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Murky Standards for Ethics Cases

Two of the House Ethics Committee’s current investigations focus on whether current Members used their office for personal financial gain.

The chain of events leading to the probes of Democratic Reps. Shelley Berkley (Nev.) and Maxine Waters (Calif.) are straightforward and factually similar: Both lawmakers urged outside entities to take actions that would, if successful, eventually benefit their spouses financially.

But determining whether the actions were taken primarily for their own benefit or for a larger group will be key to establishing whether any ethics violations occurred.

Legal experts told Roll Call that such cases fall into a gray area of ethics rules that’s filled with opportunities for divergent interpretations because conclusions could hinge on establishing intent.

“I think Representatives are all trying to do the right thing, but there will be some differences of opinion sometimes when it comes to conflicts-of-interest [cases]. It’s an area that’s a little ambiguous and less clear-cut,” said Jan Witold Baran of Wiley Rein.

The committee announced earlier this month that it would form an investigative subcommittee to handle the Berkley case. The independent Office of Congressional Ethics referred the case to the committee after reviewing the seven-term lawmaker’s role in trying to save a kidney transplant program at a hospital where her husband’s medical practice had a lucrative contract and to preserve government reimbursements for dialysis centers, which his practice owns throughout the state.

The Waters case, which the committee is investigating with the help of an outside counsel, focuses on her role in setting up meetings between Treasury Department officials and the National Bankers Association to discuss the financial health of
minority banks. The OCE referred the case after finding that the meeting focused on one bank where Waters’ husband had previously been a board member and in which he had a financial stake.

The cases against both lawmakers rely on the application of House rules, passages in the Code of Ethics for Government Service and guidance in the House Ethics Manual related to conflicts of interest and using a government office for personal financial gain.

Baran said the rules on Congressional conflicts of interest and matters of personal interest are narrowly tailored to encourage participation in the legislative process unless a lawmaker has a direct and specific financial interest.

“The general principle is that the ethics rules discourage finding a conflict of interest because the consequence is so dramatic, it prevents a Member or Representative from participating or voting on legislative matters,” Baran said. “Unlike judges or executive branch personnel, [Members] cannot recuse themselves or give the vote to someone else.”

Experts said the Waters and Berkley cases have parallels to that of Rep. Sam Graves (R-Mo.). In that case, the OCE determined in 2009 that there was “substantial reason to believe that an appearance of a conflict of interest was created” when Graves asked a friend to testify at a House Small Business Committee hearing, given that the individual had invested in the same renewable fuel cooperatives as Graves’ wife.

But in a strongly worded report, the committee dismissed the independent ethics office’s interpretation, saying that “no relevant House Rule or other standard of conduct prohibits creation of an appearance of a conflict of interest when selecting witnesses.”

The committee also noted that Graves had disclosed his wife’s financial interest in the entities, and it said that voters could decide whether there was any conflict of interest.

Waters’ legal team has likened her case to that of Graves in urging its dismissal. Like Graves, Waters had acted in a way that both benefited a larger class of individuals and was adequately disclosed, her attorneys said.

“The Committee has adopted an approach that is sharply divergent and significantly harsher than the decision rendered in Graves,” Stan Brand, Waters’ lawyer, wrote in a motion to dismiss the case.

But the committee said Waters’ arguments “regarding conflict of interest have no bearing” because it is a case related to more specific rules concerning exerting influence for personal benefit.

Experts say a variety of factors could affect whether conflict-of-interest and use of office for personal gain charges merit a more serious probe. Though the committee has a policy of not commenting on matters under its purview, its decision to pursue such cases could hinge on factors that include whether a lawmaker’s financial benefit can be definitively valued, the stake a Member has in a particular outcome compared to other similarly situated individuals and whether the lawmaker adequately and proactively disclosed his or her financial interest in the matter, experts said.

But to those on the outside, the cases look similar.

“I can’t distinguish Graves from Berkley and Waters; they are nearly indistinguishable,” said Melanie Sloan, executive director of the watchdog group Citizens for Responsibility and Ethics in Washington.

“The Ethics Committee might have felt that it would have a hard time letting Berkley go, given Waters, and that makes sense to me … but then why not Sam Graves?”

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