Mr. MARTIN. In addition, I have some unprepared comments I would like to start off with, and then I will entertain as many questions as you or the other members might have.

First, as regards the confidential reporting system which you mentioned in your opening statement, after the Department of Justice made a final decision in June 1984, that, in fact, the confidential system that we had in place was without legal authority, following that June 1984 decision, we attempted in the executive branch to accommodate the various competing interests of the departments and agencies in trying to work out an administrative solution to that problem. We ultimately concluded that—at least my office concluded that legislation was the preferable route to go.

I included in a proposed amendment-I included among a number of amendments to the Ethics in Government Act an amendment to provide authority for a new confidential reporting system that would require less information than was required by public filers. There was not a lot of support for all of the other amendments that I had suggested. Therefore, I propose that we go forward only on the amendment which authorized the confidential reporting system.

I understand that yesterday there was forwarded proposed legislation to the President pro tempore and Speaker of the House, legislation to accomplish just that. It would authorize the President to implement a system of confidential reporting and delegate that authority to the Office of Government Ethics.

Senator COHEN. Requiring less information?

Mr. MARTIN. Yes. It would give the President and the Director, through delegation, authority to implement essentially what is now what was the confidential reporting system pursuant to the Executive order and require less information than was required by public filers.

Senator COHEN. Let me just ask you as a matter of policy, why would you want to have less information, if, in fact, the information is confidential? I don't understand objections to requiring people who come in at midlevel to file when this information stays entirely confidential. This is not released to the press. It is not released to the public, and yet we are going to give agencies less information.

It seems to me that it is contradictory.

Mr. MARTIN. Here is the reason why, Senator. We do not need, for people who only serve on advisory boards who come in twice a month or for full-time employees in certain positions which we have designated as vulnerable, we don't need all that information. Senator COHEN. How do you know?

Mr. MARTIN. It is just the considered judgment of my staff that it is unnecessary, and I believe that. I don't think-I think also that what is publicly filed now is not necessary. That is my personal view, but certainly for confidential filers and in terms of reviewing, there are many, many man-hours lost or consumed in reviewing. Senator COHEN. Let me explore that. Why is the information currently required in public relations forms unnecessary?

Mr. MARTIN. I don't believe that you need to have-I think you need to know assets. You need to know income. You need to know exchanges. You need to know gifts, but you don't need to know in

the detailed categories that we now have in the law. That is my personal view. I know it is shared by many members of my staff. Senator COHEN. In what sense? What kind of detail would you think should be omitted?

Mr. MARTIN. I think you should have a category, one or two categories that show-you see, the conflict-of-interest laws have no de minimis requirement. If you have one stock worth 10 cents or 1 million dollars' worth of stock, that is conflict of interest. And that is what we need to know. What do you own, in terms of conflicts of interests, to make judgments. Some of the judgments about-oh, is there a recusal necessary? Is there a waiver? They don't have to look into, OK, what does he own? How much is there? That is only in the event that you find that there is, in fact, a conflict of interest.

Senator COHEN. So, you think if I had one share of Capital Associates stock, or whatever it might be, that it would be enough to disclose that I held stock in this particular company, but not the amount?

Mr. MARTIN. That is right.

Senator COHEN. 20,000 shares, but if I had $1 worth of stock would that be enough to satisfy you that a conflict exists?

Mr. MARTIN. I would want to know if you had that $1 worth of stock.

Senator COHEN. And it wouldn't make any difference to you if I had 2 million dollars' worth of stock and were in a position of having some influence?

Mr. MARTIN. If you were the Secretary of Commerce, and you were dealing in that area, I would want to know if you had $1 or more, but I could satisfy that through less than the number of categories that we now have. We have six or seven categories, and I don't feel that is necessary.

Senator COHEN. Why don't you go on. We will go into that in further detail. But the upshot of it is that you require less information for those now required to file public disclosure. You would modify that and have less information available, less detail, I should say, less detail required by those who are now required to comply with the disclosure laws, public disclosure.

Mr. MARTIN. That is my personal view.
Senator COHEN. I understand that.

Now second, with respect to confidential statements, you would have even less information than contained in the public disclosure? Mr. MARTIN. Yes. As is the current test. That is exactly right. As regards appearances, my personal view is that the standard to avoid appearances is a necessary and vital part of the Ethics Program. However, the term "appearance" or "appearance of impropriety" has been widely used, and in some cases been widely abused. It has become a catchall phrase.

Regarding its use in terms of whether or not there is a violation in the standards of conduct, I am personally reluctant to use the word "violation" without some solid evidence. In our office, frequently we are dealing prospectively, but in reviewing past activity, where only the appearance is involved, where delicate and complex matters are being reviewed, it is just too easy to use a label that may be turned into a headline that says "Violation."

We in the ethics area cannot settle for shorthand labels that avoid these very difficult judgments that must be made.

Certainly, where an appearance is concerned, there may be instances where corrective or disciplinary action is necessary. That to me is the most important point for an ethics official. What action did the Ethics Office recommend to take, corrective or disciplinary, not what shorthand label should be put on an act to characterize it? The problem, as I see it, is that there is a multiplicity of ethical standards and norms which are not uniformly applied. There is no focal point. Worse yet, the improprieties are triggered inconsistently through suspicion, innuendo, ignorance or mistake. Appearance plays an increasingly major role in ethics-related cases to the point where the distinction between evil and the appearance of evil are blurred. It would be my view that I would like to bring some consistency to the appearance of impropriety and avoid the use of shorthand labels.

Now as regards postemployment problems, that is title XVIII, section 207 and 208, negotiating for employment. In the regulatory agencies that we have audited, there are already regulations which require a person who negotiates for employment to notify_the agency and to recuse himself from any activity in that regard. That is not uniformly true throughout the Federal Government, but we have consistently advised all agencies that we audit, that that ought to be the case, and in all our training and lecturing that we do, we take that position.

There are two prominent problems that I see in the postemployment area. One is the appearance of impropriety that is created when a high-ranking official, uniform or nonuniformed, who is administering or supervising a contract, changes sides and in short order goes over to represent or work for the contractor.

I think that is an appearance problem that is created, and the reason I think it is a problem is because that affects the public, and it affects the public in this way. It affects the public's view of the integrity of the procurement process in the Government. It is an appearance problem. I am not sure how you deal with it, but it certainly is an appearance problem.

The second area that I think is important is in the lower echelons of people who are administering contracts, the acquisitions officers, everybody involved in it, in, let's say, a large program, when two or three key people switch sides, as we have found in one instance, and go over and work for the contractor.

In that case, there is an effect on the morale of the other people who stay in the Federal Government, who stay on the contract. In fact, they feel that their fellow employees have sold out, and it does affect morale. I see that as two key problems in the postemployment area.

What are the solutions? I am not sure. We have certainly extensively lectured and trained on the need to recuse yourself when you are approached by a contractor or when there is some negotiation.

Mr. Chairman, those are the two things I think this committee ought to look at in terms of postemployment problems.

As regards the other areas that you indicated in your letter to me that you wanted me to testify about implementing our regula

tions, we have clearly implemented all of the amendments that were passed in the 1983 act and they are now part of our regulations.

With that, Mr. Chairman, I'll be available to answer any questions you might have.

Senator COHEN. Thank you very much, Mr. Martin. If there is any confusion about my interpretation of your statements, perhaps I simply have misunderstood the nature of what you tried to accomplish.

I was looking at a document that you addressed to Senator Thurmond, for example, dated January 28, 1985, pertaining to the Meese nomination. In that letter you said that "the standards of conduct of the Executive Office of the President, which are aspirational in nature"-you go on to cite that. So you used that phrase "are aspirational in nature."1

Then again, during the testimony in the Meese case, you said, "As you know, there is a rule in the executive branch regarding appearances, whose coverage is very broad. It provides that the employee avoid any action which might result in or create the appearance of a number of things, and let's call them an impropriety for now. Might result in and/or create the appearance. This rule is aspirational in nature." 2 So I'm simply quoting your words to the Judiciary Committee and your letter to Senator Thurmond.

And then, in dealing with the testimony over before the Armed Forces subcommittee, you're correct that it did deal with postemployment, but your statement leads me to a certain conclusion. You testified that, "I agree with much of the testimony of this subjective influence. I do believe it exists, but I don't know how to deal with it. I think you cannot make an appearance problem a violation of law. I think it's unenforceable." 3

Those were the comments I was looking at in coming to these conclusions. In fact, your interpretation of the appearance standard is that it is aspirational in nature, and your view concerning what restriction can be placed upon postemployment services, such as employment with the private sector, is that it is unenforceable and cannot be made a violation of the law.

Now, with respect to your observation, I think you are perhaps the first of the OGE directors to use or employ the phrase "aspirational." You and I have had some private discussions about the source of that. I'm sure Senator Levin will go back and recall his moments of dealing with professor whomever who coined the phrase.

Mr. MARTIN. Fuller.

Senator COHEN. I'll leave that portion to Senator Levin when he arrives, but Mr. Wruble, who is going to be testifying after you, is going to testify that the appearance of conflict of interest does, in fact, or can violate the Executive order.

Mr. David Scott, who was the first chief counsel and the former Acting Director of OGE, has also given his views. I wrote a letter to

1 See p. 148. 2 See p. 149. 'See p. 150.

him in March in which I asked him whether he agrees with your interpretation. The answer was:

No *

* Section 201(C) of the Executive order plainly equates an "appearance of a conflict of interest" with an actual conflict of interest. A violation of either would subject an executive branch employee to possible disciplinary action. The section of the Standards of Conduct which interpret 201(C) in the Executive order makes this point in a very straightforward manner by including "appearance problems" on an equal footing with other "Proscribed actions." 1

The question is whether there has been a change in the Executive order or any regulation pertaining to that, or simply a change in the interpretation made by you?

Mr. MARTIN. Let me answer your question. There has not been a change, obviously, in the Executive order although I am going to study it and maybe perhaps propose some by the end of the summer. It is my view that this standard does marry aspirational standards with regulatory standards and that it just has become too convenient to label an appearance problem a violation.

Senator COHEN. Why is it too hard to label it a violation? It certainly could pertain to the kind of recommendation you make. I mean, you draw distinctions every day. You were saying that there is evil and the appearance of evil and that they have become blurred. Well, we live in a pretty complicated world and sometimes you can have a very minor conflict of interest and a major appearance problem, and you'd be hard pressed to say that the actual conflict is more evil than the major appearance.

So don't you draw distinctions by saying, "Well, we have a minor conflict problem here and here is our recommendation for action toward this employee. And here we have a major appearance of impropriety problem and here is how we deal with this," rather than saying, "it's aspirational." And really we don't want to marry aspiration with actuality.

Mr. MARTIN. Maybe we're saying the same thing, Senator, because the way that we have viewed it traditionally, notwithstanding what Mr. Scott and Mr. Wruble may say, the way that the staff tells me they viewed it is it's kind of a sliding scale. When you get an appearance problem purely you kind of look at it and say, well, is it egregious or not. If it's not, maybe we'll recommend counseling. Maybe we won't even recommend counseling. Maybe there's some disciplinary action that the agency would take.

Senator COHEN. But you still could cite it as a violation of the Executive order.

Mr. MARTIN. I personally would not. I think there's a violation of the act when the agency takes action and it's upheld by the MSPB. I don't like to deal in those labels.

Senator COHEN. If it is only an appearance problem, then that will not be a violation of the Executive order in your judgment?

Mr. MARTIN. I don't view it as a strict violation. I wouldn't label it so. I think the important thing, Senator, is not what you call something but what action you might take to remedy the situation. Most of the Ethics in Government Act and most of what we deal with is preventive in nature, trying to avoid appearances and trying to avoid conflicts of interest. I think it can be counterpro

1 See p. 141.