New York State
Ethics Commission


Advisory Opinion No. 99-03: Whether various activities are permissible under Public Officers Law 73(8)(a)(i) where a former Banking Department employee belongs to a firm which has been retained by a bank to conduct an investigation.

INTRODUCTION

The following advisory opinion is issued in response to a request submitted by [ ], a former employee of the New York State Banking Department ("Department"), concerning the application of the post-employment restrictions of Public Officers Law 73(8)(a)(i) to her as an official of an investigative consulting firm that has been retained by a bank to conduct an investigation that has been ordered by the Federal Reserve Bank of New York ("FRB").

Pursuant to the authority vested in it by Executive Law 94(15), the State Ethics Commission ("Commission") renders its opinion that [the requesting individual] may not appear before the Department or have her name placed on any document submitted to the Department. She may, however, render services in connection with the investigation, which is before the FRB, as long as it has not come before the Department; should the investigation come before the Department, she may not participate in any aspect of the matter that is before the Department or that is jointly before the Department and the FRB. Finally, [the requesting individual] may make a presentation to the FRB where the Department is invited to attend, but only if the Department is present as an observer.

BACKGROUND

[The requesting individual] is a former [job title] of the Department. Her Civil Service title was [ ]. She presently serves as the [a senior official] for [ ], an investigative consulting firm ("firm"). This firm has been retained by a foreign bank ("bank") located in New York which was directed by the FRB to conduct an internal investigation into certain occurrences within the bank. The bank is also regulated by the Department.

The results of the firm's internal investigation will be provided by the bank to the FRB. The FRB may, in turn, share the information with the Department under an information sharing agreement that appears to authorize but not require the sharing of confidential information. Alternatively, the bank may voluntarily provide the information to the Department. The Department has the authority to take regulatory action based upon the information that will be contained in the investigative report.

[The requesting individual] does not expect to make any actual appearances before the Department on behalf of the bank. Neither the firm nor [the requesting individual] will act as counsel to the bank; rather, the firm's investigative services will be rendered pursuant to the retention of the firm by the bank's general counsel. [The requesting individual] may be asked to make presentations before the FRB, and it is possible that the Department will be invited to attend these presentations.

[The requesting individual] asks whether she may be engaged in the investigative work, and to what extent; and if she cannot be so engaged, may she offer general guidance to the bank. She also asks about appearing before the FRB where the Department is in attendance.

APPLICABLE LAW

The revolving door statute, applicable to State employees who have left State service, is contained in Public Officers Law 73(8)(a). Subparagraph (i) of this section provides as follows:

No person who has served as a state officer or employee shall within a period of two years after the termination of such service or employment appear or practice before such state agency or receive compensation for any services rendered by such former officer or employee on behalf of any case, proceeding or application or other matter before such agency.

This provision, known as the "two year bar", sets the ground rules for what individuals may do with the knowledge, experience and contacts gained from public service after they terminate their employment with a State agency. It prohibits former State officers and employees from appearing, practicing or rendering services for compensation in relation to any case, proceeding, application or other matter before their former agency for a period of two years following their separation from State service.

DISCUSSION

Since she is subject to the restrictions of the two year bar, [the requesting individual] may not appear or practice before the Department or render compensated services in relation to a matter before the Department. The term "appearance" has been broadly construed by the Commission. It is not limited to a physical appearance before a former employee's former agency. It has been held to include various types of submissions which are signed by a former employee or which involve documents identifying the individual (See Advisory Opinion Nos. 89-7, 89-11, 91-9). Thus, it is clear that [the requesting individual] may not physically appear before the Department or have her name placed on any document submitted to the Department.

The more difficult questions presented by [the requesting individual's] request concern work in which she will be involved in connection with the investigation but which will not require her to appear before the Department. These raise the scope of the restrictions that prohibit her from rendering services for compensation in relation to a matter before the Department. The first question that must be determined is whether there is such a matter.

In Advisory Opinion No. 89-7, the Commission was asked whether a former State employee could render services related to the preparation of an application for a permit or grant to be issued by his or her former agency, or to a contract proposal, where the documents had not yet been submitted. It was understood that the former employee would not participate once the submission had been made. The Commission held that 73(8) prohibited the rendering of such services. It said:

The time frame in which the services of the former State employee are rendered with respect to bringing a case, proceeding, application or transaction in front of the former employing agency is not the decisive factor in determining whether or not it is permitted under the law. Clearly, a specific permit or grant application or contract proposal as posed in the question is under the jurisdiction of a particular agency, at all times, whether or not the agency physically has received the documentation or was yet to be contacted on the matter.

To conclude that the revolving door proscription does not apply in the circumstances described herein would run afoul of the purpose of the subdivision and contort the meaning of the subdivision by splitting hairs. It would not be a sensible result to find that 73(8) would allow former State officers and employees to be compensated for services rendered on permit or grant applications or contract proposals in circumstances where all of their services were rendered "prior to submission" to the agency (footnotes omitted).

In Advisory Opinion No. 97-5, the Commission held that a former State employee may be retained by a law firm for certain limited purposes, but he could not prepare documents for the firm if it was foreseeable that such documents would ultimately be reviewed by his former agency. The Commission stated:

[I]f [the former employee] were to prepare documents which he has reason to believe would be reviewed by . . . , his former agency, he would be rendering services for compensation in relation to a matter before the agency. This would fall squarely within one of the prohibitions of 73(8)(a)(i).

In Advisory Opinion No. 94-6, a former employee of the Division of the Budget ("DOB") asked several questions after presenting a set of facts. A State agency other than DOB hires his firm to provide it with recommendations on how it can collect more revenue. The firm's effort would involve collecting data, doing statistical analysis of that data, drawing analytical conclusions, developing recommendations, and preparing a written report summarizing the work and findings. Implementation of the recommendations would require the State agency to request additional appropriations, and the agency's appropriation request would be reviewed by DOB.

The former DOB employee first asked whether he would violate the two year bar if the agency provided DOB with the data and analysis that resulted from his work without his knowledge or expectation, but did not submit to DOB his report or any other information that identifies him or his firm as having prepared the data and analysis. The Commission held:

In this scenario, it would not be an appearance before DOB if the client agency submitted the data and analysis that resulted from [the requesting individual's] work if [he] had no reason to know or anticipate such submissions.

The former DOB employee also asked about a situation where the State agency succeeded in getting the additional appropriation included in the Executive Budget without DOB's having seen his work, but legislative staff asked the agency for backup information during the Legislature's consideration of the budget. If the agency provided the former employee's report to legislative staff, which, in turn, provided it to DOB, would there be a violation? The Commission held that there would be no violation, as the former employee "could not reasonably know or anticipate that his work product would reach DOB in this manner." The Commission said that "At this point, he has 'lost control' over his work product since preparing it for the client agency. A former employee cannot be held responsible for an 'appearance' of this nature, that is inadvertent, unanticipated or remote."

In Advisory Opinion No. 89-8, the Commission held that a submission by a former State employee was prohibited where it would be made to a State agency other than his former State agency but would be reviewed by his former agency. The Commission said, however:

[I]f the requesting individual has no reason to know or anticipate that [his former employing agency] would be brought in by the other department to consult on a particular matter and there is no statute, law or policy providing for such other agency involvement, there is no revolving door violation if the former employee's materials are reviewed by a current employee [of his former employing agency] within two years of the former employee's termination from State service.

In Advisory Opinion No. 97-5, the Commission examined the "actual practice" used by the State in commencing a proceeding under the Navigation Law. It determined that it was routine procedure for a submission made to one agency to be forwarded to the former agency of the individual who sought to prepare certain papers. Thus, the Commission found reason to believe that the papers would be submitted to his former agency, and barred the individual from preparing the papers. In Advisory Opinion No. 89-8, the Commission said that foreseeability could be found in the requirements of a statute, law or policy.

Based on these precedents, it might seem that the question that [the requesting individual] would have to determine is whether it can reasonably be anticipated at the outset that the investigation on which she wishes to work will result in findings or conclusions that will be presented to the Department for its consideration. However, requiring her to make this determination would place her in a difficult situation. None of the opinions discussed above concerned an investigation. In general, they dealt with proceedings where the likelihood of a former employee's work product reaching his or her former agency was fairly predictable. In the case of an investigation, there is no such predictability.

At the outset of the bank investigation, which had been ordered by the FRB, [the requesting individual] could not possibly know what it would reveal as it progressed. However, the facts that the investigation reveals will determine whether it will eventually come before the Department. Consequently, at the outset, [the requesting individual] cannot be expected to determine the foreseeability of the investigation's reaching the Department; yet, it is at that point that she must decide whether or not she can participate. Clearly, it would be unfair to find that an employee had rendered services in violation of the two year bar if neither the employee nor the Commission can determine at the time the services are rendered whether or not they are permissible under the foreseeability test.

In order to avoid placing [the requesting individual] in this position, the Commission holds that the foreseeability standard that has previously been applied cannot be applied to her because an investigation is not susceptible to this standard. Instead, the Commission finds that the investigation is, at this time, before only the FRB, the agency that ordered that it be conducted. Therefore, [the requesting individual] may render services without restriction. However, should the investigation come before the Department, her former agency, she may not participate in any aspect of the matter that is before the Department or that is jointly before the Department and the FRB. She would be required to withdraw.

[The requesting individual] also indicated that she may be asked to make presentations before the FRB where it is possible that the Department would be invited to attend. She asks whether her attendance at any such meeting would constitute a prohibited "appearance."

Clearly, [the requesting individual] cannot appear before the Department itself. She would also be barred from appearing before the Department in any meeting or presentation where the Department was to play an active role, even if the FRB were present.(1) Otherwise, the restrictions of the two year bar could easily be avoided by having another agency present while she meets with the Department. Thus, she may not appear if the Department is going to be a participant in any discussions that might take place at the presentation or meeting.

This leaves for decision whether she could make a presentation before the FRB where the Department was no more than an observer. In Advisory Opinion No. 93-18, the Commission prohibited a former agency official from participating in a proceeding before his former agency, but permitted him to attend the proceeding "as any member of the public." This meant that he could observe but not participate. In [the requesting individual's] situation, if there is no participation by the Department, the situation would be reversed; that is, the former employee would be participating but the former agency would be the observer.

[The requesting individual] must make a good faith effort to determine whether the Department will attend as a participant or as an observer. If the Department is merely an observer, then [the requesting individual's] presentation would not be a prohibited appearance. If, during the meeting, the Department becomes more than a mere observer, [the requesting individual] must cease to participate. This approach follows from Advisory Opinion No. 93-18.

CONCLUSION

The Commission concludes that [the requesting individual] may not appear before the Department or have her name placed on any document submitted to the Department. She may, however, render services in connection with the investigation, which is before the FRB, as long as the investigation has not come before the Department; should the investigation come before the Department, she may no longer participate in those aspects of the matter that are before the Department or that are jointly before the Department and the FRB. Finally, [the requesting individual] may make a presentation to the FRB where the Department is invited to attend, but only if the Department is present as an observer.

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

All concur:

Paul L. Shechtman, Chair

Robert J. Giuffra, Jr.
Henry G. Gossel
O. Peter Sherwood, Members

Dated: January 25, 1999


Endnotes

1. See Advisory Opinion No. 89-12, where the Commission concluded that a former employee could not testify at a joint hearing co-sponsored by the Legislature and his former agency, since a "joint hearing [would] lead to a joint finding or result."


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URL: http://www.nysl.nysed.gov/edocs/ethics/99-03.htm