Request By:
Honorable Bruce Blythe
32nd District, Representative
304 W. Liberty, Suite 303
Louisville, Kentucky 40202
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Walter C. Herdman, Assistant Deputy Attorney General
This is in answer to your letter of February 28 in which you as a member of the legislature raise a question concerning a possible conflict of interest on your part under the following stated facts:
"My advertising agency, a proprietorship, merged on January 1, 1978 with two other advertising agencies forming the new corporation of Blythe, Brothers, and Lee. Prior to this merger Mr. Glenn Brothers, now a partner in the corporation, had in existence an advertising contract with the Department of Public Information. This contract was initiated long before we considered merger.
"Each of the three partners brings with him prior existing business in which the two do not participate. Our corporation will be built on future business -- not on existing business.
"Thus far I have not participated in proceeds of this contract, in fact, all of the proceeds of this contract will be paid to Mr. Glenn Brothers. After the expiration of this pre-existing contract no other state contract will be assumed by Blythe, Brothers, and Lee Corporation."
Your question involves a possible violation of the Legislative Ethics Act [KRS 6.755 to KRS 6.825] and more specifically, as far as we can determine, KRS 6.775(7), which reads as follows:
"No legislator shall knowingly himself or by his partners or through any corporation which he controls or in which he owns or controls more than five per cent (5%) of the stock, or by any other person for his use or benefit or on his account, undertake, execute, hold or enjoy, in whole or in part, any contract, agreement, sale or purchase of the value of twenty-five dollars ($25.00) or more, made, entered into, awarded or granted by any state agency, unless said contract, agreement, sale or purchase was made or let after public notice and competitive bidding."
From the related facts, the contract in question with the Department of Public Information was executed prior to the merger of your advertising agency and that of Brothers and Lee. At the same time, it also appears that as a result of the merger you will receive no pecuniary benefit from the pre-existing contract, which we believe the statute is designed to prevent. Even assuming, however, that the existence of a pecuniary interest is not the sole intent of the statute, the fact that the contract was executed prior to your association with the corporation would, we believe, relieve you of any violation of its terms. Referring to the case of
Collingsworth v. City of Catlettsburg, 236 Ky. 194, 32 S.W.2d 982 (1930), construing a conflict of interest statute prohibiting municipal officers from being directly or indirectly interested in contracts with the city, we quote the following:
"The interest must exist at the time the contract is made. If at the time a contract is executed no officer of the city has a pecuniary interest in it, it is valid and it will not be invalidated merely because an officer subsequently acquires an interest therein, provided there is no evidence of any conspiracy or criminal understanding between the contractor and the city officer at the time the principal contract was entered into."
See OAG's 74-597, 75-474, and 69-63.
It should also be noted that contracts covered by subsection (7) of KRS 6.775 do not involve a conflict of interest where such contracts are let on a bid basis. The related facts do not answer this question.
Under the related circumstances, we would be of the opinion that no conflict of interest exists with respect to your being a member of the state legislature and your association with the corporation of Blythe, Brothers and Lee which presently holds an advertising contract with the Department of Public Information.