Request By:
The Honorable Virgil Pearman
State Representative
952 Woodland Drive
Radcliff, Kentucky 40160
Opinion
Opinion By: Steven L. Beshear, Attorney General; Walter C. Herdman, Assistant Deputy Attorney General
This is in response to a letter dated December 10 in which a conflict of interest question is raised. The facts indicate that a water district near Radcliff, Kentucky, was created pursuant to KRS Chapter 74. A member of the water commission is also president of the local bank in Radcliff in which the funds of the water district are deposited in a checking account. At the same time refinancing bonds issued by the district were purchased by the bank in question. Under the circumstances, the following question is presented:
"Does the commissioner in question have a conflict of interest because the bank which he serves as president provides financial services to the district?"
Pursuant to KRS 74.020(2), a commissioner of a water district may be removed from office as provided by KRS 65.007. KRS 65.007 provides for the removal of such member where a "conflict of interest" exists.
Insofar as the water district depositing its funds in a checking account with the bank of which the commissioner is president, there would be no conflict of interest, as pointed out in the case of
McCloud v. City of Cadiz, Ky. App., 548 S.W.2d 158 (1977), wherein the Court took the position that the deposit of money by a city of the fifth class in a bank where certain city officials were directors, would not violate the conflict of interest statute, namely KRS 61.280.
We also do not believe that the purchase by the bank of the refinancing bonds issued by the district would create a conflict of interest, particularly where the commissioner in question did not participate in the negotiations relative to the sale of the bonds to the bank as you indicated to be the case by phone conversation. Also, as pointed out in the McCloud case, supra, whatever benefit, if any, the commissioner would receive is too speculative and remote as to suggest a conflict of interest.