New York State
Ethics Commission


Advisory Opinion No. 97-22: Application of Public Officers Law §74 to a State scientist who wishes to serve as a consultant to an entity that funds a State laboratory project that he heads.

INTRODUCTION

The following advisory opinion is issued in response to a request from [ ], a Research Scientist at [ ], a facility of the New York State Office of Mental Retardation and Developmental Disabilities ("OMRDD"). He asks whether he may, as an outside activity, serve as a consultant to a pharmaceutical company that has invested funds in a State laboratory that he heads.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") under Executive Law §94(15), the Commission hereby renders its opinion that there would be the appearance of a conflict of interest, prohibited by Public Officers Law §74, if [the requesting individual] were to serve as a consultant to the company while it is funding research at the State laboratory.

BACKGROUND

[The requesting individual] is a "Research Scientist [ ]" at [a State facility] and heads its [ ] laboratory. This laboratory is involved in the study of [ ]. His responsibilities as laboratory head include maintaining an active research program, performing experiments within the laboratory, instructing members of his staff with regard to their research activities, developing and conducting collaborations with numerous laboratories both inside and outside of [the State facility], keeping informed of current literature and techniques, and preparing various administrative reports of laboratory activities.

[The requesting individual] is also a member of [the State facility's] committee involved in the annual examination of laboratory budgets and in the progress of research related to the mission of OMRDD. He attends scientific meetings to present data, prepares manuscripts and grant applications, and reviews and critically evaluates colleagues' manuscripts and grant applications. In addition, [the requesting individual] is a principal investigator under a National Institute of Health grant and a United States Department of Agriculture cooperative agreement, and co-investigator under numerous other grants.

[A pharmaceutical company] has invested funds for a specific research project presently being conducted in the laboratory [the requesting individual] heads. Work on the project is being performed both at [the State facility] and at [the pharmaceutical company's] laboratories, and scientists from both laboratories routinely share information. As it is a single project, there is an ongoing exchange between [the requesting individual], along with his staff, and [the pharmaceutical company's] employees. [The pharmaceutical company] has provided initial funding for the project through an agreement with the Research Foundation for Mental Hygiene, OMRDD's closely affiliated not-for-profit corporation. The two year funding grant does not address commercial applications, as it is concerned with basic research. However, both the Research Foundation and [the pharmaceutical company] have ownership rights to any intellectual property that may be developed under the grant. While it is common practice for companies to seek to keep developments secret, the grant permits [the State facility] to publicly share its findings. Depending on the results of the project, [the State facility] may issue a scientific paper.

[The requesting individual's] inquiry concerns his ability to serve as a consultant to [the pharmaceutical company] for projects that are unrelated to his work at [the State facility]. He states that the offer of the consultancy came after [the pharmaceutical company] accepted his grant proposal, but it was unrelated to the grant. As a consultant for [the pharmaceutical company], [the requesting individual] would offer his advice (1) on the design of [experiments]; and (2) on the design of [other experiments.] Specifically, he would advise [the pharmaceutical company] personnel on the most efficient way of conducting their experiments, the health risks of handling infectious agents, the proper manner of disposal, and the design of [the pharmaceutical company's] newly renovated laboratory containment facilities. The work would be carried out at [the pharmaceutical company's] facilities in [location].

[The requesting individual] argues that his role as a consultant for [the pharmaceutical company] would not conflict with his duties for [the State facility]. He claims that as a consultant, he would have an advisory role only and would not be involved in policymaking decisions.

APPLICABLE STATUTES

Public Officers Law §74 addresses both actual conflicts of interest and their appearance. The code of ethics, found in Public Officers Law §74, provides minimum standards against which State officers and employees are expected to gauge their behavior. The code addresses the conflict between the obligation of public service and private, and often personal, financial interest.

Public Officers Law §74(2) contains the rule with respect to conflicts of interest:

No officer or employee of a state agency . . . should have any interest . . . business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.

Of particular relevance to this inquiry are the following provisions of Public Officers Law §74(3):

(a) No officer or employee of a state agency . . . should accept other employment which will impair his independence of judgment in the exercise of official duties.

(b) No officer or employee of a state agency . . . should accept employment or engage in any business or professional activity which will require him to disclose confidential information which he has gain by reason of his official position.

(c) No officer or employee of a state agency . . . should disclose confidential information acquired by him in the course of his official duties nor use such information to further his personal interests.

(d) No officer or employee of a state agency . . . should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others.

. . . .

(f) An officer or employee of a state agency . . . should not by his conduct give reasonable basis for the impression that any person can improperly influence him in the performance of his official duties, or that he is affected by the kinship, rank, position or influence of any party or person.

. . . .

(h) An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.

. . . .

DISCUSSION

The Commission makes its determinations as to whether to approve or disapprove an individual's outside activity request based upon whether the proposed outside activity is in conflict with the proper and effective discharge of the individual's duties. In making such determinations, the Commission considers the provisions of Public Officers §74 outlined above,(1) and whether there would be a relationship between the employee's public and private responsibilities. If there would be a relationship, the Commission examines its nature.

In reviewing its prior opinions, the Commission has found no precedent that would clearly govern the situation presented by [the requesting individual's] inquiry. In Advisory Opinion No. 91-3, the Commission considered whether non-policymaking employees of an agency could be employed by a not-for-profit provider licensed and regulated by the agency. It held that such employment was permissible under §74 as long as the employee "is completely removed from the licensing or rate setting functions." Following this opinion, the Commission barred employees of OMRDD from acting as family care providers where their State work involved them in the certification process or the administration of the family care program (Advisory Opinions Nos. 91-11, 94-17). Similarly, surveyors employed by the Department of Health ("DOH") who inspect health care facilities for the agency were barred from outside employment in any facility of the type that they inspected. For example, nurses who inspected nursing homes were barred from employment in any such home, although they were permitted to be employed by hospitals (Advisory Opinion No. 92-24).

The opinion most directly related to [the requesting individual's] inquiry is Advisory Opinion No. 92-18. There, [a State agency] had a contract with a not-for-profit corporation that did training in the field of foster care. [The State agency] was interested in having agency employees sit on the board of the corporation and act as consultants to the corporation. The Commission held that Public Officers Law §74 precluded [State agency] policymakers and those agency employees directly or indirectly responsible for the contract, including its oversight, from serving on the board. It stated:

When [State agency] employees serve on the Task Force board, competitors for such contracts may well question whether those training contracts were awarded fairly and objectively, whether confidential information was acquired from the [State agency] employees in order to secure the contracts in violation of §74(3)(c), or whether the [State agency] board members secured unwarranted privileges for the Task Force in violation of §74(3)(d).

The Commission, however, permitted the [State agency] employees to serve as consultants or advisors to the not-for-profit corporation, but only as long as the employees "restrict their participation to providing information on only those issues that are of concern to [the State agency] and as long as [the State agency] makes its employees equally available as consultants or advisors to other not-for-profit corporations if so requested."

In the case of [the requesting individual], he is seeking to becoming a consultant to [the pharmaceutical company], which, unlike the corporation in Advisory Opinion No. 92-18, is a for-profit corporation. In Advisory Opinion No. 90-6 -- where the Commission considered whether §74 precluded a State officer or employee from serving as an uncompensated member of the board of directors of a not-for-profit development corporation and its wholly owned for-profit subsidiary which conducted business with State agencies, and, potentially, with the State officer's employing agency -- it expressed its added concern when a for-profit corporation is involved:

The potential for conflict is more of a problem with the private, for-profit corporation. For, in the case of . . ., the profits that may be received from doing business with the State may appear to have been the direct result of the involvement of the requesting individual [State employee], a voting board member . . . We [the Commission] express greater concern about the involvement of public servants in private corporations.

In [the requesting individual's] case, he proposes to serve as a paid consultant to [the pharmaceutical company] on matters unrelated to his agency's contract with [the pharmaceutical company] rather than as an uncompensated member of its board of directors. However, many of the concerns previously expressed by the Commission are present. Since [the requesting individual] would be compensated by [the pharmaceutical company], he would, even though not a director of [the pharmaceutical company], have a personal financial interest in maintaining a good relationship with the corporation. This could affect his decision-making as [an employee of the State facility]. The public could perceive that his consulting arrangement is in conflict with the undivided loyalty he owes to his agency (See Advisory Opinion Nos. 91-7 and 93-3). Like the OMRDD employees who were barred by Advisory Opinion Nos. 91-11 and 94-17 from serving as family care providers because of their State responsibilities for the family care program, [the requesting individual], in acting as a consultant, would, in his proposed outside activity, be working in an area related to his State responsibilities. While the Commission recognizes that the subject of his consulting would be divorced from his State work, his dual relationship with [the pharmaceutical company] -- one in his public position and another in his private work -- would give rise to the appearance of a conflict of interest, prohibited by Public Officers Law §74.(2)

Furthermore, as [the requesting individual] serves on the internal [the State facility] committee that reviews laboratory budgets and the relevance of research to [the State facility's] mission, it could be perceived that [the pharmaceutical company] has an advantage over other companies when matters in which it has a direct or indirect interest come before the committee. Again, this is prohibited by §74.

CONCLUSION

The Commission concludes that there would be the appearance of a conflict of interest, prohibited by Public Officers Law §74, if [the requesting individual] were to serve as a consultant to [the pharmaceutical company] while it is funding research at the State laboratory he heads.

This opinion, until and unless amended or revoked, is binding on the Commission in any subsequent proceeding concerning the person who is the subject of the opinion and who acted in good faith, unless material facts were omitted or misstated in the request for an opinion or related supporting documentation.

All concur:

Evans V. Brewster
Henry G. Gossel
Paul L. Shechtman
O. Peter Sherwood, Members

Dated: September 23, 1997


Endnotes

1. It also considers the provisions of Public Officers Law §73, but they are not applicable here.

2. [The requesting individual] has not suggested that he could recuse himself from involvement in the project funded by [the pharmaceutical company]; nor does such recusal appear practical on the facts presented to the Commission.



URL: http://www.nysl.nysed.gov/edocs/ethics/97-22.htm