United States of America Office of Government Ethics 83 x 20 Office of Personnel Management Letter to an Agency Attorney dated 12/30/83 This is in response to your request dated December 12, 1983, for our opinion on the applicability of 18 U.S.C. S 208(a) in relation to an employee of your agency in the field of data processing, and his wife. It appears from the information you supplied with your request that the [employee's wife] is, to use [the employee's] term, a "self-employed consultant" to [a] firm which has two contracts with your Agency one to provide services in support of an ADP/software project known as [Project 1], and a second to provide services in a project known as [Project 2]. [The employee's] characterization of his wife's relationship with [the firm], is substantiated by the terms of the Consultant Agreement she and [the firm] executed [in July, 1983]. The information you furnished also discloses that [the firm] has assigned [the wife] to provide "a data entry component" for [Project 1]; that [the employee, in his government capacity,] has a significant role as an adviser to [Project 1]; and that he is also involved, although to a lesser extent, in [Project 2]. However, it is not apparent whether [the employee's wife] is providing services to [Project 2]. Section 208(a), insofar as pertinent here, bans an employee of the federal Government from participating personally and substantially in a "particular matter in which, to his knowledge, he, his spouse or any of certain other persons] has a financial interest". (Underlining added). Presumably your agency's contracts with [the firm], regarding [Projects 1 and 2] are separate undertakings and therefore are two "particular matters" for the purposes of S 208(a). {The employee's wife's] role in [Project 1] is essentially that of a subcontractor of [the firm], as distinguished from an employee of the latter. Accordingly, like [the firm], she has a financial interest in the [Project 1] matter. We are therefore of the opinion that if [the wife] were to continue her work on [Project 1, the employee] would be in violation of S 208 (a) and thus required to recuse himself from that matter. Under 18 U.S.C. $ 208(b) the agency may grant [the employee] a waiver of the criminal restrictions if it determines that such a waiver is appropriate. Notwithstanding such a waiver, however, we are of the opinion that [the employee's] continued work on the [Project 1] matter under these circumstances raises a clear appearance of impropriety which can not be overcome by simply using the waiver powers granted to the agency. [The employee] may carry out his responsibilities relative to [Project 2] without contravening S 208(a) as long as [his wife] does not perform services for that project. That state of affairs would not be altered were he to recuse himself from [Project 1]. I trust that the foregoing discussion will be of guidance to you in resolving this matter. Sincerely, David H. Martin United States of America Office of Government Ethics Office of Personnel Management 84 x 6 Letter to an Agency Counsel dated 05/01/84 This is in response to your letter of April 2, 1984, presenting for our consideration a suggestion intended to permit [an employee's] continued participation in [a] project in your agency with the concomitant rendering of services to [a private contractor on the project] by [the employee's] wife in the role of a part-time "retainer" of that company with a predetermined total remuneration rather than in the role of an independent contractor. Although your letter does not aver that [the employee's wife] would or would not provide a "data entry component" for [the project] (see our letter of December 30, 1983, [numbered 83 x 20]), we assume that she would perform duties of that nature or other duties connected with [the project]. You ask specifically whether the proposed "form of retainer arrangement" described in your letter "could operate to remove any financial interest the [couple] would have in the existence or continuation of... the [company's] contract relating to the project?" Assuming that the terms of the "retainer arrangement" realistically placed [the employee's wife] in the role of an employee of [the company], as distinguished from her present role as an independent contractor, she would no longer have a "financial interest" in the [project contract] and therefore her change of status would lift the bar of 18 U.S.C. 208(a) against the concomitant participation of her husband in that matter. This result is the same as the one that could be alternatively achieved, notwithstanding [the wife's] continuance as an independent contractor, by your agency's grant of a waiver to [the employee] under 18 U.S.C. 208(b), a possibility we noted in our December 30th, 1983, letter to [your agency]. However, your present suggestion, like the grant of a waiver, would fail to deal with the problem we noted in that letter that is, the appearance of impropriety. Regarding that problem, it is not the nature of the financial arrangement between [the employee's wife] and [the company] that is crucial; rather it is the husband-wife relationship which gives rise to the adverse appearance -that is, to the suggestion that [the employee] might lose his objectivity in performing his duties with regard to [the project] by reason of his wife's services on behalf of [a company with a government contract to perform services] in connection with that same project. Finally, we do not believe the analogy you draw in the third paragraph of your letter is apt. The payment of a salary instead of the grant of a partnership interest to a lawyer who has left the service of the Federal Government for practice as a principal in a law firm is a means of avoiding the specific prohibition of 18 U.S.C. 203 against a former Government employee's sharing in compensation received by another person or entity for services rendered before any federal agency during the former employee's tenure with the Government. The presence or absence of an untoward appearance if he or she were to be made a partner and share in the firm's receipts would be irrelevant for purposes of 18 U.S.C. 203. I trust that you will find this discussion helpful in advising [the employee]. DAVID B. MOFFER V. DEPARTMENT OF THE INTERIOR OPINION AND Order DOCKET NO. The appellant was removed from his GS-12 Realty Specialist position in the Bureau of Indian Affairs for violations of laws and regulations prohibiting employees from trading with Indians, engaging in a financial transaction resulting from or relying on information obtained through his government position and using his office for private gain. He appealed the decision and following a hearing the presiding official found that appellant had technically violated 25 U.S.C. § 68' by purchasing land with his wife from an Indian, but that the appellant's involvement in the transaction was only a passive one, that the Indian seller, a college graduate, was the cousin of the appellant's wife, that the seller initiated the transaction to keep the property in the family, that the sale price was the appraised value of the property, that the appellant acquired no gain as a result of the transaction, that the appellant's involvement was limited to endorsement of the financial instrument as his wife's husband, and that, upon being informed that the transaction violated the statute, the appellant conveyed his title to his wife, thereby divesting himself of his interest in the property. The presiding official found that, with the exception of the technical violation, the agency had failed to sustain its burden of proving that the appellant had violated other regulations regarding misuse of information and misuse of his office for personal gain. He concluded that, although the statute technically was violated, the "spirit, intent and purpose of the statute were not violated." Accordingly, he found that the removal would not promote the efficiency of the service and reversed the agency action. In its petition for review the agency argues that the presiding official erroneously interpreted law and regulation. Specifically, it states that the removal action was mandatory and could not be mitigated, as the appellant had violated the law prohibiting trading with Indians and that the presiding official had misconstrued agency 'Pub. L. 96-277, 94 Stat. 544 (June 17, 1980) repealed 25 U.S.C. § 68. The offense with which the appellant was charged is now covered by 18 U.S.C. § 437. While under 25 U.S.C. § 68 the ban against trading with Indians applied to all federal officers, employees and agents, under 18 U.S.C. § 437 the trade restriction applies only to employees of the Bureau of Indian Affairs and the Indian Health Service. S. Rep. No. 96-629, 96th Cong., 2d Sess. (1980). Since the appellant was an employee of the Bureau of Indian Affairs, the new law would not affect the charge brought against him. regulations and the law relative to the agency's trust responsibility toward Indians." The petition for review is GRANTED. We find error in the presiding official's conclusion with respect to the agency's third charge relating to the appellant's alleged misuse of his office for private gain. In this respect, the appellant was charged with violating 43 C.F.R., Part 20, Section 735-32(d)1), which provides, in pertinent part: An employee must avoid action, whether or not specifically prohibited by this subpart, which might result in, or create the appearance of: 1. Using public office for private gain; [Emphasis added.] In reaching his decision on this charge, the presiding official discussed the evidence and concluded that the agency had failed to prove that the appellant had used his office for private gain. However. he erred in failing to consider or rule on whether the appellant, in knowingly engaging in a real estate transaction with the Indian seller, created the appearance of using his office for private gain. 5 C.F.R. & 1201.111(bX1). The record clearly supports a finding that the appellant's participation in the transaction created the appearance of his use of his federal office for private gain. Such conduct was prohibited under the agency's regulations. Accordingly, we REVERSE the presiding official's finding that the agency had failed to support the third charge by a preponderance of the evidence. In discussing the efficiency of the service standard under 5 U.S.C. § 7513(a) with respect to the first charge, the presiding official found that, while the appellant had technically violated 25 U.S.C. § 68, he did not violate the spirit, intent and purpose of the statute. We disagree. That section provides, in pertinent part: No person employed in Indian affairs shall have any interest or concern in any trade with the Indians, except for, and on account of, the United States. [Emphasis added.] "The agency further alleges in its petition for review that the presiding official initially deemed it unnecessary to call as a witness the agency's supervisory appraiser who could have testified with respect to the value of the land and then proceeded to accept an incorrect appraisal for the property as a basis for his finding that the appellant made no gain as to the transaction. At the hearing the presiding official noted that during conversations prior to the hearing the agency's representative indicated that he would call only two of the five requested witnesses. The supervisory appraiser was one of those witnesses not called. Transcript at 6. The agency did not object to this account of the circumstances surrounding the failure to call the supervisory appraiser. Accordingly, we find that the record fails to support the allegation that the presiding official was responsible for the supervisory appraiser's failure to testify. The courts have consistently given strict interpretation to this provision over a long period of time. Thus, the Supreme Court, in United States v. Hutto, 256 U.S. 524, 528 (1921), stated that "it manifestly was and is designed to insure integrity of conduct on the part of all persons employed in Indian affairs, and an impartial attitude towards the Indians, by excluding from persons so employed all motives of personal gain, so that the duty of the United States as trustee for these dependent peoples, recognized wards of the government, might be performed with a single regard for their interests appropriate to the fiduciary relation." See also Ewert v. Bluejacket, 259 U.S. 129, 137 (1922); Kendall v. Ewert, 259 U.S. 139 (1922); United States v. Douglas, 190 F. 482 (C.A. 8 1911). As noted in footnote 1, supra, 25 U.S.C. § 68 was repealed on June 17, 1980, by the enactment of Public Law 96-277. The ban against trading with Indians was liberalized somewhat, so that it no longer was applicable to all federal officers, employees and agents, but only those employed by the Bureau of Indian Affairs and Indian Health Service. The legislative history of Pub. L. 96-277 reveals that the Senate Select Committee on Indian Affairs to which H.R. 3979 had been assigned following House passage of the bill adopted an amendment based upon information furnished to the committee by the Standing Rock Reservation Landowners Association which indicated that 22.3 percent of the Standing Rock land purchased between 1964 and 1978 was purchased by Bureau of Indian Affairs employees or their relatives and that "Indian [Bureau of Indian Affairs] employees in the realty branch showed preferential treatment to their relatives, their friends, friends of friends, or other employees and that this has served as a hindrance to effective utilization of lands on the Standing Rock Reservation." S. Rep. No. 96-629, 96th Cong., 2d. Sess. (1980). To guard against such abuses the bill was amended to retain the ban against trade between Indians and persons employed by the Bureau of Indian Affairs and the Indian Health Service, and to allow employees to have an interest in the purchase or sale of trust property only if approved by the Secretary or his designee. Id. Public Law 96-277 was enacted with this amendment. 94 Stat. 544. Although 25 U.S.C. § 68 was repealed after the action involved in the instant case, Congress, by amending 18 U.S.C. § 437 to provide for the continuation of the ban, in effect, reaffirmed the courts' strict interpretation of the ban against such action by BIA employees. Here, as a Realty Specialist in the Bureau of Indian Affairs, appellant stood in a fiduciary relationship with Indians whose interests he was employed to protect. In purchasing the land from an Indian, the appellant clearly engaged in conduct against which the provision was designed to protect. Moreover, the appellant served on the agency's Land Sale Committee which recommends approval of |