Ethics and Government Update December 2006

December 2006

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH ethics and government publications.

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Business Ethics

Corporate Compliance and Ethics Programs Are Good for Business
Compliance can be a competitive advantage in the marketplace and a benefit to a corporation’s bottom line, according to a panel that gave a presentation at the Society of Corporate Compliance and Ethics’ (“SCCE”) Annual Conference held in Chicago, Illinois, on September 11-13, 2006,. The panel discussed the business benefits of an effective compliance and ethics program. The panel explained the "true costs" of compliance failure by using the example of Boeing, which spent six years under investigation at a cost of $615 million in fines and penalties. In addition, Boeing lost $1 billion in government contracts, was sued by a competitor for $1 billion, saw employees fired and indicted, was denied export licenses and State Department licenses, lost security clearances, and suffered damage to shareholder value and, most importantly, Boeing's reputation.

DII Program Promotes Pursuing New Business in an Ethical Manner

The Defense Industry Initiative on Business Ethics and Conduct (“DII”) focused its annual fall program held in Arlington, Virginia on October 19, 2006 on ethics issues that arise in the areas of business development, marketing and new sales. Steve Chaudet, the Vice President, State and Local Government Affairs & PAC for Lockheed Martin, discussed the difficulties of teaching lobbyists and business development personnel to operate ethically when interacting with Members of Congress and their staffs. The Deputy General Counsel of the Air Force, Don W. Fox discussed post-government employment issues, including looking for a job, criminal restrictions regarding representation back to the Government and Procurement Integrity restrictions that may limit where former/retired Federal personnel may work.

Office of Government Ethics

OGE Gives Amended Advice Regarding Soliciting Gifts of Travel

The Office of Government Ethics (“OGE”) issued a DAEOgram on November 7, 2006 as a follow up to an earlier DAEOgram from March 21, 2006 that addressed questions that were raised regarding the propriety of executive branch employees soliciting free travel. OGE stated that the Standards of Ethical Conduct govern the solicitation and acceptance of personal gifts, including gifts of personal (unofficial) travel. According to the agency, Federal employees may not, in their personal capacities, accept gifts from prohibited sources, or gifts given to them because of their official positions. (CCH Federal Ethics Report, Volume 13, Issue 12, December 2006)

Investigations

VA Employee Sentenced to Prison for Conflict of Interest Violation

A former employee of the Veterans Administration (“VA”), Natalie Coker, was sentenced in the U.S. District Court of the Middle District of Tennessee for violating the conflict of interest statute by negotiating for post-government employment with a company with which she was involved in an official capacity as part of her VA responsibilities. According to a press release, Judge Robert L. Echols considered the totality of Coker’s total public corruption activities, which included taking bribes and kickbacks along with the illegal job negotiation, in determining her sentence. (CCH Federal Ethics Report, Volume 13, Issue 12, December 2006)

Campaign Finance

Rep's Appearance in Tourism Infomercial Not In-Kind Contribution

An appearance by a Representative Mary Bono in a 30-minute infomercial to promote tourism in Los Angeles and Orange Counties would not be considered an in-kind contribution to her authorized committee, the Federal Election Commission ruled. The Palm Springs Desert Resorts Convention and Visitors Authority asked Bono, who represents the 45th district of California, to be their spokesperson. The commercial campaign will run for an eight-month period beginning October 2006, but is not being aired in her district. The Commission found that Representative Bono's appearance in the infomercial as spokesperson for the Authority would not satisfy the Commission’s test for coordinated communications: it was not considered an electioneering communication because it would not be received by at least 50,000 persons in her district; it did not constitute the republication of her campaign materials; it did not expressly advocate the election or defeat of the congresswoman or any other federal candidate; and it was not broadcast in her district within 90 days of the 2006 general election. Because the test was not satisfied, the communication was not considered a contribution to Representative Bono. (CCH Federal Election Campaign Financing Guide ¶6513)

Committee May Delay Forwarding Earmarked Contributions

ActBlue, a non-connected political committee formed to promote the election of Democratic candidates to federal office, may solicit and receive campaign contributions from individuals earmarked for clearly identified prospective candidates for President but postpone forwarding them to the designated candidate until after the candidate registers a presidential campaign committee with the Commission. The Federal Election Campaign Act and Commission regulations governing the receipt of contributions require that earmarked contributions be forwarded to the candidate's authorized committee within ten days of receipt. This requirement, FEC said, is tolled for prospective candidates until both the recipient's identity and candidacy status are known. Contributions earmarked for a prospective candidate who does not register as a presidential candidate by a date certain (in this case, seven days before the Democratic party's 2008 nominating convention) may be forwarded to a default recipient, such as a party committee or another candidate, provided that the ActBlue clearly states in its solicitations how it will distribute such contributions under those circumstances. (CCH Federal Election Campaign Financing Guide ¶6514)