December 2008

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

If you have any comments or suggestions concerning the information provided or the format used, we'd like to hear from you. Please send your comments to pamela.maloney@wolterskluwer

Contracting

DII Panel Discusses Final Mandatory Disclosure Rule Issues
Contractors should prepare for the ramifications of the Federal Acquisition Regulation (“FAR”) mandatory disclosure rule by assessing legal and compliance resources now, said Angela Styles, a partner at Crowell & Moring. In a webinar for Defense Industry Initiative members held on December 3, 2008, Styles advised that the rule will require contractors to self investigate and that multiple investigations may have to be undertaken simultaneously. She recommended taking a swat team approach. The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council on November 12, 2008 issued a final rule at 73 Fed. Reg. 67064 that amends the FAR to require government contractors to establish and maintain specific internal controls to detect and prevent improper conduct in connection with the award or performance of covered government contracts or subcontracts. The final rule also requires government contractors to timely disclose to the agency Office of the Inspector General (“OIG”), with a copy to the contracting officer, whenever the contractor has credible evidence of a violation of Federal criminal law involving fraud, conflict of interest, bribery or gratuity or a violation of the civil False Claims Act, with regard to the government contract performed by the contractor or a subcontractor awarded there under. The rule also provides as cause for suspension or debarment knowing failure by a principal of a contractor to timely disclose to the government, in connection with any contract, credible evidence of a violation of the criminal laws mentioned above or a violation of the False Claims Act. (Federal Ethics Report, Issue 15, No. 12, December 2008)

Business Ethics

How to Make the Process of an FCPA Compliance Monitor Productive
The number of corporate monitors appointed in Department of Justice (“DOJ”) Deferred Prosecution Agreements (“DPAs”) and Non-Prosecution Agreements (“NPAs”) is spiking upward, especially in Foreign Corrupt Practices (“FCPA”) cases, according to Stephen Fishbein, a partner at Shearman & Sterling who has worked as a compliance monitor for Baker Hughes. William Jacobson, who recently left the DOJ criminal division that focused on FCPA cases to work at Fulbright & Jaworski, LLP, and Brian Quinn, from the Securities and Exchange Commission, joined Fishbein on a panel discussing the FCPA Compliance Monitor process at the Marcus Evan FCPA conference held in Washington DC in September, 2008. Jacobson explained that DOJ will require a monitor if the wrongdoing is widespread, for example the Siemens case, in which the company’s modus operandi was to bribe foreign officials to get business. DOJ also would require appointment of a monitor if the company is a recidivist, with a history of bad conduct repeated over the course of years, as seen in the Baker Hughes case. Generally, DOJ will require a monitor if a company has shown itself to be insufficient in its investigation of its business in other countries. In addition, DOJ will require a monitor if it finds that a company has an insufficient compliance program. (Federal Ethics Report, Issue 15, No. 12, December 2008)

Office of Government Ethics

OGE Discusses Legislation Affecting the Executive Branch Ethics Program
OGE issued a memorandum (DL-08-037) on November 6, 2006, that discussed three new public laws that affect the executive branch ethics program. OGE stated that the Senior Professional Performance Act of 2008, Public. L. No 110-372, which raises the cap on base pay for SL and ST Federal employees and eliminates locality pay for these senior level positions, will lead to many more SL and ST employees being covered by the one-year post-employment restrictions. OGE also advised that a recent law will permit current and former college and graduate degrees students to receive student loan repayments without violating the supplementation of salary statute. The College Opportunity and Affordability Act, Public L. No. 110-315 (2008), allows current and former students of institutions of higher education who go to work for the Federal Government to participate in such an institution’s loan forbearance or repayment programs without violating 18 U.S. C. §209 or the Standards of Ethical Conduct gift rules if certain criteria are met. Finally, OGE advised that section 241 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, Public L. No. 110-417, includes Government-wide ethics safeguards addressing conflicts of interest for certain Federal Government contractors. The law contains specific policy requirements applicable to contractor employees who are performing “acquisition functions closely associated with inherently governmental functions” for or on behalf of a Federal agency or department. (Federal Ethics Report, Issue 15, No. 12, December 2008)

Investigations

Two Interior Officials’ Cases Arise from OIG Investigation
The former special assistant, Jimmy W. Mayberry, to the Associate Director, Lucy Dennet, at the Mineral Management Service (“MMS”) of the Department of the Interior, was sentenced in the U.S. District Court for the District of Columbia following his pleading guilty to a one-count information charging him with violating the conflict of interest statute, 18 U.S.C. §208. A second former MMS official, Milton K. Dial, pleaded guilty in the U.S. District Court for the District of Nevada to a one-count information charging him with violating the post-employment statute, 18 U.S.C. §207. Both the Mayberry and Dial cases arose from an extensive investigation by the Interior Office of Inspector General into confidential allegations against more than a dozen current and former MMS employees. The investigation focused on a Denver-based division of MMS that is responsible for managing all royalties associated with both onshore and offshore oil and gas production from federal mineral leases. (Federal Ethics Report, Issue 15, No. 12, December 2008)

Another Congressional Staffer Caught Up in Abramoff Scandal
A former Senate Legislative Assistant, Trevor L. Blackann, pleaded guilty on November 20, 2008, in the U.S. District Court for the District of Columbia to a one-count information charging him with making a false statement on his 2003 Federal tax return by failing to report as income thousands of dollars in illegal gifts received from lobbyists. A lobbyist gave Blackann tickets for sporting and concert events for his personal use and the use and benefit of others. The lobbyist also bought Blackann meals and beverages at Washington, DC restaurants. During 2003 alone, Blackann received more that $3,100 worth of tickets, meals and drinks from the lobbyist. From 2001 until 2004, the lobbyist requested, and Blackann provided, assistance on matters for the lobbyist and his clients. In 2003, two other lobbyists provided Blackann with a free trip to the first game of the 2003 World Series in New York, NY. In addition to a free ticket to the game, the trip included free round trip airline tickets from Washington, DC to New York City, one night’s free accommodation at an upscale hotel; free use of a private chauffeur and sport utility vehicle for transportation; free meals and drinks; a free souvenir baseball jersey and free admission to and entertainment at a gentlemen’s club following the game. (Federal Ethics Report, Issue 15, No. 12, December 2008)

Campaign Finance

U.S. Supreme Court to Hear “Hillary the Movie” Case
The U.S. Supreme Court has agreed to review a decision by the U.S. District Court for the District of Columbia in Citizens United v. Federal Election Commission, Docket No. 08-205, concerning whether a film critical of Senator Hillary Clinton and advertisements for it were subject to regulation under the Bipartisan Campaign Reform Act (BCRA) of 2002. During the primaries for the 2008 presidential election a conservative advocacy group released a film titled “Hillary: The Movie.” The Commission moved to enforce provisions of BCRA with respect to Citizens United advertisements for the movie and its distribution of the movie through cable TV video on-demand. Citizens United challenged the district court's ruling asking four questions: whether (1) all as-applied challenge to disclosure requirements (reporting and disclaimers) imposed on “electioneering communications'” by the BCRA were previously resolved; (2) BCRA's disclosure requirements imposed an unconstitutional burden when applied to electioneering communications protected from prohibition by the appeal-to-vote test; (3) the appeal-to-vote test required a clear plea for action to vote for or against a candidate; and (4) a broadcast feature-length documentary movie that was sold on DVD, shown in theaters, and accompanied by a compendium book was to be treated the same as a broadcast “ad.” (Citizens United v. Federal Election Commission, Dkt. No. 08-205, CCH Federal Election Campaign Finance Reports, No. 403, November 24, 2008)

FEC Releases Summary of National Party Financial Activity
National committees of the two major political parties had spent $865.1 million during the 2007-2008 election-cycle according to a Federal Election Commission (FEC) summary. The most recent comprehensive disclosures of all financial activity were submitted on October 23, indicating that national party committees raised $981.2 million between January 1, 2007, and October 15, 2008. Republican committees, including the Republican National Committee (RNC), the National Republican Senatorial Committee (NRSC) and the National Republican Congressional Committee (NRCC) raised $518.8 million in federally permissible “hard money.” During the same period from January 2007 through mid-October of 2008, the Democratic National Committee (DNC), Democratic Senatorial Campaign Committee (DSCC) and the Democratic Congressional Campaign Committee (DCCC) raised $462.4 million in federally permissible funds. CCH Federal Election Campaign Finance Reports, No. 403, November 24, 2008)