A Question of Ethics

Are There Grounds for an Ethics Complaint Against McCain?

August 26, 2008

Q: I do not believe Sen. John McCain (R-Ariz.) should be elected president, and I am doing whatever I can to prevent it. One idea that occurred to me was to file an ethics complaint against him. However, I wasn’t sure whether a regular guy like me could file such a complaint with the Senate. May I?
Also, I wouldn’t want to file a complaint unless there were legitimate grounds. I searched for news stories regarding ethics issues for McCain and identified two potential grounds: (1) McCain unilaterally backed out of public financing of his primary campaign; and (2) a March fundraiser for him in London that was illegally funded by foreign nationals. I’m no expert on ethics violations. Are either of these grounds for a complaint?

A: The 2008 election marks the first time in the country’s history that two sitting Senators are competing for the presidency. This means that it is also the first time that both candidates are vulnerable to potential Senate ethics complaints. Your first question is: Who may file such a complaint? Believe it or not, anyone can. This is in stark contrast to the House, where only a Member can file a formal complaint.

When someone files a complaint, the Ethics Committee typically conducts a “preliminary inquiry,” which may involve depositions, subpoenas, interviews and sworn statements. With two Senators competing for the presidency, you are right to suggest that an ethics complaint could become a political weapon. This column addresses your potential complaint against McCain, and next week I will address a question regarding a potential complaint against Sen. Barack Obama (D-Ill.).

You propose filing a complaint against McCain for violations of campaign regulations. In general, the Federal Election Commission has jurisdiction over such regulations, but the Ethics Committee might consider some FEC regulation violations to be ethics violations as well. Broadly, the committee has stated that it will act on allegations of violations of any law or rule relating to a Senator’s performance of official duties or misconduct that may reflect on the Senate. With those general guidelines in mind, let’s turn to the specific bases you have proposed.

The first concerns McCain backing out of public financing of his primary campaign. Last year, McCain applied for the presidential primary matching payment program, under which candidates can receive public funding. McCain certified to the FEC that he would comply with the many eligibility requirements, including a spending limit of about $50 million. In December 2007, the FEC certified McCain’s eligibility for the program. In February 2008, before he received any public funds, McCain sent a letter to the FEC stating that he was withdrawing from the program. The FEC replied that withdrawal would require an affirmative vote of four FEC commissioners and that it therefore considered McCain’s letter to be a mere request to withdraw.

The Democratic National Committee then filed an FEC complaint against McCain based on two grounds. First, the DNC said, even though the FEC had not yet approved McCain’s request to withdraw, McCain was already violating the eligibility requirements, including the spending limit. This, the DNC argued, violated FEC precedent, which holds that participation in the program constitutes a binding contract with the FEC from which a candidate may not unilaterally withdraw. Second, the DNC said, the FEC could not in any event release McCain from the program because he had already pledged his eligibility in the program as security for a loan.

It would be difficult to argue that either allegation is grounds for an ethics complaint. When McCain attempted to withdraw from the program in February, the FEC did not have enough commissioners for a quorum and therefore could not release him. This meant McCain could either go on complying with the spending limit and other eligibility requirements until the FEC had enough commissioners to vote, or proceed as if he was no longer in the program. It now appears that, had there been a quorum at the time of McCain’s letter, the FEC would have permitted him to withdraw. This is because last week the FEC unanimously ruled that McCain’s loan terms did not prevent him from withdrawing from the program.

Let’s turn to the other grounds you have proposed for an ethics complaint. In April, Judicial Watch requested that the FEC investigate whether McCain’s campaign violated regulations by holding a fundraiser at London’s Spencer House without paying for the use of facility. This, Judicial Watch argued, would be an in-kind contribution from the owners of the Spencer House, who are not U.S. citizens, and would therefore violate FEC regulations prohibiting contributions from foreign nationals.

If true, such a violation might also violate ethics rules. Broadly, the gift rule prohibits Senators from accepting a gift of any kind unless it meets one of the many exceptions. One allows Senators to accept campaign contributions that are “lawfully made” under FEC rules. Here, you could argue that the campaign contribution does not qualify for the exception because it was not “lawfully made.” Therefore, you could contend that the McCain campaign’s use of the Spencer House violated the gift rules and is grounds for an ethics complaint.

Although the FEC has not reached a decision on Judicial Watch’s request, McCain’s campaign has said it had an agreement under which it paid for the use of the venue, catering and other costs for the event. Assuming the campaign paid an appropriate rate and did not accept any contributions from foreign nationals, there would be no grounds for an ethics complaint.

In sum, complaints based on the grounds you have proposed might be difficult to sustain. Therefore, unless additional searches turn up other grounds for a complaint, your efforts might be better directed elsewhere. I hear there’s a convention going on this week.

© Copyright 2008, 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

When Do Personal Financial Interests Prohibit Earmarks?

August 4, 2008

Q: I am a staffer for a Member of the House and am responsible for her earmark requests. For years, she has obtained earmarks that specifically benefit a company that is a major employer in her district. Recently, the company acquired a corporation in which my Member’s husband holds stock. He received the stock as a gift from his godparents when he was a child, and he has held it ever since. Because the acquisition was paid for by stock, he is now a stockholder in the company that has been the subject of my Member’s earmark requests. I know that the new rules prohibit a Member from requesting an earmark that benefits the Member’s spouse. In light of those rules, if her husband keeps the stock, must she stop requesting earmarks that benefit the company?

A: In early 2007, as part of its ethics overhaul, the House added a clause to the Code of Official Conduct providing that when Members request certain fiscal legislative provisions, they must certify that they have no financial interest in the provision. Clause 17 of House Rule 23 applies anytime a Member “requests a congressional earmark, a limited tax benefit, or a limited tariff benefit in any bill or joint resolution (or accompanying report) or in any conference report on a bill or joint resolution (or an accompanying joint statement of managers).” In such a case, the Member must certify that neither the Member nor Member’s spouse has a “financial interest in such congressional earmark or limited tax or tariff benefit.”

Your question turns on what counts as having a “financial interest” in an earmark. But, before turning to that, there is a threshold issue to consider. What qualifies as an “earmark” that triggers the certification requirement in the first place? According to the House Ethics Manual, it is up to the committee with jurisdiction over a particular fiscal legislative provision to determine whether it triggers the certification requirement. So, the first thing to do is to check with the relevant committee whether the certification requirement even applies.

Assuming it does apply, before your Member can certify that her husband has no “financial interest,” you need to understand what the term means. The ethics committee’s general guidance is that a Member’s spouse has financial interest in an earmark when “it would be reasonable to conclude” that the earmark would have a “direct and foreseeable effect” on the spouse’s pecuniary interests. On the other hand, a financial interest does not include “remote, inconsequential, or speculative interests.” As for specific application, the manual states that the answer depends on the specific facts of the proposed provision and the spouse’s personal financial circumstances.

In a letter to the House ethics committee last week, Rep. Jerry Costello (D-Ill.) requested an advisory opinion regarding earmark requests for Southwestern Illinois College, where his wife recently became president. The letter said that his wife’s salary and benefits are established by a three-year contract and that her compensation is therefore not contingent upon any standards relative to revenue, grants or funding for the college. The letter also stated that Costello has requested earmarks for SWIC in the past. As Costello told Roll Call: “I don’t believe that the college should be penalized because my wife is the new president.”

Similarly, your Member might argue that the company in her district that has benefited from earmarks in the past should not now be penalized just because your Member’s husband has, through no action of his own, come to own stock in it. However, while previous ethics committee guidance suggests that Costello will likely be permitted to continue his earmark requests, your Member might not.

In Costello’s case, the ethics committee has previously approved requests very similar to his. Last year, the committee advised Rep. Robert Andrews (D-N.J.) that his wife did not have a financial interest in certain earmarks for Rutgers University even though she was dean of enrollment at Rutgers’ law school. The committee stated that a Member’s spouse may have a financial interest in an earmark benefiting her employer when the spouse holds an ownership interest in the employer, when the earmark would affect the spouse’s salary, or when the existence of her position would be affected. Because none of those factors was present in Andrews’ case, the committee concluded there was no financial interest. The committee is likely to reach a similar conclusion regarding Costello’s request.

Your Member’s case is different. The ethics manual specifically addresses stock ownership. On the one hand, it says that if a Member requests an earmark in a certain company, the Member would not have a financial interest merely because the Member owned shares in a mutual fund that happened to include stock in the company. On the other hand, the manual says, “direct ownership of stock” in the company likely would constitute a financial interest.

Here, your Member’s husband’s direct ownership of stock in the company suggests that he would have a “financial interest” in an earmark for that company. Ultimately, though, only the ethics committee can say for sure. While the ethics manual states that in the “great majority of cases” Members should readily be able to answer the financial interest question, Members also should consult with the committee with any questions. I suspect that either the earmarks or the husband’s stock must go.

© Copyright 2008, 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.