Meetings
 
Agenda Item
Docket No. 12-1782
 
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RE:
Reconsideration of an advisory opinion regarding whether members of the Louisiana Seafood Promotion and Marketing Board (LSPMB) may participate in a LSPMB trade show booth and whether it is a conflict of interest if LSPMB Board members inadvertently received a benefit from Distributor Promotions and Incentive Programs conducted by the Seafood Marketing Campaign Team.
Facts:
CHANGE OF FACTS:

The Louisiana Seafood Promotion and Marketing Board was originally an agency located within the Office of Fisheries of the Department of Wildlife and Fisheries. Pursuant to changes enacted by the Legislature during the 2013 Regular Legislative Session under Act 228, the LSPMB is now an agency under the direction of the Department of Culture, Recreation, and Tourism (DCRT). The members of the LSPMB and the Executive Director are now appointed by the Lieutenant Governor. The Executive Director shall now discharge all operational, maintenance, administrative, and executive functions of the LSPMB subject to the control, jurisdiction, and supervision of the DCRT.

The LSPMB shall carry out its campaign for advertising and promotion and its contracts for advertising and promotion or take any other actions with the approval of DCRT.

LSPMB is contractually bound to develop and implement a Seafood Marketing Program pursuant to a Memorandum of Understanding between BP, LDWF, the Office of Lieutenant Governor, LSPMB and LDWF Foundation. Since the change in the law, the LSPMB members must adopt a strategic plan and budget, but have no role in the selecting participants used in the Seafood Marketing Program, no role in reviewing contracts, or authorizing payments.

The LSPMB members' role in the Seafood Marketing Program is limited to determination of whether or not to include in the strategic plan objectives and strategies that allow for distributor-focused promotional activities and the authorization of a budget to fund the strategic plan/Seafood Marketing Program. Staff selection of specific retailers to participate in the Seafood Marketing Program and the approval of contracts and invoices falls under the supervision, jurisdiction, and control of the Lieutenant Governor and DCRT.

Also, as part of the change in the law, all contractual obligations of the LSPMB transferred to DCRT, which would have included any contracts with any marketing company like GCR, Inc. and The Food Group. However, it should be noted that at this time DCRT has terminated its contract with GCR, Inc. and its subcontractor, The Food Group.

LSPMB, subject to DCRT approval, may enter into new contracts. The Seafood campaign management functions that were handled by GCR will now be handled in-house by DCRT. The LSPMB, through its staff (DCRT staff), will direct and approve the work of any contractors and vendors involved in the campaign, with the approval of DCRT as set forth in La. R.S. 56:578.4 and Policy and Procedures for project Initiation, Approval, Payment, and Assessment. The LSPMB plays no role in that process. Also, the LSPMB plays no role in the procedure for authorizing payments from the funds given pursuant to the MOU between BP, DCRT, LWFF.

CRT is considering entering into the marketing campaign as previously proposed involving Giant Eagle grocery stores.

INITIAL FACTS: The Louisiana Seafood Promotion and Marketing Board (LSPMB) is an agency located within the Office of Fisheries, Louisiana Department of Wildlife and Fisheries. The LSPMB is composed of individuals who are engaged in the Louisiana seafood industry.

The LSPMB is currently operating under a three year plan to expend $30 million derived from a Memorandum of Understanding between BP, LDWF, the Office of the Lieutenant Governor, the LSPMB, and the Louisiana Wildlife and Fisheries Foundation (LWFF) in the aftermath of the 2010 Deepwater Horizon incident. LSPMB was required to develop and implement a Seafood Marketing Program to help boost the sale of Louisiana seafood in the aftermath of the BP oil spill. LSPMB's plan was approved by BP, the LSPMB Board, LDWF, and the Lieutenant Governor.

In furtherance of implementing the Seafood Marketing Program, a Seafood Marketing Campaign Team was created. The LSPMB, LDWF, and LWFF entered into a contract with Gregory C. Rigamer & Associates, Inc. ("GCR") to be the project manager on the Seafood Marketing Campaign Team. The Seafood Marketing Campaign Team is made up of the Executive Director for LSPMB, a representative of GCR, and a representative of The Food Group (an advertising company which is a subcontractor of GCR).

The Seafood Marketing Campaign Team is tasked with implementing the Seafood Marketing Program, which has been approved by the LSPMB and to which the LSPMB has dedicated $15 million of the BP funds. At this point, the Seafood Marketing Campaign Team is not required to return to the LSPMB for permission or approval to run any particular promotions in furtherance of the Seafood Marketing Program. However, the LSPMB Executive Director has been given such authority to sign off on any task order, which is required to be submitted to LWFF to release any funds to fund such promotions. GCR is required to present quarterly reports to the LSPMB to keep them abreast of the activities being performed by the Seafood Marketing Campaign Team.

LWFF is a nonprofit, public charitable foundation. Its relationship with LSPMB regarding the $30 million BP fund is memorialized in an Addendum attached to the Memorandum of Understanding. The promotional and marketing activities contemplated by LSPMB are to be financed by the funds held in and disbursed by LWFF. LWFF will only disburse funds as directed by in writing from the LDWF and LSPMB (through its Executive Director). LWFF is responsible for providing quarterly Fund Statements to LDWF and LSPMB that illustrate all Fund Activities.

As stated before, the LSPMB is task with promoting and marketing Louisiana seafood products to end users as well as at every level of the supply chain. Part of the $30 million dollars received from BP is being used to fund specific Distributor Promotions and Incentive Programs. The expenditures would be decided by the Seafood Marketing Campaign Team through a Task Order which defines the capital commitment and tactics that would be dedicated to accomplishing a Distributor Promotion or Incentive Program. The LSPMB Board does not approve or otherwise direct specific activities, tactics, or Task Orders that are dedicated to and budgeted for the Seafood Marketing Campaign as the LSPMB has already approved the Seafood Marketing Program.

The Seafood Marketing Campaign would like to establish effective programs with vendors who are major distributors of Louisiana seafood products. Because LSPMB board members are participants in the industry, it is likely that the Seafood Marketing Campaign Team may conduct Distributor Promotions and Incentive Programs with vendors that carry Louisiana seafood or other products harvested, processed or dealt by the Board members.

The Food Group has identified a potential marketing campaign opportunity with Giant Eagle Supermarkets, which have stores in Western Pennsylvania, Ohio, Northern West Virginia and Western Maryland. The Seafood Marketing Campaign Team would like to have these supermarkets conduct in-store samplings of Louisiana seafood; publish and distribute coupons, consumer handouts and recipe booklets; publish and distribute direct mail fliers with a coupon included; and perform point of sale advertising.

Given that LSPMB members are participants in the Louisiana seafood industry, the proposed supermarket promotions could result in a financial benefit to the board members. An example given is that one member is a harvester and the supermarket promotion could lead to higher sale prices for his seafood at the dock. Other board members are processors, and their product might wind up on Giant Eagle's shelves through brokered or direct sales.

The Seafood Marketing Campaign Team would like to enter into an agreement to provide for at least 4 product sampling events costing $427,524; recipe cards to cost $7,476; direct mail outs with coupons to cost $50,000. The funds to cover the costs of this seafood promotion would come from the $15 million dedicated by the LSPMB to fund the Seafood Marketing Program it approved. The funds would be released from LWFF through a task order executed by LSPMB's Executive Director and LDWF.





Comments:
The Board issued an advisory opinion which advised that La. R.S. 42:1111C(2)(d) would prohibit a LSPMB member from providing compensated services to Giant Eagle when Giant Eagle has a financial relationship with the LSPMB. Since the funds being used to fund the promotion with Giant Eagle can only be paid with the direction by the LSPMB's Executive Director, who works at the direction of the LSPMB, the board members are prohibited from transacting business with Giant Eagle either directly or through a third-party.

During the 2013 Regular Legislative Session, the laws which govern the LSPMB were modified and changed. As such, the Office of the Lieutenant Governor which oversees the Department of Culture, Recreation, and Tourism is requesting reconsideration of the prior advisory opinion.

Law:
La. R.S. 42:1113B prohibits an appointed member of a board or commission, his immediate family member, or a legal entity in which they have a substantial economic interest, from entering into or being in any way interested in a transaction that is under the supervision or jurisdiction of the board or commission.

La. R.S. 42:1111C(2)(d) prohibits a public servant and a legal entity in which the public servant exercises control or owns an interest from receiving any thing of economic value for services rendered to or for any person during his public service unless such services are neither performed for nor compensated by any person from whom such public servant would be prohibited by Section 1115(A)(1) or (B) from receiving a gift.

La. R.S. 42:1115A(1) prohibits a public servant from soliciting or accepting, directly or indirectly, any thing of economic value as a gift or gratuity from any person or from any officer, director, agent, or employee of such person, if such public servant knows or reasonably should know that such person has or is seeking to have a contractual, business or financial relationship with the public servant's agency.

La. R.S. 42:1115B(1) prohibits a public employee from soliciting or accepting, directly or indirectly, any thing of economic value as a gift or gratuity from any person or from any officer, director, agent, or employee of such person, if such public servant knows or reasonably should know that such person conducts operations or activities that are regulated by the public employees' agency.

Recommendations:
Adopt proposed advisory opinion.

Assigned Attorney: Tracy Barker
 
 
ATTACHMENTS:
Description:
2012-1782- Request for Reconsideration
2012-1782B Draft Opinion Reconsideration
2012-1782- OLG Letter to Ethics LSPMB follow-up 10-09-13