STATEMENT OF DAVID H. MARTIN OFFICE OF GOVERNMENT ETHICS BEFORE THE SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT OF THE SENATE COMMITTEE ON GOVERNMENTAL AFFAIRS ON OVERSIGHT ON THE OFFICE OF GOVERNMENT ETHICS APRIL 2, 1985 MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: I appreciate the invitation to appear before this Subcommittee to present the views of the Office of Government Ethics (OGE) on the performance of its duties under Title IV of the Ethics in Government Act of 1978 (the Act). In addition to giving our views on the performance of the Office, I will address a number of specific issues which were raised in Chairman Cohen's letter inviting me to testify. These issues were OGE's interpretation of E.O. 11222 in cases involving the appearance of a conflict of interest; actions that the OGE has taken to implement the provisions of P.L. 98-150; the current status of the confidential financial disclosure system for Executive Branch Officials; and OGE's views regarding enforcement of the post-employment conflict of interest provisions contained in Title V of the Act and the implementing regulations. Since the passage of the Ethics in Government Act on October 26, 1978, OGE has been charged with the responsibility of providing overall direction of Executive Branch policies related to preventing conflicts of interest. In 1983, when this Office testified before this Subcommittee in support of S. 461, legislation to extend the appropriation authority for OGE, the functions of the Office were explained in detail. Since that time, no major structural or organizational changes have taken place within the Office. The budget and staffing levels of OGE for fiscal years 1984 through 1986 are reflected as follows: The figures for FY 1984 represent actual year ending levels; those for FY 85 and *The budget level figures are expressed in the thousands of dollars. The work of this Office, including its responsibilities for Executive Branch personnel financial disclosure requirements, revolving door or post employment conflicts of interest, all other criminal conflict of interest statutes, and Executive Branch employee standards of conduct regulations, continue to be divided between the Chief Counsel and his staff of attorneys, and the Monitoring and Compliance Division staff of nine management analysts. In calendar years 1984 and 1985, the Monitoring and Compliance Staff conducted reviews in 22 departments and agencies and in 7 regional offices. From January 1984 to date, 762 annual, 221 nominee and new entrant, and 151 termination public financial disclosure reports (SF 278) were reviewed by the Office pursuant to the public disclosure provisions of Title II of the Ethics in Government Act. We continue to stress the educational and training responsibilities of Title IV. From January 1984 to date, OGE has conducted 11 regional training sessions and 13 days of training here in Washington. Upon request, we have participated in more than 30 training courses sponsored by individual agencies. OGE continues to sponsor its annual training conference for agency ethics personnel, attendance for which in 1984 exceeded two hundred participants. In addition, effective May 1984, we began publishing a quarterly newsletter, a useful vehicle for disseminating timely ethics news and information about current legal issues, agency ethics reviews, training, financial disclosure and other matters of general interest to the ethics community. Pursuant to the regulations implementing Titles II, IV and V of the Ethics Act, the staff continues to render formal and informal advisory opinions and to respond to numerous telephone inquiries from agency officials, individual employees, private companies or firms and the press on a variety of ethics issues and concerns. A digest of selected OGE opinions is annually made available to agency ethics officials to aid them in the administration of their ethics programs. Fully indexed copies of the complete opinions are available in our library. EXECUTIVE ORDER 11222 Executive Order 11222 states that employees are to avoid any action, whether or not specifically prohibited by the Order's provisions on gifts, which might result in, or create the appearance of (1) using public office for private gain; (2) giving preferential treatment to any organization or person; (3) impeding government efficiency or economy; (4) losing complete independence or impartiality of action; (5) making a government decision outside of official channels; or (6) affecting adversely the confidence of the public in the integrity of the Government. The language shall" ... avoid any action ... which might result in or create the appearance..." has created certain difficulties of interpretation and enforcement due to the apparently subjective nature of the standards. The Office of Government Ethics believes that the intent of the "appearance standard", as stated in Executive Order No. 11222, is to require all executive branch government employees to make every effort to avoid any action or situation which might result in the public perception that the government employee had abused one of the Executive Order's six standards. Clearly, this is an aspirational standard which is often difficult to apply in practice. Additionally, an appearance problem can be created through ignorance or inadvertence or due to circumstances which are unforeseen or beyond an individual's ability to control. The proper remedy in any given situation may be difficult to determine since it is hard to assess retroactively whether an appearance of conflict was predictable or avoidable under the circumstances. In any event, any remedial action taken by an agency must meet any requirement imposed by statute, regulation, or Executive order. PUBLIC LAW 98-150 The Office issued interim regulations in 1984 and final regulations in January 1985 conforming existing regulations to changes made to Titles II and IV of the Ethics Act by Pub. L. 98-150 of November 11, 1983. These regulatory amendments described the important changes made by Pub. L. 98-150 and identified areas of specific change as they relate to public financial disclosure or enforcement of agency procedures. The financial disclosure form (SF 278) is currently being updated to enhance its usefulness. More particularly, our amended regulations reflect the change in the relationship between the Office of Personnel Management (OPM) and OGE; spell out OGE's authority to issue ethics regulations independent of OP M; give instructions for updating disclosure reports with respect to any income and honoraria received by a nominee as of 5 days before the scheduled date of the Senate committee hearing, define staff functions in support of an advisory committee composed in whole or part of special Government employees, and establish requirements and procedures for the creation of and follow-up on ethics agreements. CONFIDENTIAL FINANCIAL DISCLOSURE SYSTEM In May 1983, this Office sought a delegation of authority from the President under 5 U.S.C. App. 207(a) to revise the regulations concerning the confidential financial disclosure system for Federal employees in positions below grade GS-16. The revisions were circulated by the Office of Management and Budget (OMB) within the executive branch for comment. There was immediate objection by numerous agencies to the requirement that the confidential statements be in the same form as that used for a public financial disclosure report (SF 278) under the Ethics in Government Act. Several agencies expected problems and resistance in seeking to obtain the SF 278 report from |