Request By:
Mr. Dallas Wade, Jr.
Principal Park Manager
Lake Cumberland State
Resort Park
Jamestown, Kentucky 42629
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question about the possible existence of a conflict of interest situation. You state you are the Principal Park Manager at the Lake Cumberland State Resort Park. The primary function of the facility is to make available overnight lodging in the form of rooms or cottages for renting by the public. You ask whether it would constitute a conflict of interest if you purchased a condominium at the nearby Apple Valley Resort to own and lease by the month or year, to own and rent by the day or week or to own and place on the rental property plan of the Apple Valley Resort.
Conflicts of interest exist pursuant to either statutory provisions or principles of the common law. Where they are statutory in nature, the statutes specifically prohibit certain contractual situations as well as other designated activities and transactions. KRS 45A.340 deals with conflicts of interest of public officers and employes. We have examined those statutory provisions and on the basis of the fact situation you have presented the activities you are contemplating would not be prohibited by those particular enactments.
KRS 45A.340 provides in part that no officer or employe of an agency (defined in part as a department of the state government) shall knowingly receive or agree to receive, directly or indirectly, compensation for any services to be rendered, by himself or another, in negotiations with the state or an agency for the purchase by the state or agency of an interest in real property. In addition, no officer or employe of an agency may be in any manner interested, either directly or indirectly, in his own name or in the name of any other person, association, trust or corporation, in any contract for the performance of any work in the making or letting or administration of which such officer or employe may be called upon to act or vote. Furthermore, no officer of employe may represent any person, association, trust or corporation with respect to any application or bid for any contract or work in regard to which such officer or employe may be called upon to act or vote. No officer or employe is permitted to take, solicit or receive any money or other thing of value as a gift or bribe or means of influencing his vote or action in his official character.
KRS 45A.340 also states that no officer or employe shall, for compensation, appear before an agency as an expert witness. No officer or employe shall act as officer or agent for the Commonwealth or any agency in the transaction of any business with himself, or with any corporation, company, association or firm in which he or his spouse has any interest greater than five percent of the total value thereof. Also no officer or employe shall knowingly himself or by his partners or through any corporation which he controls or in which he owns or controls more than ten percent of the stock or by any other person for his use or benefit or on his account, undertake, execute, hold or enjoy any contract, agreement, sale or purchase of the value of $25.00 or more made or granted by any agency, unless the contract, agreement, sale or purchase was made or let after public notice and competitive bidding. Finally, no officer or employe of an agency shall knowingly receive or agree to receive compensation for any services rendered by himself or another in any cause, proceeding, application or other matter which is before the agency or department in which the agency functions.
Where there are no controlling statutory provisions relative to conflicts of interest there can still be common law conflicts. Consider, for example, the following pronouncement from McQuillin Mun. Corp. (3rd Ed.), Vol. 10, § 29.97:
". . . [I]t is generally held that whenever a public officer enters into a contract the execution of which may make it possible for personal interests to become antagonistic to his faithful discharge of a public duty, such contract will be held void as against public policy. . . ."
In
Commonwealth ex rel. Vincent v. Withers, 266 Ky. 29, 98 S.W.2d 24, 25 (1936), the court said:
"It is a salutary doctrine that he who is interested with the business of others cannot be allowed to make such business an object of profit to himself. This is based upon principles of reason, of morality, and of public policy. These are principles of the common law and of equity which have been supplemented and made more emphatic by the foregoing and other statutory enactments.
Nunemacher v. City of Louisville, 98 Ky. 334, 32 S.W. 1091, 17 Ky.Law Rep. 933. In their application and operation it is impossible to lay down any definite rules defining the nature of the interest of the officer, or indicating the line between that which is proper and that which is unlawful. In general, the disqualifying interest must be pecuniary or proprietary by which he stands to gain or lose something. Falling within the principle are contracts with firms in which the member of the municipal body is a partner or a corporation of which he is an officer, or sometimes only a stockholder or employee.
Byrne & Speed Coal Co. v. City of Louisville, 189 Ky. 346, 224 S.W. 883;
Douglas v. Pittman, 239 Ky. 548, 39 S.W. (2d) 979. Furthermore, it is not material that the self-interest is only indirect or very small." (Emphasis added).
In conclusion, it is our opinion that the purchase of a condominium at a private resort by the manager of a Kentucky State Resort Park and his subsequent renting or leasing of that facility to persons or organizations other than state government does not violate the provisions of KRS 45A.340 and thus no statutory conflict of interest is created. No common law conflict of interest will arise if the manager of the state park keeps his private business interests completely separated from his functions duties and responsibilities associated with the management of the state resort park and those private interests do not interfere with his public duties.