                                October 9, 1989



Ms. Lynn B. Polson                      Opinion No.   JM-1107
Acting Executive Director
Department of Information               Re: Construction of conflict
   Resources                            of interest provisions    of
P. 0. Box 13564                         article 4413(32j), V.T.C.S.,
Austin, Texas   78711                   which creates the Department
                                        of Information Resources
                                        (RQ-1802)

Dear   Ms.   Polson:

        On behalf of the Department   of Information  Resources
you request an interpretation of the conflict of interest
PrOViSiOnS    in section 8 of article 4413(32j), V.T.C.S.   This
statute, enacted by the 71st Legislature as House Bill 2736,
establishes the Department of Information Resources,      grants
it powers and duties formerly vested         in the Automated
Information and Telecommunications Council, and abolishes
the council. See Acts 1989, 71st Leg., ch. 788, § 1, at
3569. You are concerned about the following two conflict of
interest provisions:

                (a) A member of the board or an        employee
             of the department may not:

                .   .   .   .

                (3) own, control, or have, directly     or
             indirectly, more than a 10 percent   interest
             in a business entity that has a substantial
             interest in the information resources tech-
             nologies industry and that may contract with
             state government;

                 (4) receive more than 25 percent of the
             person's income from a business entity that
             has a substantial interest in the information
             resources technologies industry and that may
             contract with state government . . . .

V.T.C.S.   art. 4413(32j),  5 8.   "Information                  resources
technologies" is defined as "data processing                    and tele-
communications  hardware,. software,  services,                  supplies,




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personnel, facility resources,     maintenance,   and   training."
Id. 5 3(4).
     The Department of Information Resources was established
to coordinate and direct the use of information    resources
technologies by state agencies and to ensure that the most
cost effective and useful methods are implemented.  L!L § 1.
To carry out these goals, you state that you must employ
highly trained professionals with expertise in various areas
of computer technology.     Many of these individuals   have
worked in the private sector.

     you are concerned about the effect of section 8(a)(3)
on your employment of persons who may have acquired stock in
their former employers through pension and stock ownership
plans. YOU also ask whether     this section prohibits   the
department from employing   individuals whose parents   have
partial ownership in such businesses.

     Section 8(a)(3) applies if an employee owns more than a
10 percent interest in a business entity that has **a sub-
stantial interest in the information resources technolosies
industryn and that "may. contract with state government."
Your questions   relate only to the person's       ownership
interest in a business entity, and not to the magnitude   of
the entity's  interest in the industry or the possibility
that it may contract with the state. Nor do we address
these aspects of sections 8(a)(3) and 8(a)(4), except to
point out that these conditions    must also exist for an
individual's employment to be barred.

     Section 8(a)(3) applies to persons who "own. control,
gr have. directly or indirectly, more than a 10 percent
interest" in the described business entity. V.T.C.S.      art.
4413(32j),  5 8    (emphasis added).      This is    expansive
language, and in our opinion    it includes stock acquired by
the person through an employees' pension or stock    ownership
plan. The individual's    interest in the stock gives him a
personal stake in the former employer's economic welfare,
and creates a risk of divided loyalties if he were employed
by the department.   Accordingly, when you determine   whether
an applicant or employee has more than a 10 percent interest
in a business entity under section 8(a)(3), you must count
stock in former employers acquired through pension and stock
ownership plans.

     We find no provision of law that attributes to an indi-
vidual a parent's ownership   interest in a business entity.
Prior opinions  of this office dealing with an analogous
question indicate that the parent's interest should not be
attributed to a child.      Attorney General Opinion   H-354




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Ms. Lynn B. Polson - Page 3   (JM-1107)




(1974) determined that the commissioners court of a county
could purchase fuel from a corporation owned by a brother of
one of the commissioners.  The county was prohibited by law
from entering into a contract in which a commissioner had a
direct or indirect pecuniary interest, but, the opinion
stated, "the mere relationship of two brothers is not, in
and of itself, sufficient to establish the prohibited
interest." Attorney General Opinion H-354 at 3.      See also
Attorney General Opinion O-2856 (1940); Letter Opinion 88-44
(1988). The fact that an applicant's or employee's     parent
owns an interest in a business does not mean that the
applicant or employee would   "own, control, or have" that
interest.  In the absence of other facts showing that a
person actually owns or controls a parent's interest in a
business  entity, the parent's     interest should not     be
included in determining whether the person owns, controls or
has more than a 10 percent interest in a particular business
entity.

     You ask whether section 8(a)(3) prohibits the depart-
ment from employing individuals whose spouses have partial
ownership in a business entity with a "substantial  interest
in the information    resources technologies   industry and
that may contract with state government."   With respect to
section 8(a)(4), you ask whether community property     laws
apply in determining whether   an individual receives more
than 25 percent  of his income from this kind of business
entity.

     Prior opinions of this office have considered         com-
munity property laws in addressing questions of conflict     of
interest under particular statutes or common law rules. See
Attorney General Opinion JM-817    (1987) (university regent
has a personal pecuniary interest in spouse's salary from
corporation   and income    from his ownership       interest):
Attorney General Opinion JM-126      (1984) (state officer's
community   interest in her     husband's   salary does     not
constitute   a "substantial    pecuniary   interest"   in   the
facility that employs husband).       On the basis of these
opinions, we conclude that you should consider community
property laws in applying sections 8(a)(3) and 8(a)(4).

     You have not asked us about the application     of the
conflict  of interest provisions   to a particular      case
involving community property interests.    Whether  specific
individuals are barred  from working    for the department
must be resolved on a case-by-case.basis,   by applying the
community property laws to the facts of each case.      See.
e.s., Fam. Code ch. 5.




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Ms. Lynn B. Polson - Page 4      (JM-1107)




     You do not ask, and we do not address, any constitu-
tional issue, either with respect to composition       or to
duties.  You inquire only about statutory construction.  See
Attorney General Opinion JM-872 (1988).

                       SUMMARY

           In applying the conflict of interest pro-
        visions found in sections 8(a)(3) and 8(a)(4)
        of article 4413(32j), V.T.C.S., the Depart-
        ment of Information Resources should consider
        an employee's community property interest    in
        his spouse‘s interests in or income from 'Ia
        business entity that has a substantial      in-
        terest in the information     resources   tech-
        nologies industry and that may contract with
        state government."   Whether specific   indivi-
        duals are barred from working for the depart-
        ment must be determined on a case-by-case
        basis. An applicant's or employee's stock in
        a business entity acquired while an employee
        of the business   through a pension or stock
        ownership plan should also be counted        in
        determining   that    individual's    ownership
        interest. A parent's interest in a business
        entity  should not     be attributed    to
        individual, unless the facts show that ki
        actually controls it.




                                   J htJ&
                                    Very truly yo

                                           AA
                                    JIM     MATTOX
                                    Attorney General of Texas

MARYKELLER
First Assistant Attorney General

LOU MCCREARY
Executive Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Susan L. Garrison
Assistant Attorney General




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