Allen rules conflict of interest in Fancy Gap utilities projects
Franklin County Commonwealth’s Attorney Timothy W. Allen has ruled that a conflict of interest exists with the a Carroll County Board of Supervisor also being an employee of the company performing inspections on the Fancy Gap Water and Sewer projects.
In April, federal funding agency Rural Development informed the Carroll County Public Service Authority (PSA) that a conflict of interest may exist with the utilities projects, and that it would discontinue funding for the project until the matter was resolved.
In a letter sent to the Carroll PSA dated April 16, Rural Development Area Specialist Travis Jackson stated that Rural Development will not disburse any more funds for inspection services relating to the project until a satisfactory response was received from the PSA. Nehemiah Engineering President Jeremy Hendrick said after the meeting the conflict arises from his brother, Joshua Hendrick, working for the company and also serving as one of the county’s board of supervisors.
After hearing a recommendation from County Attorney Jim Cornwell in April, the Carroll County PSA voted to request Commonwealth’s Attorney Nathan Lyons to investigate the matter and to issue an opinion on whether a conflict of an interest exists. The matter was later turned over to the Virginia State Police for an investigation.
However, Allen issued an opinion on the matter on Monday in a letter to Joshua Hendrick. Allen said Hendrick requested the Commonwealth’s Attorney render an opinion as to whether, under Virginia law, there is a conflict of interest with Nehemiah Engineering, Inc., having and executing service contracts with the Carroll County PSA while he simultaneously serves as a duly elected Supervisor on the Carroll County Board of Supervisors.
“After careful review of the State and Local Government Conflict of Interests Act, I conclude there is a conflict of interests for you if you remain employed by Nehemiah Engineering, Inc., which has executed a contract with the Carroll County Public Service Authority and you continue serving as a duly elected Supervisor on the Carroll County Board of Supervisors,” Allen wrote.
Allen then stated facts related to him as part of the investigation by the Virginia State Police Bureau of Criminal Investigations. Those facts include that Joshua Hendrick has been a duly elected member of the Carroll County Board of Supervisors since January 1, 2012, after the November 2011 election.
“You do not serve on the Carroll County PSA Board. However, you indicated that the Carroll County PSA Board members are all appointed by the Board of Supervisors,” Allen wrote. “The Board of Supervisors may appoint themselves to serve or someone else. Ultimate oversight authority of the Carroll County PSA rests with the Carroll County Board of Supervisors.”
“Prior to you becoming elected and since 2008, you have been and continue to be employed by Nehemiah Engineering, In., a company owned by your brother Jeremy Hendrick, and you receive an annual salary in excess of $10,000 (usually around $40,000). At one point prior to you serving as duly elected Supervisor on the Carroll County Board of Supervisors, you held a 20 percent ownership of Nehemiah Engineering, Inc. You have indicated, however, that all your ownership interests were lawfully transferred to your brother prior to you beginning public office,” Allen wrote. “On Dec. 5, 2011, Carroll County PSA entered into a contract with Nehemiah Engineering, Inc. to conduct inspection services for the Fancy Gap Water/Sewer Project. The contract is administered by the Carroll County PSA and is for a term of 24 months (11-23-2011 through 11-23-2013). This contract was publicly advertised via Requests for Proposals and was not awarded on a “sealed bid” basis.”
Allen wrote that the relevant Virginia law addressing this issue is contained in Chapter 31 of the 1950 Code of Virginia as amended and labeled “State and Local Government Conflicts of Interests Act.” The Act was enacted for the purpose of establishing a single body of law applicable to all state and local government officers and employees on the subject of conflict of interests.
“Under Section 2.2-3101 definitions, you, as an elected Board of Supervisor member, are an ‘officer’ of a ‘Governmental Agency.’ Furthermore, as defined in the same Section, you have a ‘personal interest’ in this matter because you receive over $10,000 in annual compensation from Nehemiah Engineering, Inc.,” Allen wrote. “According to my interpretation of the law to your facts, you also have a ‘personal interest in a contract’ because you have a personal interest in a business that is a party to the ongoing contract between Nehemiah Engineering, Inc. and Carroll County PSA, which is supervised by the Carroll County Board of Supervisors. In addition, you also have a ‘personal interest in a transaction’ because you may realize a reasonably foreseeable direct or indirect benefit as a result of the action of the agency (Carroll County PSA) considering the transaction (the ongoing contract).”
Allen wrote that according to Virginia Code Section 2.2-3107, no person elected or appointed as a member of the governing body of a county, city or town shall have a personal interest in any contract other than a contract of employment with any other governmental agency if such person’s governing body appoints a majority of the members of the governing body of the second governmental agency.
“Since the Carroll County Board of Supervisors appoints all the members of the Carroll County PSA and you are an employee of Nehemiah Engineering, Inc., it is my opinion as long as you have a personal interest in Nehemiah Engineering, Inc. (employment) it is a conflict of interests under 2.2-3107,” Allen wrote. “According to Virginia Code Section 2.2-3112, no person elected or appointed to a governmental agency and who has a personal interest in a transaction shall participate in the transaction if the transaction has application solely to property or a business in which he has a personal interest. It is my opinion that you would have a personal interest in any transaction with Nehemiah Engineering, Inc. And therefore, this would be an additional conflict of interest. There are certain exemptions under this code section; however, I do not have enough information to determine if you qualify under any of these exemptions.”
Allen also noted that his opinion is only applicable to the facts Hendrick and the Virginia State Police provided him, and is only advisory on nature.
“If there are any omissions of facts or if circumstances change, then this opinion is null and void,” Allen wrote. “Moreover, this opinion does not address any possible conflict of interests regarding the RUS instruction 1780.70 or any other unspecified USDA-RD regulations or federal law.”
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