The subcommittee met at 9:35 a.m. in room SD-342 of the Dirksen Senate Office Building, Hon. William S. Cohen (chairman of the subcommittee) presiding.

Present: Senators Cohen and Levin.

Staff present: Susan M. Collins, staff director; Mary Berry Gerwin, counsel; Frankie deVergie, chief clerk; Rachel D. Harlan, assistant chief clerk; Ralph O. White, minority professional staff assistant.

OPENING STATEMENT OF SENATOR COHEN

Senator COHEN. The committee will come to order.

The principle that a public office is a public trust dates back to ancient times. Cicero wrote that the administration of government, like the office of trustee, must be conducted for the benefit of those entrusted to one's care, not for those to whom it is entrusted. The theme that our Government officials must be held to the highest standards of a fiduciary runs consistently throughout our country's law and jurisprudence.

Congress and the executive branch have followed this principle of public trust by taking steps to assure that Government employees maintain high standards of integrity, honesty and impartiality in performing their duties.

Nearly 20 years ago, President Johnson issued an Executive order_setting forth standards of conduct for Federal employees. This Executive order has been used over the years to identify and resolve conflicts of interest and has been enforced by strong disciplinary actions against employees such as suspension, reassignment of duties, and even dismissal.

The culmination of congressional efforts to reinforce the concept of public office as a public trust was the enactment of the Ethics in Government Act of 1978. This landmark legislation strengthened Federal conflict of interest laws, provided for the appointment of an independent counsel to investigate allegations of wrongdoing by high level officials and imposed financial disclosure requirements on all three branches of Government.

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In addition, the act established the Office of Government Ethics to oversee, implement, and enforce the ethics laws and standards governing executive branch officials and employees.

The responsibilities of the Ethics Office include advising Federal agencies and officials on how to comply with the ethics laws and the Executive order, reviewing financial disclosure reports filed by Presidential nominees and high-ranking officials, and monitoring the implementation of the post-Government employment restrictions of the Ethics Act. Perhaps the greatest role assigned to the Director of the OGE is acting as the chief arbitor in questions involving the ethical conduct of executive branch employees.

Today the subcommittee is going to review the performance of this crucial office.

Concerns have surfaced that the Office of Government Ethics is not fully implementing the provisions of the Executive order on ethical conduct. The Executive order requires Federal employees to avoid both the appearance of and actual conflicts of interest in performing their official duties. In testimony before the Senate Judiciary Committee during the nomination hearings of Edwin Meese, however, David Martin, the Director of the OGE, asserted that the appearance standard in the Executive order is "aspirational" only and not a mandatory rule. Instead he maintained that only conduct resulting in actual conflicts of interest violates the Executive order.

More recently in press interviews and in testimony before an Armed Services subcommittee, Mr. Martin has labeled the appearance standard as being "unenforceable."

The subcommittee is going to explore today the basis for and the implication of the OGE's position on cases involving the appearance of impropriety. We are going to explore whether Mr. Martin's ruling deviates from the past policy of the Office, whether it sends a dangerous signal to Government employees about the ethical standards they are to observe, and whether it erodes the fundamental premise of public office as a public trust.

We are also going to inquire whether past policies or past announcements are, as Mr. Martin suggests, unrealistic, unenforceable and perhaps even undesirable. Since ethical questions inevitably require difficult judgments, these issues are not easy ones to resolve.

The hearing is going to address how well the OGE is performing its other duties under the Ethics in Government Act. We will examine, for example, the performance of the OGE in overseeing and implementing the so-called revolving door provisions which prevent former Government officials from switching sides and representing a private client in the same matter for which they previously represented the Government.

Recently, several stories in the press have focused on cases in which Government employees, particularly in the Defense Department, have gone to work for defense contractors on whose contracts they worked while in Government service. These cases have raised speculation that employment prospects may have influenced the employee's decision on contracts and that the revolving door is opened too wide, allowing conflicts of interest to go undetected. I

hope the hearing will shed some additional light on how well the post-Government employment laws are working.

The subcommittee is also going to hear testimony on the confidential financial disclosure system in executive agencies. Under this system about 100,000 Government employees who are not subject to public financial disclosure requirements must file confidential financial statements with their agency ethics officials. These reports are important to ensure that midlevel employees, many of whom are responsible for the day-to-day decisions of Government are acting free from conflicts of interest. Department of Justice opinions are disputing the legality of the Confidential Disclosure reporting requirements and have jeopardized the enforceability of the system. We are going to explore what actions the OGE has taken to resolve the legal questions raised by the Justice opinions. In reauthorizing the Office of Government Ethics in 1983, this subcommittee, as well as Congress, as a whole, reaffirmed its commitment to a strong independent Office of Government Ethics. Again today, the subcommittee is going to review the policy of the OGE to determine how well that office is fulfilling its statutory mandate.

The first witness this morning is David Martin, who is the Director of the Office of Government Ethics. We will then hear from Bernhardt Wruble, the first Director of the OGE and Ann McBride of Common Cause. Finally, we will hear from officials representing the Department of Defense and the General Accounting Office.

I look forward to receiving the testimony today and believe it is going to provide some valuable insight on how well the Ethics Program in the executive branch is working.

So our first witness today is Mr. Martin, Director of OGE. He has served as the Government's chief ethics officer since he was confirmed by the Senate in June 1983.

TESTIMONY OF DAVID H. MARTIN, DIRECTOR, OFFICE OF

GOVERNMENT ETHICS

Mr. MARTIN. Good morning, Mr. Chairman. I appreciate the opportunity to appear here before the committee and the subcommittee and to clarify my position on a variety of issues that you have talked about in your opening remarks. I would like to clarify two things that you indicated in your opening statement.

One is that I said that the standards of conduct were unenforceable, before an Armed Services Committee in the House. I said that section 208 was difficult to enforce. It was just difficult to determine when somebody is negotiating for employment. That was the context in which I testified there.

I did not, I don't think, ever say that the standards of conduct regarding the caution against avoiding appearances was only aspirational. I said, in a letter to Senator Levin following these hearings, I indicated that I thought that the standards married regulatory concepts with aspirational concepts. That is still the position I take.

I have a prepared statement which I would request be submitted for the record.

Senator CоHEN. It will be included.