205–Conflict of Interest NWSC Board Members
POLICY: 205
ADOPTED: May 2013
205 CONFLICT OF INTEREST – NORTHWEST SERVICE COOPERATIVE (NWSC) BOARD MEMBERS
I. PURPOSE
The purpose of this NWSC policy is to observe state statutes regarding conflicts of interest and to engage in NWSC business activities in a fashion designed to avoid any conflict of interest or the appearance of impropriety.
II. GENERAL STATEMENT OF POLICY
It is the policy of the NWSC board to contract for goods and services in conformance with statutory conflict of interest laws and in a manner that will avoid any conflict of interest or the appearance thereof. Accordingly, the NWSC board will contract under the statutory exception provisions only when it is clearly in the best interest of the NWSC because of limitations that may exist on goods or services otherwise available to the cooperative.
III. GENERAL PROHIBITIONS AND RECOGNIZED STATUTORY EXCEPTIONS
1. A NWSC board member who is authorized to take part in any manner in making any sale, lease, or contract in his or her official capacity shall not voluntarily have a personal financial interest in that sale, lease, or contract or personally benefit financially therefrom.
2. In the following circumstances, however, the NWSC board may as an exception, by unanimous vote, contract for goods or services with a board member of the NWSC:
- In the designation of a bank or savings association, in which a NWSC board member is interested, as an authorized depository for NWSC funds and as a source of borrowing, provided such deposited funds are protected in accordance with Minn. Stat. Ch. 118A. Any NWSC board member having said interest shall disclose that interest and the interest shall be entered upon the minutes of the board. Disclosure must be made when such bank or savings association is first designated as a depository or source of borrowing, or when such NWSC board member is elected, whichever is later. Disclosure serves as notice of the interest and must only be made once;
- The designation of an official newspaper, or publication of official matters therein, in which the NWSC board member is interested when it is the only newspaper complying with statutory requirements relating to the designation or publication;
- A contract with a cooperative association of which the NWSC board member is a shareholder or stockholder but not an officer or manager;
- A contract for which competitive bids are not required by law. A contract made under this exception will be void unless the following procedures are observed:
- The NWSC board must authorize the contract in advance of its performance by adopting a resolution setting out the essential facts and determining that the contract price is as low as or lower than the price at which the goods or services could be obtained elsewhere.
- In the case of an emergency when the contract cannot be authorized in advance, payment of the claims must be authorized by a like resolution wherein the facts of the emergency are also stated.
- Before a claim is paid, the interested NWSC board member must file with the clerk of the NWSC board an affidavit stating:
(1) The name of the NWSC board member and the office held;
(2) An itemization of the goods or services furnished;
(3) The contract price;
(4) The reasonable value;
(5) The interest of the NWSC board member in the contract; and
(6) That to the best of the NWSC board member’s knowledge and belief, the contract price is as low as, or lower than, the price at which the goods or services could be obtained from other sources.
- A NWSC board member may contract with the cooperative to provide construction materials or services, or both, when the sealed bid process is used. When the contract comes before the NWSC board for consideration, the interested NWSC board member may not vote on the contract.
- A NWSC board member may rent space in a public facility at a rate commensurate with that paid by other members of the public.
3. In the following circumstances, the NWSC board may as an exception, by majority vote at a meeting where all board members are present, contract for services with a NWSC board member of the cooperative: A NWSC board member may be newly employed or may continue to be employed by the cooperative as an employee where there is a reasonable expectation on July 1, or at the time the contract is entered into or extended, that the amount to be earned by that NWSC board member under that contract or employment relationship, will not exceed $8,000 in that fiscal year. If the NWSC board member does not receive majority approval to be initially employed or to continue in employment at a meeting where all NWSC board members are present, that employment must be immediately terminated and that NWSC board member will have no further rights to employment while serving as a NWSC board member in the cooperative.
4. The NWSC board may contract with a class of cooperative employees, such as program coordinators or assistants, where the spouse of a NWSC board member is a member of the class of employees contracting with the NWSC board and the employee spouse receives no special monetary or other benefit that is substantially different from the benefits that other members of the class receive under the employment contract. In order for the NWSC board to invoke this exception, it must have a majority of disinterested NWSC board members vote to approve the contract, direct the board member spouse to abstain from voting to approve the contract, and publicly set out the essential facts of the contract at the meeting where the contract is approved.
IV. LIMITATIONS ON RELATED EMPLOYEES
- The NWSC board can hire or dismiss staff only at duly called meetings. Where a husband and wife, brother and sister, or two brothers or sisters, constitute a quorum, no contract employing a staff member may be made or authorized except upon the unanimous vote of the full NWSC board.
- The NWSC board may not employ any staff member related by blood or marriage to a board member, within the fourth degree as computed by the civil law, except by a unanimous vote of the full NWSC board.
V. CONFLICTS PRIOR TO TAKING OFFICE
A NWSC board member with personal financial interest in a sale, lease, or contract with the cooperative which was entered before the NWSC board member took office and presents an actual or potential conflict of interest, shall immediately notify the NWSC board of such interest. It shall thereafter be the responsibility of the NWSC board member to refrain from participating in any action relating to the sale, lease, or contract. At the time of renewal of any such sale, lease, or contract, the NWSC board may enter into or renew such sale, lease, or contract only if it falls within one of the enumerated exceptions for contracts relating to goods or services provided above and if the procedures provided in this policy are followed.
VI. DETERMINATION AS TO WHETHER A CONFLICT OF INTEREST EXISTS
The determination as to whether a conflict of interest exists is to be made by the NWSC board. Any NWSC board member who has an actual or potential conflict shall notify the NWSC board of such conflict immediately. The NWSC board member shall thereafter cooperate with the NWSC board as necessary for the NWSC board to make its determination.
Legal References: Minn. Stat. § 122A.40, Subd. 3 (Teacher Hiring, Dismissal)
Minn. Stat. § 123B.195 (Board Member’s Right to Employment)
Minn. Stat. § 471.87 (Public Officers; Interest in Contract; Penalty)
Minn. Stat. § 471.88, Subds. 2, 3, 4, 5, 12, 13 and 21 (Exceptions)
Minn. Stat. § 471.89 (Contract, When Void)
Op. Atty. Gen. 437-A-4, March 15, 1935
Op. Atty. Gen 90-C-5, July 30, 1940
Op. Atty. Gen. 90-A, August 14, 1957