Ethics Advisory Opinion No. 5

December 18, 2000

Issued By. The Ethics Review Board

Whether, upon submitting a proposal for a Discretionary Contract with the City, a company is required to disclose the owners and officers of parent companies or other similar entities.

An attorney representing a company wishing to enter into a Discretionary Contract with the City requests an opinion with respect to the scope of the disclosure form and the persons whose actions must be reported therein. The following facts are presented:

The City of San Antonio has requested Tower Foods, Inc. to submit a Discretionary Contracts Disclosure form in connection with pending City Council action initiated by the City Parks Department.

Tower Foods, Inc., a Texas corporation, is owned fifty percent (50%) by Hasslocher Enterprises, Inc. and fifty percent (50%) in varying percentages by Mr. Eric Byrne Stumberg, Ms. Helen Louise Womack, and Mrs. Leonora Belle Berg. The Directors of Tower Foods, Inc. are Mr. Robert C. Hasslocher, Mr. Stumberg, and Ms. Berg. The Officers of Tower Foods, Inc. are Mr. Hasslocher and Ms. Berg. Hasslocher Enterprises, Inc. is a family partnership of which members of the Hasslocher family are beneficial owners.

The issue is whether the officers of Hasslocher Enterprises, Inc. or other persons are required to disclose political contributions totaling one hundred dollars ($100) or more made to City Council member(s) or to any political action committee (PAC) that contributes to City Council elections as required by the Ethics Code of the City of San Antonio.

Part D of the Ethics Code discusses the obligations of persons doing business with the City. Section 1(a) requires those seeking to do business with the City to disclose the following: (1) the identity of any individual and/or business entity that is a party to a City contract; (2) the identity of any subcontractor to the contract; (3) the identity of a partner, parent or subsidiary business entity of the contracting party; and (4) the identity of any lobbyist or public relations firm employed as a result of the contract. In the instant case, Tower Foods, Inc. is a corporation owned by its shareholders, Hasslocher Enterprises, Inc. and members of the Hasslocher family. Although the shareholders of a party to a City contract are not specifically required to be disclosed, the intent of said form is to provide full disclosure of any business entity having ownership in a party to a City contract, including, but not limited to, its shareholders. Therefore, we interpret Question (2)(B) of the Form to require disclosure of any business entity that owns shares or stocks in another that is a party to a discretionary contract. Accordingly, Hasslocher Enterprises, Inc. must be identified in such question pursuant to Part D, Section 1(a) of the Code.

Moreover, Section 1(b) requires disclosure of political contribution totaling one hundred dollars or more to a City Council member, or to a PAC that contributes to a City Council member, within the prior 24 months, made by any party disclosed under Section 1(a), whether those contributions are made directly or indirectly. Indirect contributions include, but are not limited to, those made by the officers, owners, or registered lobbyists of the entity and are required to be identified.

Ethics Advisory Opinion No. 5

December 18, 2000

page-2

 

The issue is whether the definition of the term "entity" as used in Section 1(b) of the Code means the contracting party or any party required to be identified in Section 1(a). If it refers to the contracting party, then the duty to disclose indirect contributions stops with those made by the officers, owners, and registered lobbyists of the contracting party, which in this case is Tower Foods. If, on the other hand the term "entity" refers to any party required to be identified under Section 1(a), then the duty to disclose indirect contributions extends to the officers, owners, and registered lobbyists of, not only Tower Foods, Inc, but also of its partners, shareholders, parents, subsidiaries, and subcontractors.

We believe that the purpose of the disclosure requirements is to encourage the greatest degree of open government for the citizens of San Antonio. In recognition of that purpose, we adopt the latter construction of the term "entity" in Section 1(b): that is, that the term "entity" refers to any party to be disclosed under Section 1(a). Therefore, not only must the owners, officers, and registered lobbyists of Tower Foods Inc. disclose any political contributions as required herein, but also the owners, officers and registered lobbyists of those parties identified under Questions (1), (2), and (3) of the Form must disclose any such contributions.

SUMMARY

The purpose of the Discretionary Contracts Disclosure Form is to encourage the greatest degree of open government for the citizens of San Antonio. To that end, the Form requires the disclosure of all individuals and/or business entities that are parties to a discretionary contract with the City. In addition, the Form requires the identity of subcontractors, partners, parents or subsidiary business entities of the business entity that is party to the contract, and any lobbyist or public relations firm of the contracting party. Although not specifically stated, such disclosure extends to any entity that has an ownership in the contracting party, including any shareholders.

In addition, any political contributions, as required, including, but not limited to, those made by the officers, owners, or registered lobbyists, of any party disclosed under Questions (1), (2), and (3) of the Form must be disclosed. Accordingly, the officers, owners and/or registered lobbyists of Hasslocher Enterprises, Inc. must disclose any such political contributions as required therein.

 

 

 

____________________________

Ron Gossen, District 10

 

 

____________________________

Arthur Downey, District 9

 

 

____________________________

Benjamin F. Youngblood, District 8