A Question of Ethics

May Staffers Provide Legal Services to Campaigns?

September 22, 2008

Q: I am an attorney working as chief of staff for a Member of the House who is seeking re-election. The legal counsel for his campaign recently went on maternity leave, and my Member has asked me to take over in my spare time. Under the arrangement, I would continue my role as chief of staff while being paid $10,000 by the campaign to be its legal counsel. The campaign says there is a limit on the income that staffers may earn while employed by Congress, but the $10,000 addition still keeps me below the limit. In fact, campaign officials say they specifically designed the proposed arrangement to comply with the ethics rules. Does it?

A: House rules do allow staffers to work on Members’ campaigns during their spare time, but there are strict rules governing such work. These rules are extensive and require close attention. In fact, the House Ethics Manual devotes more than 60 pages to its chapter on campaign activity and another 60 pages to a chapter addressing outside employment and income.

One set of rules discussed in these chapters prohibits the use of House resources for campaign purposes and provides that staffers may work on campaigns only on their “own time.” Another set imposes restrictions on the types of outside employment staffers may accept and the amount of income they may earn. The House Ethics Manual identifies two purposes of this latter set of rules. First, they ensure that staffers do not use the influence or prestige of their position for personal gain. Second, they prevent conflicts of interest.

As to your question, House Rule 25 sets forth the restrictions on the income that staffers may receive from sources outside Congress during a given year. However, the restrictions do not apply to all staffers. So, the first task is to determine whether they apply to you. The rule states that the restrictions apply to all staffers who are “paid at a rate equal to or greater than 120 percent of the minimum rate of basic pay for GS-15 of the General Schedule.” That rate currently equates to $114,468. As chief of staff, I assume your pay exceeds this.

If that’s right, the restrictions themselves provide that you may not “have outside earned income attributable to a calendar year that exceeds 15 percent of the annual rate of basic pay for level II of the Executive Schedule.” In English, this means that you cannot make more than $25,830 for part-time work done during your own time. The only exception to this rule is for staffers who go on leave-without-pay status.

In your case, a House Member wants you to remain chief of staff, so leave without pay is not an option. The campaign proposes paying you $10,000 to be campaign counsel. Since this is below $25,830, the campaign is right that your compensation would not exceed Rule 25’s limit on compensation for work on the side. So far so good.

But, as you probably guessed, there’s a catch. And, it’s a big one. Under the Ethics Reform Act of 1989, there are some outside activities for which staffers may not receive any compensation at all. Specifically, staffers may not “receive compensation for practicing a profession that involves a fiduciary relationship.” The purpose of this prohibition is to prevent conflicts of interest.

According to the legislative history, when an outside position creates a fiduciary responsibility to a private party, there is the potential for a “serious conflict of interest,” which occurs in “the clash of those responsibilities and the divergence of public and private interests on a particular governmental matter or in general government policy.”

The Bipartisan Task Force Report that led to the Ethics Reform Act states that the term “fiduciary” should not “be applied in a narrow, technical sense.” Although the rule itself neither defines “fiduciary” nor contains a list of professions to which the prohibition applies, the task force report does provide a representative list of covered services. The list includes “legal, consulting and advising” services, among others. The House Ethics Manual also confirms that staffers may not receive compensation for providing professional services in these fields.

In your case, then, the campaign’s proposed arrangement unfortunately does not comply with the rules. In fact, the only way for you to work on the campaign as an attorney while also keeping your job as a staffer is one that might not be particularly appealing to you: You could work for the campaign for no pay, because the prohibition on providing professional services involving a fiduciary relationship only applies when you receive compensation for those services. So, either you’ll have to join the campaign pro bono, or someone else should take the job.

© 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

Are There Grounds for a Complaint Against Obama?

September 2, 2008

Q: I do not believe that Sen. Barack Obama (D-Ill.) is ready to be president. While I blog about this constantly, my readership is limited so I am looking for other ways to impact the election. I know that watchdog groups sometimes file ethics complaints against Senators who engage in misconduct, and I am considering filing one against Obama. I think that there a number of potential grounds. Most notably, Obama proposed an earmark for University of Chicago Hospitals after they promoted his wife and tripled her salary. In addition, Obama has filed several false financial disclosure forms — the same offense for which Sen. Ted Stevens (R-Alaska) has been indicted. Aren’t these grounds for ethics complaints?

A: Because both presidential candidates are Senators, they are both vulnerable to potential Senate ethics complaints. Last week’s column addressed grounds for a potential complaint against Sen. John McCain (R-Ariz.) and concluded there were none, and this week’s will address your question regarding a complaint against Obama.

The first grounds you propose relate to Michelle Obama’s job at the University of Chicago Hospitals. In 2002, Michelle Obama joined UCH as executive director for community affairs. In 2005, a few months after Barack Obama took office, UCH promoted her to vice president for community and external affairs, and increased her salary from $121,910 to $316,962. In 2006, the Senator requested a $1 million earmark for construction of a pavilion at UCH. The request was denied.

Taken alone, it would be hard to argue that these facts amount to a violation of Senate ethics rules, as there is no precedent for sanctions under these circumstances. While it is true that ethics rules prohibit a Senator from taking an official act for the purpose of benefiting a spouse, there is no evidence that Obama did so. In fact, the circumstances of the raise and the earmark suggest just the opposite.

As to the raise, UCH officials have said that her compensation was in line with others in similar positions, and that her promotion had nothing to do with Obama’s election to the Senate. In fact, UCH said, Michelle Obama had previously turned down the very same promotion and had also rejected a more lucrative offer from another organization in order to stay at UCH. As to the earmark, there is nothing to suggest that the earmark would have affected Michelle Obama’s compensation in any way. Moreover, UCH was merely one of many hospital systems for whom Obama requested earmarks. Neither the House nor Senate ethics committees have ever interpreted the rules to disqualify an entity from receiving earmarks merely because the entity employs a Member’s spouse. In the absence of any evidence showing that Michelle Obama stood to gain from the earmark, there is no basis for an ethics complaint.

The other grounds you have proposed concern Obama’s financial disclosure forms. The Ethics in Government Act requires every Senator to file an annual disclosure report containing information regarding income, assets, liabilities and gifts received. False reports can result in criminal liability and ethics sanctions. Earlier this year, Roll Call reported that Obama’s 2005 report contained errors. Obama acknowledged the errors and said he would file an amended form. Obama had twice previously filed amendments to correct errors in his report. As you point out, filing a false report is the same violation alleged in the recent indictment of Stevens.

Nonetheless, the circumstances of Obama’s errors again would make an ethics complaint difficult to sustain. Whereas Stevens is accused of concealing large gifts, Obama’s error was that he failed to include $2,000 of capital gains from a 2005 stock sale. The Obama camp has since stated that Obama’s 2005 tax returns, which were also made public, provided detailed information about the capital gains, and that it would file an amended disclosure report to reflect the information in the tax returns. There is no precedent for sanctions based on minor, inadvertent errors, and it would be hard to argue that Obama’s were anything but just that.

In addition, as Roll Call reported at the time, many other Members have made the exact same error on their disclosure reports: failure to include capital gains as income. None of those Members has been subject to ethics complaints. While Senators should certainly take care to ensure the accuracy of their disclosure reports and avoid the liability that can result from false reports, not every error — however inadvertent — gives rise to an ethics complaint.

Therefore, you do not appear to have grounds for an ethics complaint. If it’s any consolation, I am not sure how effective a political weapon an ethics complaint would have been anyway. In July, Judicial Watch filed an ethics complaint against Obama alleging he received a home loan below market rate, claims the Obama camp has denied. The Ethics Committee has since made no public comment about the complaint, and it does not appear to have had any discernible impact on Obama’s campaign. I’m afraid that you might be better off working on your blog.

© 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.