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Conflicts Do Not Only Involve the Official's Direct Financial Interests -- The Charity Case
Tuesday, November 25th, 2008
Robert Wechsler
Most ethics codes effectively define a conflict of interest as a
conflict between an
official's personal financial interest and an official's obligation to the public interest. But this leaves out an enormous
number of personal interests, many of which are themselves financial,
including the financial interests of family members, business
associates, and favorite charities.
Gift provisions often make it a violation for immediate family members to accept gifts from those doing business with the government, but it is the rare ethics code that also includes charities with which an official is closely identified, either as board member, director, employee, or prominent sponsor.
This leaves a very wide door open for individuals and entities to influence an official by giving large amounts of money to a charity, for which the official need not recuse himself when the donor's interests come before him.
This situation made the front page of the New York Times today, and Rep. Charles Rangel (NY) is once again involved (two earlier blog entries on Rep. Rangel are here and here). The president of a corporation that moved offshore to reduce its federal tax payments pledged a million dollars to the Charles B. Rangel School of Public Service, whose principal sponsor is Guess Who. As chair of the House Ways and Means Committee, Rangel protected its tax shelter, even though the Senate voted 94-3 to get rid of it. The big donor's company saved tens of millions of dollars a year, and the treasury lost a billion dollars.
What's most important to us is what Rangel's lawyer said, after saying that he didn't know about the pledge at the time he voted on the tax loophole, even though he met with the donor (about the school) and with his company's lobbyist at the same time. "[E]ven if he had known, [the lawyer] said, there was no need to recuse himself from the matter, because House rules require such a step only when a member has a personal financial interest in the legislation."
The fact that it looks like bribery is unimportant. The fact that Rangel wasn't just a member of the committee, but the chairman, is unimportant. The fact the Senate had voted against it overwhelmingly is unimportant. All that matters are the rules. Well, the rules clearly have to be amended, just as most local government's ethics codes, to make sure that the official's personal financial interests are not all that matters.
The City Ethics Model Code has the following provision in its basic conflict of interest provision:
It's possible that this language might not even work in the Rangel case, because he may not be an officer or director of the School of Public Service that bears his name. I should probably add "fundraiser" to this list of positions.
I've written about other aspects of gifts to politicians' charities (including the city itself) here, here, here, and here.
Robert Wechsler
Director of Research-Retired, City Ethics
---
Gift provisions often make it a violation for immediate family members to accept gifts from those doing business with the government, but it is the rare ethics code that also includes charities with which an official is closely identified, either as board member, director, employee, or prominent sponsor.
This leaves a very wide door open for individuals and entities to influence an official by giving large amounts of money to a charity, for which the official need not recuse himself when the donor's interests come before him.
This situation made the front page of the New York Times today, and Rep. Charles Rangel (NY) is once again involved (two earlier blog entries on Rep. Rangel are here and here). The president of a corporation that moved offshore to reduce its federal tax payments pledged a million dollars to the Charles B. Rangel School of Public Service, whose principal sponsor is Guess Who. As chair of the House Ways and Means Committee, Rangel protected its tax shelter, even though the Senate voted 94-3 to get rid of it. The big donor's company saved tens of millions of dollars a year, and the treasury lost a billion dollars.
What's most important to us is what Rangel's lawyer said, after saying that he didn't know about the pledge at the time he voted on the tax loophole, even though he met with the donor (about the school) and with his company's lobbyist at the same time. "[E]ven if he had known, [the lawyer] said, there was no need to recuse himself from the matter, because House rules require such a step only when a member has a personal financial interest in the legislation."
The fact that it looks like bribery is unimportant. The fact that Rangel wasn't just a member of the committee, but the chairman, is unimportant. The fact the Senate had voted against it overwhelmingly is unimportant. All that matters are the rules. Well, the rules clearly have to be amended, just as most local government's ethics codes, to make sure that the official's personal financial interests are not all that matters.
The City Ethics Model Code has the following provision in its basic conflict of interest provision:
An official or
employee may not use his or her official position or office, or
take or fail to take any action, or influence others to take or fail to
take any action, in a manner which he or she knows, or has reason to
believe, may result in a personal or financial benefit, not shared with a substantial
segment of the city's population, for any of the following persons or
entities:
h. a nongovernmental civic group, union, social, charitable, or religious organization of which he or she (or his or her spouse or domestic partner) is an officer or director.
h. a nongovernmental civic group, union, social, charitable, or religious organization of which he or she (or his or her spouse or domestic partner) is an officer or director.
It's possible that this language might not even work in the Rangel case, because he may not be an officer or director of the School of Public Service that bears his name. I should probably add "fundraiser" to this list of positions.
I've written about other aspects of gifts to politicians' charities (including the city itself) here, here, here, and here.
Robert Wechsler
Director of Research-Retired, City Ethics
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- Robert Wechsler's blog
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