors, etc.) that could tend to influence you in your position, could tend to influence you in your position, that could be reasonably seen as affecting that could be reasonably seen as affecting your impartiality, or that would make it your impartiality, or that would make it appear that you are using your public office appear that you are using your public office for personal gain.for personal gain.

Others.Others.

Categories 2 and 3Categories 2 and 3

Both rely on the presence of a Both rely on the presence of a “personal interest” had by you “personal interest” had by you or a member of your immediate or a member of your immediate family (spouse or someone family (spouse or someone living in your household who is living in your household who is a dependant of yours or who a dependant of yours or who you are a dependant of). you are a dependant of).

What is a “personal What is a “personal interest”interest”

Basically, if you have a “personal interest” in Basically, if you have a “personal interest” in something, it means that you have a financial something, it means that you have a financial stake. stake.

If you own more than 3% of the equity in a business, you have If you own more than 3% of the equity in a business, you have a personal interest in that business.a personal interest in that business.

Same if you derive more than $10,000 in annual income from Same if you derive more than $10,000 in annual income from a business.a business.

If you own an interest in real or personal property that If you own an interest in real or personal property that exceeds $10,000, you have a personal interest in that real or exceeds $10,000, you have a personal interest in that real or personal property. personal property.

Same if you derive more than $10,000 annually from real or Same if you derive more than $10,000 annually from real or personal property.personal property.

Other circumstances defined in § 2.2-3101 (options to buy a Other circumstances defined in § 2.2-3101 (options to buy a business or property, personal liability assumed for a business, business or property, personal liability assumed for a business, etc.).etc.).

Category 2: ContractsCategory 2: Contracts

You cannot have a “personal interest” in You cannot have a “personal interest” in a contract with your agency other than a contract with your agency other than any sort of employment agreement that any sort of employment agreement that may pertain to you.may pertain to you.

In other words, you can’t be a party to a In other words, you can’t be a party to a contract with your SWCD, nor can a contract with your SWCD, nor can a business that you have a personal business that you have a personal interest in be a party to a contract with interest in be a party to a contract with your SWCD. your SWCD.


You cannot have a “personal You cannot have a “personal interest” in a contract with any other interest” in a contract with any other state governmental agency except:state governmental agency except: Where the contract is the result of Where the contract is the result of

awarded as a result of competitive awarded as a result of competitive sealed bidding.sealed bidding.

Where the contract is awarded after a Where the contract is awarded after a finding that competitive bidding is not finding that competitive bidding is not in the agency’s best interest.in the agency’s best interest.


There are exceptions to the “no There are exceptions to the “no contracts” rule:contracts” rule: Real estate transactions, so long as you Real estate transactions, so long as you

don’t participate on behalf of the agency.don’t participate on behalf of the agency.

Contracts for goods or services where the Contracts for goods or services where the price doesn’t exceed $500.price doesn’t exceed $500.

Working for more than one government Working for more than one government agency.agency.


Further exceptions to the “no contracts” Further exceptions to the “no contracts” rule:rule: Certain situations where your family members Certain situations where your family members

are also employees of the same agency.are also employees of the same agency.

Payments under a program where uniform Payments under a program where uniform rates are established for all participants.rates are established for all participants.

Many other exceptions for specific Many other exceptions for specific circumstances contained in §§ 3106-3110.circumstances contained in §§ 3106-3110.

Category 3: TransactionsCategory 3: Transactions

What is a “transaction”? What is a “transaction”? ““any matter considered…on which any matter considered…on which

official action is taken or contemplated.”official action is taken or contemplated.” Includes matters before committees, Includes matters before committees,

subcommittees, etc. subcommittees, etc.

You may not have a “personal You may not have a “personal interest” (again, think “financial interest” (again, think “financial stake”) in a transaction (matter) that stake”) in a transaction (matter) that comes before your agency.comes before your agency.

Category 3: TransactionsCategory 3: Transactions What do you do if you discover that you What do you do if you discover that you

have a “personal interest” in a have a “personal interest” in a transaction?transaction?

Disqualify yourself:Disqualify yourself: Make a full, public disclosure on the record of Make a full, public disclosure on the record of

your personal interest.your personal interest. Do not vote on the matter (if your absence Do not vote on the matter (if your absence

causes less than a quorum to vote, then Act says causes less than a quorum to vote, then Act says that remaining members constitute a quorum).that remaining members constitute a quorum).

Do not participate in any discussion of the Do not participate in any discussion of the matter. matter.


Exceptions to the “no participation Exceptions to the “no participation in transactions when you have a in transactions when you have a personal interest” rule:personal interest” rule: If the action affects the public If the action affects the public

generally, even though your personal generally, even though your personal interests may be affected as a member interests may be affected as a member of the public (overarching, policy-type of the public (overarching, policy-type decisions).decisions).


Further exception:Further exception: You are a member of a business, You are a member of a business,

profession, occupation, or other group of profession, occupation, or other group of 3 or more who will all be affected, and 3 or more who will all be affected, and you make a public declaration stating:you make a public declaration stating:

The transaction involved.The transaction involved. The nature of your personal interest.The nature of your personal interest. That you are a member of a group affected.That you are a member of a group affected. That you can participate fairly, objectively, That you can participate fairly, objectively,

and in the public interest.and in the public interest.


Further exception:Further exception: You are a member of a firm that represents You are a member of a firm that represents

a party to the transaction, but you don’t a party to the transaction, but you don’t personally represent the party, and you personally represent the party, and you make a public declaration of:make a public declaration of:

The transaction involved.The transaction involved. The party involved that is a client of your firm.The party involved that is a client of your firm. That you you do not personally represent the That you you do not personally represent the

party.party. That you can participate fairly, objectively, and That you can participate fairly, objectively, and

in the public interest.in the public interest.

Penalties for COIA Penalties for COIA violationsviolations

A A knowingknowing violation is a Class I violation is a Class I misdemeanor.misdemeanor.

It also constitutes “malfeasance in It also constitutes “malfeasance in office” and can cause your removal.office” and can cause your removal.

Can result in forfeiture of monetary Can result in forfeiture of monetary gain, rescission of contracts, etc.gain, rescission of contracts, etc.

What to do when you’re What to do when you’re not sure:not sure:

Office of the Attorney General charged Office of the Attorney General charged with enforcement/oversight of the Act with enforcement/oversight of the Act and has the ability to issue advisory and has the ability to issue advisory opinions in response to questions.opinions in response to questions.

If you make a full disclosure of all facts If you make a full disclosure of all facts to the OAG, and act in good faith to the OAG, and act in good faith reliance on a written opinion from that reliance on a written opinion from that office, the Act specifies that you will office, the Act specifies that you will not be prosecuted.not be prosecuted.

ScenariosScenarios Note that these hypothetical scenarios are Note that these hypothetical scenarios are

intended only to illustrate how COIA operates intended only to illustrate how COIA operates and are based on very limited, general and are based on very limited, general information. They are NOT to be relied upon information. They are NOT to be relied upon with regard to real-world situations that you with regard to real-world situations that you may encounter. may encounter.

COIA is very fact-specific and each situation COIA is very fact-specific and each situation needs to be considered individually—DO NOT needs to be considered individually—DO NOT use these as guidance to analyze particular use these as guidance to analyze particular situations that you/others are unsure about. situations that you/others are unsure about. Rather, seek individualized advice from the Rather, seek individualized advice from the proper sources (see the previous and final proper sources (see the previous and final slides of this presentation). slides of this presentation).

Scenario #1Scenario #1

Debbie Director serves on her local SWCD Debbie Director serves on her local SWCD board and also owns a 400 acre cattle board and also owns a 400 acre cattle operation. Debbie wants to participate operation. Debbie wants to participate in the BMP cost share program in order in the BMP cost share program in order to fence her cattle out of the streams on to fence her cattle out of the streams on her property.her property.

Can Debbie get cost share funds from the Can Debbie get cost share funds from the SWCD that she serves as a board SWCD that she serves as a board member for? member for?


Answer: Yes, Debbie can receive cost Answer: Yes, Debbie can receive cost share funds from her SWCD.share funds from her SWCD. Isn’t this a prohibited contract? No. While Isn’t this a prohibited contract? No. While

there is indeed a contractual relationship there is indeed a contractual relationship here, it is not prohibited, as the BMP here, it is not prohibited, as the BMP program is an example of a program where program is an example of a program where uniform rates are established. See section uniform rates are established. See section 2.2-3110(A)(8) of COIA. 2.2-3110(A)(8) of COIA.

Note that Debbie must disqualify herself Note that Debbie must disqualify herself from any vote on approval of her project from any vote on approval of her project under the “transactions” provisions of under the “transactions” provisions of COIA. COIA.


Charlie Conservation, a SWCD Director, Charlie Conservation, a SWCD Director, recently suggested that his SWCD hold recently suggested that his SWCD hold its annual retreat at his wife’s fancy bed its annual retreat at his wife’s fancy bed and breakfast. The SWCD has offered to and breakfast. The SWCD has offered to pay Charlie’s wife $1000 for hosting the pay Charlie’s wife $1000 for hosting the event. event.

If Charlie’s wife hosts the retreat and If Charlie’s wife hosts the retreat and accepts the money, does Charlie have a accepts the money, does Charlie have a COIA problem?COIA problem?


Answer: Yes. Here is an example of a Answer: Yes. Here is an example of a prohibited contract. Even though it’s prohibited contract. Even though it’s Charlie’s wife who is hosting the Charlie’s wife who is hosting the retreat, and not Charlie himself, Charlie retreat, and not Charlie himself, Charlie still has a personal interest under COIA. still has a personal interest under COIA. No COIA exception applies. No COIA exception applies. What if the price were only $400? Now, What if the price were only $400? Now,

this would be permissible, as § 2.2-3110(A)this would be permissible, as § 2.2-3110(A)(7) exempts contracts for goods or services (7) exempts contracts for goods or services that do not exceed $500. that do not exceed $500.


Joe Conservation is a DCR employee Joe Conservation is a DCR employee who wants to be elected a Director who wants to be elected a Director of his local SWCD. of his local SWCD.

Can Joe be both a DCR (or other state Can Joe be both a DCR (or other state agency) employee and a SWCD agency) employee and a SWCD Director? Director?


Answer: Yes. Although COIA Answer: Yes. Although COIA generally prohibits someone like Joe generally prohibits someone like Joe from having contracts with other from having contracts with other agencies unless certain conditions agencies unless certain conditions are met, this is one situation that are met, this is one situation that COIA permits (see § 2.2-3106(B)(3)). COIA permits (see § 2.2-3106(B)(3)).


Danny District is a SWCD Director and Danny District is a SWCD Director and also wholly owns and operates his also wholly owns and operates his own farm equipment dealership. The own farm equipment dealership. The SWCD recently decided to purchase SWCD recently decided to purchase a new no-till drill, and even though a new no-till drill, and even though these can be pricey, Danny promised these can be pricey, Danny promised that if they come see him at work, that if they come see him at work, he’ll make them a good deal. he’ll make them a good deal.

Can Danny enter into a contract with Can Danny enter into a contract with his SWCD for a new no-till drill? his SWCD for a new no-till drill?

Situation #4Situation #4

Answer: No. Even though Danny may Answer: No. Even though Danny may have the best interests of his SWCD have the best interests of his SWCD in mind, COIA prohibits this type of in mind, COIA prohibits this type of contract between himself and his contract between himself and his SWCD. No COIA exception applies SWCD. No COIA exception applies here.here. What if it were real estate, and not What if it were real estate, and not

personal property? Then, it could be personal property? Then, it could be permissible if proper procedures were permissible if proper procedures were followed. See § 2.2-3110(A)(1). followed. See § 2.2-3110(A)(1).


Sammy Soil is a SWCD Director. His Sammy Soil is a SWCD Director. His son, Stu, recently decided to apply son, Stu, recently decided to apply for a job that he saw advertised at for a job that he saw advertised at the SWCD. Stu lives right down the the SWCD. Stu lives right down the street from Sammy.street from Sammy.

Is there a COIA problem with Sammy Is there a COIA problem with Sammy being a Director of the same SWCD being a Director of the same SWCD that Stu wants to go to work for?that Stu wants to go to work for?


Answer: No. Even though a Answer: No. Even though a parent/child relationship exists, parent/child relationship exists, COIA doesn’t prohibit this COIA doesn’t prohibit this arrangement, as Stu is not a arrangement, as Stu is not a member of Sammy’s “immediate member of Sammy’s “immediate family” for COIA purposes (requires family” for COIA purposes (requires both living in the same household both living in the same household and one of them being the and one of them being the dependent of the other). dependent of the other).

Questions?Questions? See the official COIA training at: See the official COIA training at:

http://www.vaag.com/LEGAL_LEGIS/COI/index.html

For questions concerning this presentation, or for For questions concerning this presentation, or for assistance in potentially getting in touch with the assistance in potentially getting in touch with the

Office of the Attorney General for advice regarding Office of the Attorney General for advice regarding a particular case, contact:a particular case, contact:

Ryan J. Brown, Policy and Planning Assistant DirectorRyan J. Brown, Policy and Planning Assistant Director

VA Dept. of Conservation and RecreationVA Dept. of Conservation and Recreation

(804) 786-2871(804) 786-2871

[email protected]@dcr.virginia.gov

Conflicts of Interest Act

Documents

Transcript of Conflicts of Interest Act