The General Assembly, in its recent 1983 Session, enacted various amendments to the Indiana "conflicts of interest" law, including new provisions which will require the filing of disclosure statements by "public servants" (including all persons in positions to which they were appointed by "the board of trustees of a state-supported college or University" or who are staff employees "empowered to purchase on behalf of the governmental entity" are employees), as to any "pecuniary interest" or "financial interest" or potential "profit" which they may "contract or purchase connected with an action governmental entity which [they] serve..."

In general terms, these new amendments require that all Purdue officers and employees employed in positions to which they were appointed by the Board of Trustees, or in any position involving any authority to purchase or contract on behalf of the University, must file disclosure statements with the board of Trustees, stating any financial interest which they may have in any University contract or purchase. The Board must then decide whether to approve such interests and must forward all approved disclosure statements to the State Board of Accounts.

A person who "knowingly or intentionally" has a financial interest in, or expects to derive a profit from, a University contract or purchase and who fails to make the required disclosure be charged with commission of the statutory crime of "conflicts of interest", which is a felony and punishable by fine and imprisonment.

This disclosure requirement applies to all Faculty, Administrative, and Professional staff members, but especially to those who have the authority to make purchases or sign contracts for Purdue University.

1. Staff members delegated authority to make purchases shall include anyone who initiates or signs a requisition or purchase order or has the form signed on his behalf.

2. Staff members delegated authority to sign contracts shall include anyone who signs the contract (including staff members of the Purdue Research Foundation who sign contracts which are subcontracted to Purdue University).

The statute does not specifically define the terms "financial interest" or "pecuniary interest". However, based on preliminary opinions of our Legal Counsel, the following general guidelines are offered. (Obviously, individual situations will require individual consideration. Assistance in answering individual questions will be furnished by the Treasurer's Office.)

1. University Counsel advises that the terms "financial interest" and "pecuniary interest" would not include the mere ownership of small amounts of stock in large, publicly-owned corporations with which Purdue does business. Thus, no disclosure is required. However, if any employee, or his/her spouse, does own stock in such a corporation, and if the employee is aware that the corporation makes sales to or does business with that department or area of the University within which he or she has contracting or purchasing duties, he/she may opt to make a disclosure voluntarily.

2. The terms "financial interest" and "pecuniary interest" would clearly include any ownership interest in a smaller business or corporation, where a contract or sale to Purdue could be expected to have some direct effect on the owner's interests. Disclosure of any such ownership interest, held by the employee or his/her spouse, must be made.

3. The terms "financial interest" and "pecuniary interest" could also mean creditors' interests. If a Purdue employee, or his/her spouse, has made a loan to, or guaranteed an obligation of, a person or corporation who is doing business, or is seeking to do business, with Purdue, disclosure of such interest must be made.

   Ownership of publicly-held bonds or other debt securities of a large corporation would not amount to an interest requiring disclosure as discussed in Item 1 relating to stock ownership.

4. A person who is a paid officer, director, employee or consultant of a corporation, whether it be large or small, and who knows of business being done by the corporation with Purdue, would be considered to have a "financial" or "pecuniary" interest in the particular contract or purchase, by reason of the salary or fees received from the corporation. Disclosure of all such interests must be made.

There are two basic types of disclosures that may be made:

1. Annual disclosure to be used when transactions occur on a regular basis throughout the year.

2. Single disclosure to be used when a specific single transaction occurs which is not one of a series of transactions made on a regular basis and disclosed through a current "annual disclosure" statement.

Responsibility for administration of the statute on conflict of interest has been assigned to the Executive Vice President and Treasurer. Copies of the Conflict of Interest Disclosure Form may be obtained from that office.

Vice Presidents, Chancellors, Deans, Directors and department Heads are responsible for compliance with these disclosure requirements by staff members within their areas of administrative jurisdiction.

The statute requires that final approval of all potential conflicts of interest be given by the Board of Trustees, which accordingly will evaluate each specific situation disclosed. If the Board of Trustees finds that the situation involves a conflict of interest which in its opinion would be unlawful, or detrimental to or not in the best interests of the University, so that approval cannot be given, the officer or employee involved will be required to discontinue or divest himself/herself of the outside interest creating the conflict.

Completed forms (original and one copy) are to be return to the Treasurer's Office through the organizational structure with approvals being required at each level. Completed and approved forms will be submitted by the Treasurer to the Board of Trustees for final approval and then transmitted to the State Board of Accounts as required by the statute. One copy will be kept on file in the Treasurer's Office.

Questions concerning conflict of interest and the statutory requirements should be referred to the Treasurer's Office. Appropriate legal advice will be provided when necessary.

Steven C. Beering
President