County Financial Management System of 1981-Conflict of Interest

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The County Financial Management System of 1981 contains the most stringent conflict of interest provisions.  Tenn. Code Ann. § 5-21-121 provides:

(a)  The director, purchasing agent, members of the committee, members of the county legislative body, or other officials, employees, or members of the board of education or highway commission shall not be financially interested or have any personal beneficial interest, either directly or indirectly, in the purchase of any supplies, materials, equipment or contractual services for the county.

(b)  No firm, corporation, partnership, association or individual furnishing any such supplies, materials,  equipment or contractual services, shall give or offer, nor shall the director or purchasing agent or any assistant or employee accept or receive directly or indirectly from any person, firm, corporation, partnership or association to whom any contract may be awarded, by rebate, gift or otherwise, any money or other things of value whatsoever, or any promise, obligation or contract for future reward or compensation.

In addition to county officials and officers, this statute includes county employees within its prohibition.  Further, the statute makes no distinction as to whether the interested person has any authority over the purchasing decision.  The broad language of this statute prohibits county officials, officers and employees from having any interest in a contract for the purchase of supplies, materials, equipment or contractual services.

The statute does not define the term “interest.”  However, the Attorney General, when discussing this statute, has adopted the definition of “interest” contained in T.C.A. § 12-4-101.  See Op. Tenn. Atty. Gen. 00-181 (November 22, 2000) (opining that the sale of items by the spouse of an employee of the school board to that same school system would give rise to a prohibited conflict of interest under T.C.A. § 5-21-121).  Nor does the  statute define the term, “personal beneficial interest.”  In State v. Whitehead, 43 S.W.3d 921, 929 (Tenn.Crim. App. 2000) the Court of Criminal Appeals found that a similar statute prohibited a county official “from having any personally favorable interest in a county contract, regardless of whether that interest is direct or circuitous.”