A Question of Ethics

Invitation to Charity Events Is Not an Ethics Free Pass

October 22, 2007

Q: I am the president of a charity based in Washington, D.C., that frequently hosts fundraising dinners. Recently, a corporation offered to donate to an upcoming dinner on the condition that we invite certain lawmakers and arrange for the lawmakers to sit at the corporation’s table. The corporation would pay the $10,000 fee for an invitation for a table of eight and then donate the invitation back to our charity if we use it to invite specific Members of the House.

The CEO has assured me that there is a charity events exception to the ban on gifts to Members and that the proposal would comply with House ethics rules under that exception. I’m always in need of funds for these dinners but want to be sure the proposal complies with the ethics rules. Does it? If not, do I have any risk of personal liability?

A: The CEO is right that, while the House ethics rules generally prohibit Members from accepting gifts of any kind, an invitation to a charity event is an exception to the ban on gifts. The purpose of the exception is to enable Members and staff to lend their names to legitimate charitable enterprises. However, there are strings attached. To avoid trouble, before you issue any invitations, you and the CEO should carefully study the requirements of the exception.

The exception appears in Clause 5(a)(4)(C) of House Rule 25, which allows House Members and staffers to accept a sponsor’s unsolicited offer of free attendance at a charity event. For the exception to apply, the critical factor here is that the invitation must come from the sponsor of the event.

As you may know, for purposes of the exception, the term “sponsor” does not have the meaning one might normally assign to it, but rather refers to the event organizer — the entity or entities that are primarily responsible for organizing the event. The Ethics Manual states that a corporation that simply contributes money or buys tickets to an event is not considered a sponsor. Therefore, the manual states, House Members and staff may not accept an invitation from a corporation “that merely bought a block of tickets to or a table at the event.”

Given these rules, one could argue that the corporation’s proposed arrangement should not qualify for the charity events exception. According to the House Ethics Manual, a Member may not accept an invitation to a charity event from a corporate donor. If that’s the case, why should the Member be permitted to accept an invitation that a corporate donor has directed an event organizer to issue to the Member?

The answer may lie in the House Ethics Manual, which allows a corporate contributor to request that the organizer of a charity event invite particular Members or staff to sit with the contributor. However, there are restrictions on these requests, so both contributors and event organizers should tread carefully.

First, regardless of the contributor’s request, the invitation to the Member must neither reference a contributor nor be extended by anyone other than the organizer. Second, only the event organizer should communicate with the Member regarding the event. This is because a communication from the corporate contributor “may be deemed an impermissible invitation from the contributor.” In your case, while communications between the CEO and the Members are largely beyond your control, you might consider reminding the CEO not to communicate with the Members regarding the event.

Finally, while the contributor may request that the organizer invite particular Members or staff to sit with the contributor, the organizer must retain “ultimate control of the guest list and the seating arrangements.” You have been offered a contribution on the condition that you invite certain Members to sit with the potential contributor. The real crux of your question is whether it is possible for you to maintain ultimate control over the guest list and seating assignments while at the same time accepting a conditional offer like the CEO’s.

I would argue that it is possible to maintain ultimate control. After all, it is your choice whether to accept the CEO’s conditional offer. If you do not wish to invite the requested Members, or to seat the Members at the corporation’s table, you have the option to deny the corporation’s offer. On the other hand, someone also could argue that to accept the corporation’s offer is to relinquish ultimate control of the guest list and seating assignments. In the absence of any ethics rule language directly on point, there is a risk that the committee would accept this latter argument and conclude that the conditional offer violates the rules.

Given that risk, your next question is whether you have any risk of personal liability. The short answer is that you might. If the CEO who made the proposal to you is a lobbyist and his arrangement were to violate the House gift rules, the recently passed Honest Leadership and Open Government Act could certainly subject him to liability. Moreover, under the federal conspiracy statute, an aggressive prosecutor might argue that you too are liable. Generally, the conspiracy statute makes it a crime to agree to violate any other federal criminal statute. Here, if you were to participate willfully in a lobbyist’s scheme to violate the House gift rules, a prosecutor could argue that you have conspired with the lobbyist to violate the new statute requiring lobbyists to comply with those rules.

It is no secret that the ethics and lobbying reform exposes lobbyists to liability for violations of Congressional gift rules. As your question suggests, that reform also may provide aggressive prosecutors with a basis to argue that, in certain circumstances, such liability could extend to charity event organizers like you.

© 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.


A Question of Ethics

$250 Limit Covers All Personal Gifts to Members, Staffers

October 9, 2007

Q: I am a registered lobbyist and a longtime friend of a Senate staffer. We grew up on the same street and attended the same schools all the way from the first day of kindergarten through law school. I served as the best man in his wedding, and he was the best man in mine. Over the years, our wives have become close as well, so close that they speak nearly every day. My friend’s 40th birthday is coming up, and I would like to do something special for him. I’m thinking of getting him a $1,000 gift certificate to his favorite restaurant, The Inn at Little Washington. May I do so? If not, may we simply address the gift from my wife, who is not a lobbyist?

A: Wow, we should all have friends like you. Unfortunately, in this case, your friend may not be able to enjoy the full benefit of your generosity.

Under the recently enacted Honest Leadership and Open Government Act, lobbyists such as yourself face penalties for making a gift to a Senate staffer that violates the Senate gift rule. As I am sure you know, the gift rule prohibits gifts of any kind to Senators and their staffers, unless an exception applies. Therefore, the question for you is whether there is an exception that allows the gift you have in mind.

Given your relationship with the staffer, the personal friendship exception would appear to be your best bet. This exception covers anything given on the basis of a personal friendship, unless the gift was provided because of the recipient’s official position. The rule sets forth three relevant factors, and you have a good shot at meeting all three. But, as you may have guessed, there’s a catch.

The first factor is the history of the relationship between you and the staffer, including whether you have previously exchanged gifts. Given your close friendship, I’m going to bet that this is not the first time you’ve exchanged gifts. If that’s right, so far so good.

The second relevant factor is whether you will pay personally for the gift, or whether you instead will seek a business reimbursement or tax deduction. It doesn’t sound like a reimbursement or deduction is what you have in mind here. So far, you are two for two.

The third factor is whether, at the same time you give the staffer his gift, you also plan to give similar gifts to other Congressional employees. Since this gift is for a special occasion, I imagine it’s not your plan to distribute $1,000 gift certificates to The Inn at Little Washington throughout Congress.

You appear, then, to meet all three exceptions. So what’s the catch?

For gifts given under the personal friendship exception, there is a $250 across-the-board limit. The only way around this limit is for the staffer to obtain written approval from the Ethics Committee. Unless the staffer obtains such approval, your gift is four times more generous than the rule allows. (Incidentally, if you’ve already purchased the gift certificate, you should know that the Congressional rules do not forbid gifts to Roll Call columnists — although our editors probably wouldn’t be too happy about one of us getting a gift from a lobbyist.)

Unfortunately, the idea that the gift be given by your wife rather than yourself, while ingenious, won’t get you around the Senate’s rule. The rule is a general prohibition upon all gifts, regardless of the source. Even if your wife’s gift qualified under the personal friendship exception, the $250 limit would still apply.

The restrictions on the gift to your friend would be no different if your friend were in the House, where the rules contain a similar $250 limit on gifts made on the basis of personal friendship. The consistency of the House and Senate rules on this point means that, for gifts given under the personal friendship exception, there is a $250 limit on all gifts to Congressional employees.

With the holiday season approaching, your question is a useful reminder that there are now stiff penalties for lobbyists’ violations of the Congressional gift rules, even where the recipient is a personal friend. Lobbyists face up to $200,000 fines for knowingly violating the gift rules — and up to five years in jail for “corrupt” violations.

This raises one more issue: how to determine the value of a gift. In the case of your gift, a certificate with a specific denomination, it’s easy. But what about valuing other gifts? Perhaps the most important thing to remember is that, under both the Senate and House rules, the fair market value governs, not the amount that the donor paid for a gift. I predict $250 gift certificates will be hot items this year.

© 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.