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The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 5689 April 22, 1980 COLLEGES AND UNIVERSITIES: President serving on board of directors of bank holding college funds CONFLICT OF INTEREST: President of state college serving on board of directors of bank holding college funds CONSTITUTIONAL LAW: Const 1963, art 4, Sec. 10 Where a state college has funds on deposit at a local bank, the president of the state college may not serve on the board of directors of the local bank without violating Const 1963, art 4, Sec. 10 and 1968 PA 318. Honorable Mitch Irwin State Senator The Capitol Lansing, MI 48909 You have requested my opinion on a question which may be stated as follows: Would the president of an institution with authority to grant baccalaureate degrees under Const 1963, art 8, Secs. 5 and 6 be in violation of Const 1963, art 4, Sec. 10 and/or 1968 PA 318, MCLA 15.301 et seq; MSA 4.1700(21) et seq if he were to serve simultaneously as a member of the board of directors of a local bank that does business with the educational institution of which he is president? In response to your question, it must first be observed that prohibitions against holding incompatible public offices contained in 1978 PA 566, MCLA 15.181 et seq; MSA 15.1120(121) et seq, apply only to situations where separate public positions are held simultaneously by a public officer or public employee. Your question does involve a possible conflict of interest by one who holds both a public and a private position and is governed initially by Const 1963, art 4, Sec. 10, which provides: 'No member of the legislature nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest. The legislature shall further implement this provision by appropriate legislation.' OAG, 1967-1968 No 4587, p. 118 (September 26, 1967) held, inter alia, that the president of an institution of higher education having the authority to grant baccalaureate degees who simultaneously serves as a director of a bank doing business with that educational institution is a state officer involved in a substantial conflict of interest contrary to Const 1963, art 4, Sec. 10. Subsequently, the legislature enacted 1968 PA 318, MCLA 15.301 et seq; MSA 4.1700(21) et seq which provides, in pertinant part, (a1) as follows: Sec. 2. No member of the legislature, herein referred to as a 'legislator', nor any state officer shall be interested directly or indirectly in any contract with the state or any political subdivision thereof which shall cause a substantial conflict of interest. Sec. 4. . . . In the following cases, there shall be deemed to be no conflict of interest which is substantial: (b) In respect to a contract between the state or any political subdivision thereof and: '(i) a corporation in which a legislator or state officer is a stockholder . . . or a director, officer or employee; (iv) . . . [I]f the legislator or state officer does not solicit the contract, takes no part in the negotiations for or in the approval of the contract or any amendment thereto, and does not in any way represent either party in the transaction and if the contract is not with or authorized by the department or agency of the state or a political subdivision thereof with which the state officer is connected.' (Emphasis supplied) The definition of the term substantial contained in 1968 PA 318, supra, Sec. 4 was held to be consistent with and in no way restricts the terms of Const 1963, art 4, Sec. 10. OAG, 1973-1974, No 4799, supra. Thus, under 1968 PA 318, supra, a university president serving on the board of directors of a bank that does business with the educational institution of which he is president is a state officer involved in a substantial conflict of interest. However, pursuant to 1968 PA 318, supra, Sec. 4, a university president may serve on the board of directors of a bank that contracts with state agencies and political subdivisions other than the university with which he is connected, provided that the state officer plays no part in the negotiation for, execution or amendment of such contracts. OAG, 1973-1974, No 4799, supra. In view of the foregoing, it is my opinion that the president of an educational institution with authority to grant baccalaureate degrees under Const, 1963, art 8, Secs. 5 and 6 is in violation of Const 1963, 4, Sec. 10 and 1968 PA 318, supra, if he serves simultaneously as a member of the board of directors of a local bank that does business with the educational institution of which he is president. Frank J. Kelley Attorney General (a1.)
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