Ethics: Advisory Opinion No. 1994-1

Advisory Opinion No. 1994-1
Advisory Opinion No. 1994-1

Official Action Taken By The Chairperson Of The Accountancy
Board Regarding Matter Relating To A Former Private Client

The Board of Accountancy (the “Board”) is required by statute to conduct any necessary review, inspection or investigation of possible violations by persons subject to regulation or licensing by the Board.  See Conn. Gen. Stat. 20-280c.  Pursuant to that section, the Board initiated an investigation of the accounting firm of Arthur Andersen & Co. (“Andersen”) relating to the performance of professional services for Colonial Realty Company and its partners, employees and related entities (“Colonial”).  On July 29, 1993, the Board approved a Settlement Agreement between the State of Connecticut, ex. rel Richard Blumenthal, Attorney General and Andersen which provided for a release and discharge of Andersen, and its present and former partners, except for former partner David Federman.

The Chairman of the Board, the Honorable Bernard Blum, is a partner in the accounting firm of Blum, Shapiro & Co. (the “Firm”).  The Firm previously performed services for Colonial.  Furthermore, Ms. Jayne Shapiro, the daughter of another partner in the Firm, allegedly received commissions from Colonial for persuading certain individuals, including clients of the Firm, to invest in Colonial.

In order to avoid even an appearance of impropriety, Mr. Blum recused himself from the Andersen case.  The Board is now considering action regarding the conduct of David Federman and has asked whether, under the Code of Ethics for Public Officials, specifically Conn. Gen. Stat. 1-84(a), 1-86(a), Mr. Blum may participate in any decision regarding Mr. Federman.  Pursuant to Conn. Gen. Stat. 1-84(k), Mr. Blum is a public official and subject to the provisions of the Code of Ethics for Public Officials, Chapter 10, Part I, Connecticut General Statutes.  In general, the conflict of interests provisions of Conn. Gen. Stat. 1-84(a), 1-85, and 1-86(a) prohibit a public official from taking official action if, as the result of such action, he, certain family members, or a business with which he is associated will derive a financial benefit or suffer a financial loss.  For purposes of the Code of Ethics, the Firm is a business with which he is associated.  See Conn. Gen. Stat. 1-79(b).

Although Mr. Blum may know Mr. Federman and both the Firm and Ms. Shapiro may have provided services to Colonial in the past, absent any other facts to the contrary, neither Mr. Blum, his family members, nor the Firm, can derive any financial benefit or loss from any action the Board may take regarding Mr. Federman.  Therefore, under the Code of Ethics, Mr. Blum does not need to recuse himself from the matter.  Although the State Ethics Commission does not have the authority to prohibit actions which create an appearance of impropriety, Mr. Blum may, however, once again choose to recuse himself if he or the Board deems it appropriate.

By order of the Commission,

Christopher T. Donohue

Content Last Modified on 9/7/2005 8:00:43 AM