Ethics: AO 2011-5
2011

 

Advisory Opinion No. 2011-5

                                        

                                        December 15, 2011

            

 Questions Presented:          Petitioner asks whether a Connecticut company may donate

                                                  occasional use of a company airplane in order for University of

                                                  Connecticut’s Division of Athletics representatives and guests

                                                  to travel in connection with University business.   Specifically,

                                                  Petitioner asks the Board to determine whether (1) the

                                                  proposed donor is a “non-restricted” donor, and (2) whether

                                                  its donation is a permissible gift to the State under General

                                                  Statutes § 1-79 (e) (5).  

 

Brief Answer:                         The proposed donor is a non-restricted entity for purposes of

                                                 the Ethics Code, and its donation constitutes a permissible gift

                                                 to the State under § 1-79 (e) (5).

 

At its November 2011 regular meeting, the Citizen’s Ethics Advisory Board (“Board”) granted the petition for an advisory opinion submitted by Paul Pendergast, Interim Director of Athletics at the University of Connecticut.  The Board issues this advisory opinion on the date shown below in accordance with General Statutes § 1-81 (a) (3).  The opinion interprets the Code of Ethics for Public Officials (“Ethics Code”)[1] and its regulations, is binding on the Board concerning the person who requested it and who acted in good-faith reliance thereon, and is based solely on the facts provided by the Petitioner.   

 

Facts

         

The facts provided by the Petitioner are set forth (in relevant part) below and are considered part of this ruling: 

 

The University of Connecticut’s Division of Athletics (the “Division”) requests that the Board issue an advisory opinion regarding whether a private Connecticut company may donate occasional use of a company airplane for Division representatives and guests to travel in connection with University business.  Specifically, the Division asks the Board to opine as to whether (1) the proposed donor is a “nonrestricted” donor, and (2) whether the donation of such air travel services is therefore a permissible gift to the State under General Statutes § 1-79(e)(5).

 

The circumstances are as follows:  From time to time, employees of the Division need to attend meetings or events on short notice or under tight time constraints because of their other Division-related responsibilities.  At times, it is difficult to arrange commercial flights that accommodate the schedules of Division employees, and at times there is no, or no reasonably priced, commercial air service to a particular destination.  Whelen, a Connecticut manufacturer, owns private aircraft and, when such circumstances arise, is willing to provide free transportation for Division employees if an airplane is available and may otherwise be headed to the same or a reasonably proximate destination.

Whelen is a Connecticut corporation with its principal office located in Chester, Connecticut.  Whelen manufactures products for the emergency warning industry, including lightbars and sirens for emergency vehicles, strobe lights and beacons for highway and maintenance vehicles, aviation lighting devices, and outdoor warning sirens. 

Whelen is not a registered lobbyist and does not have any contract or arrangement with a registered lobbyist to represent it.  Whelen is not “regulated” by the University and is not pre-qualified with the Connecticut Department of Administrative Services pursuant to General Statutes § 4a-100. 

Whelen’s products are sold both by Whelen, either directly or indirectly through independent sales representatives, and by independent resellers.  Whelen’s direct sales to end users, include internet and telephone orders and direct customer requests for replacement parts.  Whelen’s indirect sales are made through independent sales representatives that are paid a commission by Whelen but that never take title to the product.  Whelen does not currently have a contract to sell any products to the University either directly or indirectly, and it does not intend to solicit or enter into any such contract with the University in the future. 

Most Whelen products are sold to consumers by independent distributors or dealers (collectively, “resellers”) that purchase the products from Whelen for resale.  In addition, Whelen’s independent sales representatives sometimes purchase and resell Whelen products.  These resellers purchase the products from Whelen at prices established by Whelen and then resell the products to consumers at prices set or negotiated by the resellers. 

From time to time, these independent resellers may attempt to sell Whelen products to the University, but they are not under the direction or control of Whelen; they independently negotiate the terms and conditions of the sale with the University; and they do not transmit the proceeds of the sale back to Whelen.

In the past, there have been occasional direct commercial contacts between Whelen and the University.  The last such contact occurred in November 2007.  From a review of the records related to that transaction, it appears that the University Health Center contacted Whelen to obtain replacement parts for a Whelen product that was out of warranty.  If such a need for replacement parts were to arise in the future, the University will purchase them from an independent reseller rather than from Whelen.

Whelen products sold by independent resellers to the University may be subject to manufacturer warranties that Whelen will be obligated to honor.  Such warranties are standard in form, attach to and follow Whelen products through the chain of distribution to all ultimate purchasers, and involve no direct dealings between Whelen and the purchaser except perhaps in the ordinary course of a warranty claim.  Finally, Whelen products are sold to other Connecticut state agencies by independent resellers upon terms and conditions similar to those described above.

Whelen owns aircraft that it employs in its business, typically to transport sales personnel to meet with customers or to attend trade shows around the country.  Whelen and the Division have discussed an understanding whereby Division representatives and their business guests could travel on Whelen aircraft in connection with University business.  By way of example, such business travel could include recruiting trips by Division coaches, attendance by coaches and other Division personnel at athletic conferences or meetings, and fundraising trips with donors to University athletic events.  The University represents that any request for travel on Whelen aircraft will be made solely by the University Director of Athletics (except that any travel by the Director of Athletics will also require the approval of the University President) to ensure that the requested travel is solely for, and reasonably necessary for, University business.  Whelen may grant a travel request when an airplane is available and/or the request can be accommodated in connection with Whelen’s travel plans, but Whelen will have the absolute right to grant or deny a University travel request, for any or no reason.  Whelen will not charge any fee or receive anything else of value from the University for the travel requests granted; its intent is solely to continue its long-time support of the University and its Division of Athletics.

Analysis

 

Under the Ethics Code, a state employee or public official is prohibited from knowingly accepting any “gift” from a restricted donor, namely, a lobbyist registrant (i.e., a person required to register as a lobbyist under General Statutes § 1-94), or a person the public official or state employee knows or has reason to know is (1) doing business with or seeking to do business with his or her department or agency, (2) engaged in activities directly regulated by such department or agency, or (3) prequalified under General Statutes § 4a-100 (i.e., prequalified building contractors).[2]

 

The threshold question therefore is whether Whelen is a restricted donor.  According to the Petitioner, Whelen is not a registered lobbyist or a pre-qualified building contractor, nor is it regulated by the University.  Further, the Petitioner provided an extensive explanation as to why Whelen is neither “doing business with” nor “seeking to do business with” the University or the Division.  In its petition, the Petitioner references Advisory Opinion No. 2007-14, which clarifies and distinguishes the phrases “doing business with” and “seeking to do business with” a state entity.  In that opinion, it was concluded that a person is “doing business with” a state entity “when the person is awarded a state grant or enters into a contract, lease or other such agreement with a department or agency.”  A person is “seeking to do business” with a state agency or department “when one contacts that department or agency to further a commercial, i.e., business, purpose, regardless of whether the entity contacted has actual, legal authority to issue or execute the contract, grant, award, etc. being sought.”

According to the Petitioner, Whelen has received no state grant and has no current contracts, leases or other agreements with the University or the Division.  Although Whelen products that are sold by independent resellers to the University may be subject to manufacturer warranties that Whelen will be obligated to honor, we agree with the Petitioner that such warranties cannot be interpreted to mean that Whelen is doing business with the University.  The Petitioner aptly noted that it would be impractical as a matter of administration and enforcement to treat every such manufacturer as a party “doing business” with the State if a product was purchased from an independent retailer or a third party unaffiliated with the manufacturer. 

Further, the Petitioner noted that with respect to “seeking to do business” with the State, Whelen does not respond to University bid solicitations or requests for proposals and does not otherwise contact the University or its representatives in an effort to sell its products.  Any independent resellers of Whelen products who seek to do business with the University are acting independently of Whelen in pursuit of their own commercial and business interests.  Therefore, based on the facts presented, Whelen cannot be seen as a person seeking to do business with the University.  Accordingly, for the foregoing reasons, we conclude that Whelen is a non-restricted entity for purposes of the Ethics Code. 

As noted in Advisory Opinion No. 2003-13, if a non-restricted donor is providing benefits to a state employee or public official by virtue of his or her state position, he or she may accept up to $100 in benefits in a calendar year, plus anything fitting under the gift exceptions.  One of those gift exceptions, the so-called “gift to the state” exception, exempts from the term “gift” the following: “Goods or services (A) which are provided to a state agency . . . (i) for use on    state . . . agency property, or (ii) that support an event, and (B) which facilitate state . . . agency action or functions.”[3]

In prior informal staff letters issued under the former State Ethics Commission, the “gift to the state” exception was applied to similar facts.  In Request for Advisory Opinion No. 3496, a donation of a private aircraft by a non-restricted entity for use by Division staff and other University officials was deemed a permissible “gift to the state,” provided that the plane would be used only for state and University approved purposes.  While in that opinion, the donor, in return for his donation, wanted the opportunity to request tickets to University games, the Petitioner here has stated that Whelen will not charge any fee or receive anything else of value from the University.  Whelen’s intent is solely to continue its long-time support of the University and the Division.  Further the Petitioner has noted that any request for travel on Whelen aircraft will be made solely by the University Director of Athletics (except that any travel by the Director of Athletics will also require the approval of the University President) to ensure that the requested travel is solely for, and necessary for, University business.

 

Similarly, in Request for Advisory Opinion No. 3503, the Airport Administrator at Bradley International Airport, a state employee within the Department of Transportation, asked whether it was permissible for him to accept free travel on a private airplane owned and flown by the Chairman of the Board of Directors of the Bradley Airport.  The chairman, an accomplished pilot and owner of a number of his own aircraft, offered to fly some members of the Bradley Board and the Airport Administrator to a business meeting.  Neither the Chairman nor any of his associated businesses engaged in any business relationship with the State of Connecticut.  Because the free travel was offered to facilitate state business, the Airport Administrator was permitted to accept it under the “gift to the state” exception.  

We agree with the informal advice issued under the former State Ethics Commission and therefore conclude that Whelen’s donation of the occasional use of a company airplane constitutes a permissible “gift to the state” under § 1-79 (e) (5).   

 

By order of the Board,

 

 

Dated:  12/15/2011                              David W. Gay, Chairperson



[1] Chapter 10, part I, of the General Statutes.

[2] See General Statutes § 1-84 (j) and (m).

[3] General Statutes § 1-79 (e) (5).



Content Last Modified on 12/23/2011 8:45:05 AM