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Senator COHEN. Our next witness is Ann McBride, Senior Vice President of Common Cause. Common Cause has a long history of advocacy in the ethics area. She testified before the subcommittee in 1983, when we considered the reorganization of the Office of Government Ethics. I am looking forward to her testimony this morning.

TESTIMONY OF ANN MCBRIDE, SENIOR VICE PRESIDENT,
COMMON CAUSE

Ms. MCBRIDE. Thank you very much, Senator Cohen, Senator Levin. I really appreciate the opportunity to testify before this committee and want to thank you at the outset for undertaking this very, very important oversight hearing. I'd first like to submit my statement for the record and focus my remarks on what I think is the central issue being considered here today; that is, Mr. Martin's misinterpretation of Executive Order 11122, and implementing regulations.

It's important to note at the outset that at his 1983 confirmation hearing before this committee, Mr. Martin applauded the Executive order. He said: "It should share equal status with the conflictof-interest laws and the Ethics in Government Act."

He termed the Executive order a "cornerstone of standards of conduct for all Federal employees.'

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Last January, however, in explaining how OGE had overturned the staff's original conclusion that Mr. Meese had violated the prohibitions against appearance of conflict of interest, Mr. Martin expressed a different view. This is the letter, Senator Cohen, that you cited earlier in which Mr. Martin said that violations of the appearance standard are merely aspirational, and he relabeled violations as "problems."

What Mr. Martin said is that: "An appearance problem only rises to the level of a violation if, after looking behind the appearance, the Government can demonstrate any substance to the appearance."

Mr. Martin apparently is not only attempting to establish a totally new interpretation of the Executive order, but he would add a new standard for determining violations, a showing of actual improper influence, a causal relationship.

The effect of this would really be to eviscerate the Executive order. Mr. Martin's incorrect interpretation of the Executive order represents in our view a serious, dangerous and radical change in ethics standards governing Federal employees.

Mr. Martin's interpretation of the aspirational nature and the unenforceability of the appearance standard is unique and it's wrong. Mr. Martin's interpretation flies in the face of the language of the Executive order. It stands in sharp and isolated contrast to the interpretation and enforcement of the Executive order by agency ethics officials, by inspectors general, by OGE itself, by the Merit Systems Protection Board and by the courts.

Mr. Martin's interpretation of the Executive order would make ethics enforcement a virtually impossible task, and would really stand-and I think stands today-as an open invitation for increased conflict-of-interest problems throughout the Government.

Let me take a moment just to look briefly at each of these areas. As has been mentioned by both you, Mr. Chairman, and Senator Levin, the Executive order is clear on its face. This has been restated by Mr. Wruble here this morning, and by the statement of David Scott.

It is clear that the appearance of conflict of interest is a violation of the Executive order.

Second, Mr. Martin says this morning that the Executive order should be used in a prospective way. It's forward-looking. But, in fact, the Executive order has been enforced. Robert Tobias, president of the National Treasury Employees Union, was quoted in a recent National Journal article as saying: "People are constantly disciplined and discharged based on the appearance of impropriety."

We looked at Inspectors General Reports, which are issued twice a year. And what we found is that the appearance standard is used by IG's for disciplinary action.

In our testimony, we cite a number of examples from HUD and the Small Business Administration, from the Department of the Navy, where the employees were disciplined because of the appearance of conflicts of interest.

Other examples, Mr. Chairman, have been cited here this morning.

In none of the cases-and this is important when you look at what Mr. Martin is trying to say when he says you have to get behind the cases to determine if there is substance to the appearance-in none of the cases looked at by the National Journal were the agencies required to demonstrate that the employee's private financial interests had actually affected the performance of his public duties, as Mr. Martin's interpretation, if accepted, would require. In each case cited by the National Journal, the sanction was imposed entirely because the employee had created the appearance of conflict of interest.

Further, Mr. Martin has hung a lot on the Merit Systems Protection Board. In all these cases the Merit Systems Protection Board agreed.

Mr. Chairman, I would like to say that after Mr. Martin's incorrect interpretation of the Executive order, we really wanted to find out in a comprehensive way how the Office of Government Ethics was actually applying the ethics standard.

Frankly, we wanted to know if Mr. Martin had just applied this interpretation in the Meese case, or was he applying it in a wholesale way throughout the Government.

So we filed a very standard Freedom of Information Act request, asking for a copy of all advisory opinions, letters, and other written materials produced by OGE regarding, in whole or in part, the appearance of conflict of interest.

Well, I have to tell you, it is the kind of standard request that we have filed dozens of times. The response was not standard.

Mr. Martin told us we could have the materials if Common Cause would be willing to pay fees of at least $18,000 and that if we wanted OGE to proceed we should mail them a down payment of $3,600.

Needless to say, we have not mailed the check, so when we are looking at how the Office of Government Ethics rules, we are relying primarily on the publicly available advisory opinion.

But as you mentioned, Senator Cohen, in statements that you made, OGE itself, statements, advisory opinions signed by Mr. Martin support the conflict of interest in the appearance cases.

Mr. Martin says in a December 30, 1983, advisory opinion on the applicability of conflict-of-interest rules to a certain Federal employee-there are Mr. Martin's words—there would be a "clear appearance of impropriety which cannot be overcome." 1 His language, "which cannot be overcome." Presumably cannot be overcome by looking behind the appearance to find substance.

These are his words, and this is what OGE has been doing. Throughout the Government, agency ethics officials use the appearance standard as prospective advice as well as recommending disciplinary action.

The question was raised by Senator Levin this morning about equal protection, and I want to say that, very sadly, this is not a theoretical question. Some employees at the Interior Department have raised with their ethics officials the problem that they feel that they are being held to a higher standard than the one Mr. Martin articulated in the Meese case.

In addition, the Federal courts have determined that disciplinary action can be based on the appearance of conflict of interest. Mr. Martin has indicated that the language is too broad, it is too vague, it can't be enforced. The courts, however, have really just not adopted this view.

In a 1982 case, in a decision written by Judge Richard Posner, the court rejected petitioner's argument that the code was too vague and that it did not authorize adverse action.

Also, Senator Cohen, you raised this morning the question of case law and whether Mr. Martin had examined the case law.

In response to some earlier written questions by Senator Levin, he made the flat statement that developing case law supported his view. This morning he says that he has looked at one case. In fact, he admitted in the National Journal that the subject of that case, which was enjoining a contract, could be-and his quote was-"a little different from adverse actions against personnel."

In a later case, addressed to exactly the same issue, the court specifically said-while it upheld the earlier decision by enjoining contracts-the court specifically says, "An appearance of impropriety may warrant disciplinary action against the offending official." Let me just close by saying a few things about why we believe the appearance rule is important and is necessary.

We think it is necessary really to preserve Government integrity. The appearance rule is necessary to ensure that all of us receive evenhanded, impartial judgments by public officials.

Public officials should not mix personal finances and public duties, even if there is not a causal relationship between the two. The reasons for this are simple, and they are straightforward.

1 See p. 154.

First, the mixing of personal financial affairs with Government business does not merely give the appearance of conflict of interest; it does not constitute a kind of tentative conclusion subject to further investigation.

Archibald Cox has really highlighted the basic problem that we have and the need for a prohibition against the appearance of conflict of interest. He says, "Neither the public official nor anyone else can possibly be sure that the public official's judgment was unaffected."

Second-and this has certainly been discussed this morning-the prohibitions are necessary because appearances of conflict of interest undermine confidence in the integrity of Government. Even if a public official were to be able to maintain complete impartiality of judgment, the appearance of Government officials' mixing personal financial affairs and public responsibilities undermines public respect for government.

I think the most succinct statement I have heard on this was made by Senator Strom Thurmond during consideration of the Senate Ethics Code in 1977. He said, "There is one thing my father told me when I started out in public life. He said, 'You have got to appear right as well as be right.'"

Finally, Mr. Martin's emasculating interpretation of the Executive order would impose an unnecessary heavy burden on Government ethics officials; enforcement would be very difficult.

We want to finally thank the subcommittee again for undertaking this oversight of the Office of Government Ethics. Mr. Chairman, we agree with your printed statement that Mr. Martin's position is "unprecedented." We agree with you, Senator Levin, that Mr. Martin's interpretation of the Executive order is simply wrong, and we agreed with the statement of Common Cause Chairman Archibald Cox that his interpretation is frightening.

We stand ready to work with this committee and both of you, who have done so much to work to guarantee that the public's business is separate from private interests. We will work with you in any way we can to ensure that the ethics laws and regulations are correctly applied and vigorously enforced.

Thank you very much for your time.

Senator COHEN. Thank you very much.

Can I just inquire, have you conducted a survey of some of the agency ethics offices? 1

Ms. MCBRIDE. Yes.

Senator COHEN. Have they disclosed to you that one of the problems they have, apparently, is the postemployment situation? Would you care to elaborate a bit on what your survey found?

Ms. MCBRIDE. Our survey found that this was one area in which they thought there were real problems, yet it was also an area in which, in our initial survey, we could not find out how much was actually being done.

Since then, we have gone back to ethics officials and asked them actually what is being done in monitoring, enforcing, implementing at the agency level these bans on revolving door provisions, and we

1 See p. 246.

find, unfortunately, that not much is being done and that it really is impossible to gauge the extent of the problem.

And ethics officials in fact are not doing much, but it is their perception that this is a real problem and a big problem. Not only should legislative remedies be produced, but we also believe that the monitoring and implementation of the existing laws is one of the things that the Office of Government Ethics should provide leadership on and give some direction to those agency ethics officials, including models for how you monitor this.

I think much more could be done, and it is clearly recognized by these officials as a real and a serious problem.

Senator COHEN. As you heard this morning, the Justice Department has discontinued the requirement that any of its attorneys file the confidential disclosure statement. I find that to be somewhat staggering in its implications.

But what do you think about the recommendation that, I suspect is going to emanate from Mr. Martin in terms of reducing the detail of the disclosure? Is there merit to his argument that as long as you know there is one share of stock or 10,000 shares of stock, that is all that has to be listed? Do you think you don't have to have the specific details in order to determine whether or not an official is complying with the OGE standards?

Ms. MCBRIDE. Mr. Chairman, there are actually two parts to what Mr. Martin said here this morning.

The first was, he said he would greatly lessen the requirement for public disclosure, and, again, when he came before this committee in his confirmation hearing, Senator Roth asked him the question: Do you think that the public disclosure requirements are overbroad, or are they adequate? He told this committee he felt that they were adequate.

Obviously, he has had a change of heart. We do not think there should be any cutting back in the public disclosure requirements. Mr. Martin says there is no de minimis for conflict of interest.

There certainly is a de minimis in terms of disclosure. You do not have to disclose in most cases until a holding reaches $1,000. We think those categories of value are fair. It is important to know the magnitude of a holding, and we think that this Congress should really continue to resist proposals, which certainly have been offered, to weaken public financial disclosure.

Second, we also think the confidential system should be kept in place and that there should not be restrictions in terms of cutting back on information.

When you look in the area which has been discussed here this morning, contracting and procurement, many contract and procurement officers do not reach the level of the GS-16 or above. Many of the people who are making day-to-day decisions in which there could be significant conflicts of interest are in that level GS13 to GS-16.

So we think the confidential system should be kept in place. We think the information should not be reduced, and we think that OGE and the White House really are long overdue in acting on this particular problem.

Senator COHEN. Thank you very much.

Senator Levin?

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