Ethics: Advisory Opinion No. 1998-14

Advisory Opinion No. 1998-14
Advisory Opinion No. 1998-14

Interpretation of Various Provisions of Conn. Gen. Stat. 1-84(n),
Concerning Political Contributions to the State Treasurer

The State Ethics Commission staff has received numerous inquiries regarding the meaning of various provisions of Conn. Gen. Stat. 1-84(n) of the Code of Ethics for Public Officials, Conn. Gen. Stat. 1-79 et seq. Therefore, Managing Director and Commission Attorney Rachel Rubin has asked a series of questions regarding the interpretation of that section.

Adopted by the General Assembly in 1995, at the urging of then-Treasurer Christopher Burnham, 1-84(n) is intended to "place restrictions on the ability of anyone doing business with the Office of the Treasurer to be involved in campaign financing or fund raising for the Treasurer’s campaigns and for anyone who has contributed to the Treasurer’s campaign to subsequently contract for or otherwise provide services for the Office of the Treasurer." Senator Win Smith, Senate Debate on Substitute Bill No.1059, May 3, 1995, at p.1999. The section reads as follows:

"As used in this subsection, "investment services" means legal services, investment banking services, investment advisory services, underwriting services, financial advisory services or brokerage firm services. The treasurer shall not pay any compensation, expenses, or fees or issue any contract to any firm which provides investment services when (1) a political committee, as defined in section 9-333a, established by such firm, or (2) an individual who is an owner of such firm or employed by such firm as a manager, officer, director, partner or employee with managerial or discretionary responsibilities to invest, manage funds or provide investment services for brokerage, underwriting and financial advisory activities which are in the statutory and constitutional purview of the treasurer, has made a contribution, as defined in section 9-333b, on or after the effective date of this act to, or solicited contributions on or after the effective date of this act on behalf of, any exploratory committee or candidate committee, as defined in section 9-333a, established by a candidate for nomination or election to the office of treasurer. The treasurer shall not pay any compensation, expenses or fees or issue any contract to such firms and individuals during the term of office as treasurer, including, for an incumbent treasurer seeking reelection, any remainder of the current term of office."

Attorney Rubin first asks what is meant by "owner of the firm." The meaning of the word "owner" is best "gathered from the connection in which it is used, and from the subject matter to which it is applied," but generally the word is "used to indicate a person in whom one or more interests are vested for his own benefit." Black’s Law Dictionary, Fifth Edition, p. 996. Thus, what constitutes an "owner" must be determined on a case-by-case basis, although the Code’s definition of "[B]usiness with which associated" provides an appropriate guideline for determining certain relationships which are considered significant under the law (for example, holding five per cent or more of the outstanding stock of a particular corporation.)

Secondly, Attorney Rubin asks what the phrase "managerial or discretionary responsibilities" modifies. It is clear that an employee who exercises managerial or discretionary authority in the listed areas (i.e., who invests or manages funds, or provides investment services for brokerage, underwriting or financial advisory activities which are within the Treasurer’s purview) is restricted by 1-84(n). Based on the broad intent of this section, it is also clear that all managers, officers, directors and partners of such firms are restricted regardless of their specific responsibilities. To hold otherwise could create a situation where contributions by subordinates are covered by the section but those by individuals in the firms’ highest positions are not.

Attorney Rubin’s final two questions concern application of the law to specific situations. In the first scenario, she asks whether the Treasurer could give a non-investment services contract to a firm whose members had contributed to his campaign, if the firm was in the business of investment services, as defined by 1-84(n). Given the broad sweep of this legislation and based on its clear language, the Treasurer may not give any contract to an investment services firm, regardless of whether the contract itself involves investment services. If, however, the Treasurer’s campaign receives a contribution from a firm whose business does not fall within the definition of "investment services" (e.g., a copier company), this section of the law would not preclude the Treasurer from awarding that firm a contract to provide duplicating equipment to the Treasurer’s Office, for example.

Finally, Attorney Rubin asks whether a law firm may perform legal work for the Treasurer’s Office if a partner in the firm has given a contribution to the Treasurer’s campaign. Again, the clear language of 1-84(n), which includes "legal services" within the definition of "investment services" would preclude such work. Only if the contribution were made by an employee of the firm who exercises no managerial or discretionary responsibilities in the enumerated areas (e.g., the firm bookkeeper, or an associate practicing family law) would the hiring of the law firm by the Treasurer comply with 1-84(n).

By order of the Commission,

Stanley Burdick

Content Last Modified on 9/7/2005 8:02:27 AM