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“No Conflicts Here”: How Lawmakers Skirt The Law To Keep Their Next Jobs Secret

When then-Sen. Jim DeMint said he would leave Congress to head the Heritage Foundation 13 months ago, he waited until just 24 hours before the announcement to file an official notice with the Senate that he was negotiating for the new job.

But at least DeMint gave some public notice before accepting the post.

On the day Rep. Dennis Cardoza’s midterm resignation took effect in 2012, Washington law firm Manatt, Phelps & Phillips announced it had already hired him—and the job negotiations were never made public. Nor were any official disclosures regarding job negotiations released prior to the announcement that Rep. Health Shuler accepted a job at Duke Energy when his term expired, or when Rep. Mike Ross was hired by the Southwest Power Pool.

That is not how it was supposed to work. A law designed to prevent conflicts of interest and shed light on lawmakers who negotiate for post-Capitol Hill work while still in office has failed, worn thin by a series of administrative rulings and narrow interpretations.

The result is that lawmakers themselves now determine when a potential conflict exists and when disclosures should be released publicly. Moreover, because the law has yielded almost none of the public information it was designed to provide, it remains largely unknown whom lawmakers negotiate with—and whether their official duties present any conflicts with those employers.

The Honest Leadership and Open Government Act required lawmakers to file public disclosures when they negotiate for work and when conflicts arise. Yet only seven disclosures have been made public in the House since the law was passed in 2007—even though more than 200 lawmakers during that time have resigned, were defeated in a primary, or announced their retirement. Only six disclosures have been made public in the Senate, despite 39 lawmakers leaving between 2008 and 2012.

In this midterm-election year, many more lawmakers will be making decisions about jobs and disclosure in coming months. It is still early, but no public filings have been made by any of the 16 sitting House members who have announced they are leaving Congress at the end of 2014.

In addition to those 16, three other House members have already resigned this session, and all three had outside jobs waiting. But only one of them filed a notice of job negotiations before leaving. Rep. Jo Ann Emerson, a Missouri Republican, officially resigned on Jan. 22 of last year to become CEO and president of the National Rural Electric Cooperative Association. Her disclosure of her job talks is dated Nov. 23, 2012, and reports that negotiations for that job commenced four days earlier.

The two other lawmakers were not required to make their employment negotiations public because of yet another wrinkle in the law that exempts those seeking new jobs in the public sector. Former Rep. Jo Bonner left Congress to take a job in the University of Alabama system, and former Rep. Rodney Alexander left to accept an appointment as secretary of the Louisiana Veterans Affairs Department.

Ethics Issues

There is nothing illegal or unethical about departing lawmakers looking for work while they serve out their terms. But the law was put in place as a transparency measure after former Rep. Billy Tauzin caused a stir by leaving the House in 2003 to take a $2-million-a-year job in the pharmaceutical industry, just months after playing a lead role in drafting legislation to introduce a prescription drug benefit to Medicare.

But the law’s rules apply differently today than they did when was it was passed. For example, in the House, the government panel in charge of the filings was changed from the Clerk’s Office to the Ethics Committee, which is extremely selective about what it makes public. In the Senate, the secretary of the Senate, rather than the Ethics Committee, handles most of these filings, with far different results. A higher percentage of lawmakers there have filed disclosures, and those forms were swiftly made public.

Staffers and lawmakers with direct knowledge of how the House Ethics Committee oversees the law say it is being interpreted so narrowly by officials and lawmakers as to render it ineffective.

They say lawmakers are essentially told they must file notices only when they have an actual job offer and compensation is discussed. And those notices do not have to be made public—they can be kept private by the Ethics Committee—unless lawmakers themselves determine there is a specific conflict and decide they must file a follow-up disclosure or notice recusing themselves.

The upshot is that when lawmakers do file disclosures, those filings often do not go beyond the Ethics Committee. Such apparently was the case for Cardoza, Shuler, and Ross, whose disclosures have never been released. Even the committee itself is sometimes taken by surprise by word that a lawmaker has landed a job.

“I saw a newspaper account that a lawmaker had taken a job—and my jaw dropped, and I wondered, ‘How is it that even I did not know that?’ ” said one former House Ethics official, speaking on the condition of not being identified by name.

Former Rep. John Shadegg took a job as a partner with Steptoe & Johnson in March 2011 but says he had some preliminary contact with the firm before he officially left office. Shadegg said he never filed a notice of negotiations, because the guidance he received from the Ethics Committee did not indicate he had to do so until he was on the verge of being hired, talking details about salary.

Another former lawmaker, who asked not to be identified by name, explained the Ethics Committee guidance he received this way: “I was told that, for instance, if IBM wants to hire you for $1 million, you are not required to report that legally. But the minute I say, ‘I want $1 million and one dollar,’ the law kicks in.”

Asked if he thought it odd that so few disclosures of subsequent potential conflicts have been made public, Cardoza said, “The rules are in place. I am sure there are people who have violated them; and I am sure there are people who have complied with them, and I am one.”

But he also said that there are good reasons that talks that do not result in a job should be kept private. “If you do not take an offer, it hurts your political career—it telegraphs to people you are leaving,” Cardoza said.

Questions of Conflict

Still, the current system can leave lingering questions. Take, for instance, Ross, the Arkansas Democrat who announced in July 2011 that he would not seek reelection in 2012. Ross later announced he would take a job after Congress as Senior Vice President for Government Affairs and Public Relations for the Southwest Power Pool, a non-profit which represented several coal-driven power companies.

That announcement prompted at least one publication, the nonprofit Republic Report, to raise questions about Ross’s earlier cosponsorship of an amendment to delay the Environmental Protection Agency from enforcing the Cross State Air Pollution rule, a rule the Power Pool had pushed to have relaxed.

Republic Report wrote that the situation “raises the possibility that Ross’s legislative activity had been unduly influenced by the prospect of a high-paying job.”

In response, a Ross spokesman told the publication that the lawmaker had begun job negotiations months after his EPA rule-delaying legislation passed the House, and that he would be recusing himself on any issues that provide targeted benefits to his future employer.

The spokesman went on to tell Republic Report, “He properly filed all forms required by the House Ethics Committee. And while the Ethics Committee does not make the form available to the public, in an effort to be transparent, Congressman Ross went above and beyond in announcing who he would be working for when his term in Congress ends.”

Today, Ross is running for governor of Arkansas—and his disclosures still remain unavailable for public viewing.

Meredith McGehee, policy director at the Campaign Legal Center, says the ethics law is being interpreted so narrowly that “it is simply not meaningful.”

“Swiss cheese,” is how McGehee described the current system, while Craig Holman, a legislative representative for the government watchdog group Public Citizen, said the intent of the law was to “let the public know.”

“That was the entire intent,” Holman said.

 

By: Billy House, The National Journal, January 21, 2014

January 24, 2014 Posted by | Congress, Lawmakers | , , , , , , , | Leave a comment

Eric Cantor’s Glaring Conflict Of Interest

When Eric Cantor shut down debt ceiling negotiations last week, it did more than just rekindle fears that the U.S. government might soon default on its debt obligations — it also brought him closer to reaping a small financial windfall from his investment in a mutual fund whose performance is directly affected by debt ceiling brinkmanship.

Last year the Wall Street Journal reported that Cantor, the No. 2 Republican in the House, had between $1,000 and $15,000 invested in ProShares Trust Ultrashort 20+ Year Treasury EFT. The fund aggressively “shorts” long-term U.S. Treasury bonds, meaning that it performs well when U.S. debt is undesirable. (A short is when the trader hopes to profit from the decline in the value of an asset.)

According to his latest financial disclosure statement, which covers the year 2010 and has been publicly available since this spring, Cantor still has up to $15,000 in the same fund. Contacted by Salon this week, Cantor’s office gave no indication that the Virginia Republican, who has played a leading role in the debt ceiling negotiations, has divested himself of these holdings since his last filing. Unless an agreement can be reached, the U.S. could begin defaulting on its debt payments on Aug. 2. If that happens and Cantor is still invested in the fund, the value of his holdings would skyrocket.

“If the debt ceiling isn’t raised, investors would start fleeing U.S. Treasuries,” said Matt Koppenheffer, who writes for the investment website the Motley Fool. “Yields would rise, prices would fall, and the Proshares ETF should do very well. It would spike.”

The fund hasn’t significantly spiked yet because many investors believe Congress will eventually raise the debt ceiling. However, since Cantor abruptly called off debt ceiling negotiations last Thursday, the fund is up 3.3 percent. Even if an agreement is ultimately reached before Aug. 2, the fund could continue to benefit between now and then from the uncertainty. (One tactic some speculators are using is to “trade the debt ceiling debate” — that is, to place short-term bets on prices as they fluctuate with the news out of Washington.)

Salon’s Andrew Leonard calls the debt ceiling negotiations “Washington’s titanic game of chicken,” and the longer the game goes on, the more skittish the bond markets will become.

“Cantor’s involvement in the fund and negotiations is not ideal,” Koppenheffer said. “I don’t think someone negotiating the debt ceiling should be invested in this kind of an ultra-short. We can only guess how much he understands what’s in his portfolio, but you’d think a politician would know better. It looks pretty bad.”

Cantor spokesman Brad Dayspring noted that U.S. Treasury bonds make up a large portion of the congressman’s pension, and said investment in ProShares ETF serves to balance that investment and to diversify his portfolio. Disclosure forms indicate that Cantor has considerable personal assets, including real estate in Virginia worth up to $1 million, and a number of six- and seven-figure loans to private entities and limited liability companies. So his investment in ProShares ETF represents only a small portion of his overall portfolio — but that share could grow a little larger just over a month from now.

 

By: Jonathan Easley, Editorial Fellow, Salo, June 27, 2011

June 28, 2011 Posted by | Budget, Congress, Conservatives, Debt Ceiling, Deficits, Economic Recovery, Economy, GOP, Government, Government Shut Down, Politics, Republicans, Right Wing | , , , , , , , , , , , | Leave a comment

Justice Thomas Doesn’t Ask Questions, But He Certainly Should Have Some Answers

Justice Clarence Thomas is famous for his silence. While his fellow Supreme Court justices regularly challenge and work out complex points with the lawyers who appear before them, Justice Thomas has not asked a question from the bench for five years and counting. Unfortunately, he has been quiet on another matter as well: the mounting concerns that he has flouted ethics and financial disclosure rules in accepting gifts and favors from wealthy friends who have a stake in the cases he decides.

Justice Thomas can choose not to ask questions. But it’s clearly time that he answered some.

Justice Thomas has, for at least the past few years, walked along the blurry edge that divides unethical conduct from acceptable practices on the Supreme Court. He notoriously chose not to disclose major sources of family income on federal forms for more than a decade in violation of federal law.  Although he reported no income earned by his wife Virginia, she in fact earned hundreds of thousands of dollars. Even worse, some of the income he failed to disclose came from a conservative think tank that frequently files briefs with the Court. He also drew fire for attending, with Justice Antonin Scalia, a private get-together sponsored by billionaire political powerhouses David and Charles Koch whose pet corporate causes often come across the Justices’ desks.

Then, this week, the New York Times broke the story of Thomas’ close friendship and mutual back-scratching with a politically active real estate magnate Harlan Crow. Crow, the Times reported, “has done many favors for the justice and his wife, Virginia, helping finance a Savannah library project dedicated to Justice Thomas, presenting him with a Bible that belonged to Frederick Douglass [valued at over $19,000] and reportedly providing $500,000 for Ms. Thomas to start a Tea Party-related group.”  He also, the Times discovered, has been trying to hide his role as the main benefactor behind a multi-million dollar museum in Georgia that is a pet project of the Justice. In addition, the Times story raised concerns about whether some of Justice Thomas’s travel was underwritten by Mr. Crow and whether such support was accurately disclosed in the Justice’s notoriously inaccurate financial disclosures.

Crow isn’t just a friend of Thomas who happens to be rich. He’s active in political causes, and has “served on the boards of two conservative organizations involved in filing supporting briefs in cases before the Supreme Court” including one, the American Enterprise Institute, that gave Justice Thomas a $15,000 bust of Lincoln.

Obviously, Supreme Court Justices are allowed to have friends, just like the rest of us. But unlike the rest of us, their friendships — especially when they involve expensive gifts and multimillion dollar favors — can result in momentous conflicts of interest, or the appearances of conflicts, that affect the entire country. Who Justice Thomas chooses to befriend is his own private business. But who he or his pet projects receive huge gifts from is all of our business.

Ethics issues on the high court can be tricky, since Justices aren’t required to abide by any specific set of rules and don’t have a higher court to keep them in line. But many, including Thomas’ colleagues Anthony Kennedy and Stephen Breyer, say that the justices hold themselves to the same code of conduct that regulates other federal judges and stipulates that judges “should avoid impropriety or the appearance of impropriety in all situations.” Failure to comply with the code of conduct “diminishes public confidence in the judiciary and injures our system of government under law.”

This is why the American people have the right to answers from Justice Thomas. Americans have become increasingly frustrated in recent years as the Supreme Court has handed down decision after decision that privileges the interests — and profits — of corporations over the rights of individual Americans to hold them accountable. Citizens United v. FEC was one such decision. Another is this week’s decision in Dukes v. Wal-Mart, which took away the ability of as many as 1.5 million victims of pay discrimination to band together in court to hold the company accountable for its discriminatory policies. Average Americans can’t afford a ride on a private jet or an expensive work of art, let alone afford to give these as a gift to a Supreme Court justice. Even if the motivations behind all these gifts are entirely pure, accepting them casts doubt on a judge’s ability to be impartial.

Justice Thomas needs to be open with the American people, all of whose lives are affected by Supreme Court decisions. He needs to tell us who is paying for his pet causes and whether he asked them to do so. He needs to tell us where his family income is coming from and whether it benefits from his work on the Court. He needs to tell us what gifts he’s received from individuals and organizations that have a direct interest in the decisions he makes. And he needs to tell us that he will recuse himself from any case that he appears to have a financial interest in.

If Justice Thomas wants us to trust that he will give a fair hearing to all Americans, regardless of cash or connections, he needs to be open and honest with us about the circles of influence he inhabits.

It’s time for Justice Thomas to speak up. The Supreme Court’s integrity depends on it.

 

By: Michael B. Keegan, President, People For The American Way, Published in HuffPost Politics, June 23, 2011

June 26, 2011 Posted by | Conservatives, Constitution, Corporations, Democracy, GOP, Government, Politics, Republicans, Right Wing, SCOTUS, Tea Party | , , , , , , , , , , , | Leave a comment

   

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