A Question of Ethics

Is It a Crime for Members to Violate the Gift Rules?

September 24, 2007

Q: I work for an ethics watchdog group that has been seeking reform for years. The recently passed Honest Leadership and Open Government Act included many of the changes we have sought, but it did not go far enough. Most importantly, although it is now a federal crime for a lobbyist to make a gift that violates the Congressional gift rules, the act does not assign criminal liability to the official receiving such a gift. Is it really the case that, while a lobbyist’s violation of the gift rules is a crime, a Member’s violation is merely a rules violation? Or might Members and staff somehow face criminal liability for violations of Congressional gift rules?

A: You are right that the act, on its face, does not subject Members and staff to criminal liability. However, the good news for you and bad news for Members and staff is that, with a little nifty legal footwork, a prosecutor might use the act to expose Members and staff to criminal liability for violations of the gift rules that involve lobbyists. But before turning to the reasons why, we should first be careful to distinguish between the federal bribery statute and the Congressional gift rules. These are two completely different animals, and your question concerns only the Congressional gift rules.

The federal bribery statute criminalizes gifts to public officials in exchange for, or in recognition of, some official act. The statute applies to Congressional officials who receive gifts as well as individuals who offer them. The critical element for liability is the linkage of a gift to an official act.

In contrast, unlike the bribery statute, the Congressional gift rules apply even in the absence of a link to an official act. The House and Senate established the gift rules to define when Congressional officials may and may not receive gifts.

Given the rules’ purpose, it is no surprise that, until recently, they applied only to Members and staff. The House and Senate ethics committees administer the rules, investigate alleged violations and recommend sanctions where deemed appropriate. The possible sanctions for violations of the gift rules include censure, reprimand, a fine and even expulsion. The ethics committees cannot, however, impose criminal sanctions.

This is where the Honest Leadership and Open Government Act comes in. For the first time, the Congressional gift rules extend to individuals and entities outside Congress. Lobbyists and employers of in-house lobbyists now face stiff civil penalties for knowingly making a gift to a covered official that violates the Congressional gift rules. As you point out, they also face criminal liability, including up to five years in jail, if they violate the rules “corruptly.”

In light of these changes, lobbyists and employers of in-house lobbyists are rushing to learn a complex set of rules that were designed to apply only to Members and staff, and that, until now, never exposed anyone to criminal liability.

Yet, as you point out, the act does not extend criminal liability for gift rule violations to Members and staff. The act makes clear that such liability applies only to lobbyists and businesses that employ them. In fact, a strong argument exists that Congress’ omission of Members and staff from the list of individuals who face criminal liability signals its legislative intent that Members and staff should not be criminally liable for gift rule violations.

Despite the strength of this argument, Members and staff still might face a risk of criminal liability for violations of Congressional gift rules. Prosecutors might attempt to use other criminal statutes to link the gift rules to the act.

For example, under the federal conspiracy statute it is a crime to make an agreement to violate another federal criminal statute. A prosecutor might argue that, if a lobbyist knowingly and corruptly makes a gift to a Member that violates the gift rules, and the Member agrees to receive the gift, the Member and lobbyist have made an agreement to violate the act. The prosecutor could contend that the Member’s participation in the agreement therefore subjects him to criminal liability.

Likewise, it is a crime to aid and abet the commission of any federal crime. While it might sound odd to charge the recipient of a gift with aiding and abetting the donor in giving the gift, prosecutors might see this as another source of potential criminal liability. Under this theory, the prosecutor would argue that, where a Member takes some affirmative step to help a lobbyist’s violation of the act, the Member aids and abets the lobbyist’s commission of a crime.

In sum, historically the only penalties that Members and staff have faced for violations of the gift rules were the sanctions recommended by the House and Senate ethics committees. In passing the Honest Leadership and Open Government Act, Members may have unwittingly opened an avenue for federal prosecutors to investigate and prosecute them for gift rule violations involving lobbyists.


© Copyright 2007, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.

Subscribe

A Question of Ethics

Congress' Gift Rules Now Apply to Businesses

September 10, 2007

Q: I work in the government relations department of a Fortune 500 company and am responsible for filing our lobbying registration and disclosure forms. I have had this role for years and filling out the forms has become second nature. However, I gather that the recent lobbying reform will bring changes to the forms. I haven’t seen the new forms yet. Are there any potential pitfalls?

A: The Honest Leadership and Open Government Act, which is expected to become law this week, contains the most significant changes to lobbying registration and disclosure requirements since the Lobbying Disclosure Act of 1995. Many lobbyists have shrugged off the reform, saying that they do not anticipate any impact on the way they conduct business. This seems a cavalier approach, especially given the sweeping nature of some of the changes.

Perhaps the most significant change is the introduction of criminal liability. While there always have been civil penalties for lobbying registration violations, anyone who “knowingly and corruptly fails to comply with any provision” of the Lobbying Disclosure Act will now be subject to a prison sentence of up to five years. Therefore, there is every reason to take the new requirements seriously. Even though the new lobbying registration and disclosure forms do not exist yet, you are sensible to be on the lookout for potential pitfalls.

So are there any pitfalls? In a word, yes. Perhaps the most puzzling, particularly for companies like yours, is the requirement that each person and organization filing a registration form certify that the person or organization “has read and is familiar with” the Senate and House rules “relating to the provision of gifts and travel.”

In the case of an individual lobbyist, as opposed to an organization, this requirement is not puzzling at all. Before filing your registration form, simply be sure to read and familiarize yourself with the House and Senate gift and travel rules, so you can certify that you have done so.

In the case of an organization, however, certifying familiarity with the gift and travel rules becomes more complicated and confusing. This is because organizations don’t read. People read.

Take a company like Exxon. Exxon employs its own in-house lobbyists, just as your company does. Consequently, Exxon must file lobbying registration and disclosure forms and has done so for years. Beginning in 2008, someone must certify on behalf of the company that Exxon “has read and is familiar with” the Senate and House rules relating to gift and travel. Yet Exxon can no more read ethics rules than it can drink beer or play tennis.

The odd requirement that companies must “read” and be familiar with the gift and travel rules leaves many questions unanswered. What does it mean for a company to read the rules? What does it mean for a company to be familiar with the rules? In order for a company to make the required certification, must certain employees read and be familiar with the rules? If so, how should a company identify which of its employees must do so? Once the company identifies the employees, what steps must it take to ensure that they actually read the rules and are familiar with them?

While there are many ways a company could answer these questions, perhaps the safest approach is to implement formal processes designed to ensure compliance. For example, a company’s managers could first identify all employees who they believe could be in a circumstance in which the gift and travel rules might apply. Next, the company could require such employees to certify to the company that they have read and are familiar with the rules. To be absolutely certain, the company might even go one step further and require certain employees to undergo training regarding the rules.

One advantage of formal processes like these is that the company would have the ability to document compliance. This would be particularly useful if the government were ever to question whether the company properly complied with its obligation to read and be familiar with the rules. Although such processes certainly would not be necessary to demonstrate compliance, they would make it much easier for a company to do so.

Formal processes and training would have other benefits as well. Under the lobbying reform, companies are required not only to read and be familiar with the rules but to obey them, too. In fact, in their disclosure forms they must now certify that they have complied with the gift and travel rules. Lobbyists and organizations that employ lobbyists can now be criminally liable for knowing violations of these rules. This is a major change to lobbyists’ legal exposure and is a reason all by itself for a company to make sure its employees are familiar with the rules.

Prior to the lobbying reform, the House and Senate gift and travel rules applied only to Members and their staff. Now, for the first time, the rules will apply to individuals and organizations outside of Congress. Companies that employ lobbyists will soon discover what Members and their staff have known for years: The rules are neither simple nor intuitive. Pitfalls abound.


© Copyright 2007, Roll Call Inc. Reprinted with permission. Widely regarded as the leading publication for Congressional news and information, Roll Call has been the newspaper of Capitol Hill since 1955. For more information, visit www.rollcall.com.

Subscribe