Ethics requirements for serving in government can be dauting

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It might be familiar to old hands at serving government in appointed positions. But the first time, the ethics requirements and the paperwork that goes with them can be daunting. With a review of the rules, the associate counsel at the Office of Government Ethics, Elizabeth Horton, joined Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: Let’s start at the top. Suppose a person is nominated to the cabinet and we’re hearing the Cabinet nominees come out daily from the president-elect. What do they have to do?

Elizabeth Horton: So generally, the process begins when the presidential personnel office or the presidential transition team registers a prospective nominee as a filer in OGE’s electronic filing system called integrity. The nominee then receives an email with login instructions and is able to fill out the public financial disclosure report. They fill that out with all of the information and submits the report electronically. At this point, ethics officials review the report for technical completeness and accuracy, and very often contact the nominee with questions or needed corrections. And it’s quite common to have several rounds of back and forth between the nominee and ethics officials to try and ensure that the report is technically complete. And there may be actually additional rounds of back and forth prompted when the Office of Government Ethics starts its review of the report. Also, during this time, there’s an ethics agreement that is also drafted to document, the resolution for any potential conflicts of interest that were detected in the financial disclosure report. And this also may entail some collaboration and have several iterations. And once the ethics agreement and the draft report are in pretty good shape OGE pre-clears or tentatively approves the report and waits for the announcement of the intent to nominate or the actual nomination of the individual. After that the nominee formally signs and files the report and it’s no longer a draft at that point, the perspective agency where they would be working certifies the report, and then OGE certifies the report.

Tom Temin: So it’s a two stage process, but when filling out the forms initially, can the candidate or the potential nominee start and stop?

Elizabeth Horton: Absolutely, yes. It’s an electronic filing system so they can start and save it and then continue from where they’re stopped.

Tom Temin: And if this were all on paper, how many pages do you think it would be say for someone complicated?

Elizabeth Horton: Well, it wasn’t that long ago that we had paper reports, actually. And so it really varies by case. And it just depends on the number of holdings and entries that someone may have. And the system just a lot for whatever information is required to be put in and ends up being whatever it is.

Tom Temin: Sure, yeah, because I was thinking of someone say just comes to mind, Rex Tillerson, when he was originally nominated for Secretary of State, long business career, probably had investments all over the place, board memberships, that can be a pretty daunting process. Do people tend to at that level maybe retain counsel to help them get through all this?

Elizabeth Horton: I do believe that some people have retained counsel. But hopefully with the electronic filing system, it’s hopefully very user friendly. And so it’s not a requirement that one do so.

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Tom Temin: And we’ve talked a lot about the process for filing ethical disclosures. What are the ethics issues that are being sought? Is it simply financial conflict of interest, or some other form of moral turpitude that might show up?

Elizabeth Horton: So the mission of the Executive Branch Ethics Program and therefore the rules and processes that are part of that program is to prevent conflicts of interest of executive branch employees. So the reasons that mission is so important is that it helps to ensure that executive branch employees are making impartial decisions based on the public’s interest, that they are responsible stewards of public resources and that they loyally adhere to the constitution and United States laws.

Tom Temin: And do they usually need to resign boards say, aside from the direct employer that they would be leaving, if they are executives that may serve on several boards? Do they have to resign them generally speaking?

Elizabeth Horton: So yes, there are various remedies that they may have to take in order to fulfill their ethical obligations, and that may include resigning positions or divesting assets. And it’s important to note as well that past administrations have and incoming administrations may have additional restrictions and policies as well.

Tom Temin: So for example, it would not be a federal requirement to not invest in stocks that people think are bad, like oil companies or timbering companies, but that could be the administration’s policy, and therefore, that would be between the administration, the incoming group and that appointee.

Elizabeth Horton: Yes, that can be. But It should also be noted that the determination of workable solutions is very case specific. Ethics officials are very aware of an agency’s business and they prospective duties of nominee and so they are able to then surgically determine what needs to resolve any potential conflicts of interest.

Tom Temin: And are the rules and procedures the same for cabinet levels all the way down to the ordinary Schedule C that might come in in a specific agency in a specific job?

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Elizabeth Horton: So executive branch employees must comply with these conflict of interest laws and the standards of ethical conduct for employees of the executive branch or the standards of conduct for short. But there are some differences in ethics obligations depending on the duties and positions of employees. For example, some employees have to file confidential disclosure reports, while others follow the public financial disclosure reports. And others still have their reports reviewed by OGE. Also, while all new employees must complete initial ethics training, most agency leaders must also complete additional ethics training,

Tom Temin: Got it. So the ethics training then takes place in the agency. It’s not conducted by OGE, but by ethics officers at the agency.

Elizabeth Horton: That’s correct.

Tom Temin: And in your understanding, do even the very highest level officials tend to go through that type of training?

Elizabeth Horton: Oh, absolutely. Not only must they go through an initial ethics briefing, they have to go through the initial ethics training and then annual ethics training as well.

Tom Temin: Yeah. So even you know, the Mike Pompeos or the Hillary Clintons when she was Secretary of State, people like that have to do it every year.

Elizabeth Horton: Absolutely.

Tom Temin: And we mentioned the sale of certain assets might be required. What about blind trusts and putting your whole investment portfolio into someone else’s hands? Is that often a remedy, is that an allowable remedy?

Elizabeth Horton: Yes, as part of the complex analysis and the resolution of potential conflicts, there are a number of remedies available and blind trusts are, qualified trusts are also available. But again, as I mentioned, the determination of the best solution for a potential conflict is very case specific. So while that is an available remedy, I would say it’s probably not one of the most common.

Tom Temin: Got it. And are there cases where you could keep the securities? Suppose your only investment is some mutual fund that has 5,000 stocks in it? Could you probably hang on to that one because no decision you could make could really have any material effect on that investment.

Elizabeth Horton: Right. So during the complex analysis, the person’s duties and the type of business that comes before the agency is considered. And so if there’s a holding that would not interfere with that, or would not be affected by any of those things, then it is likely that person would not have to divest of that type of holding, but that is the type of analysis that the ethics officials go through to ensure that there won’t be any potential conflicts of interest.

Tom Temin: Yeah, so in other words, to put it in the opposite extreme — if you were to come in as the chief procurement officer of a defense agency, you probably don’t want to have stock in Northrop Grumman, Lockheed and Boeing.

Elizabeth Horton: Right. And that’s the case that some agencies also have specific prohibited holding regulations. So as I said, it’s not only specific to an individual, but some agencies also have additional restrictions.

Tom Temin: Well, it’s a high bar, but I guess great work once you get over it, huh?

Elizabeth Horton: We believe so. We think it is a great system and I truly believe that it tries to ensure that the public has trust in its government.

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