Davidson: May Members and Staff Accept ‘VIP’ Discounts?
Q. I am a House staffer with a question about members participating in special “VIP” discount programs that some businesses offer. The member I work for is preparing to buy a new boat, and the company he is buying from has placed him in a special VIP discount program. I’m concerned that this is the type of special treatment that might violate ethics laws. Do the ethics rules permit members to participate in a business’s VIP program?
A. It depends. In some circumstances, House ethics rules do allow members and staffers to participate in VIP discount programs offered by businesses. While members and staffers must always be careful not to receive special treatment because of their position, they need not miss out on offers available to other members of the public.
However, there are circumstances in which the rules might prohibit participation in a business’s VIP program or something similar. Moreover, even where the rules permit participation, a number of potential pitfalls warrant close attention. Participation in “VIP” programs has drawn a great deal of scrutiny in the past, so any member or staffer considering participating in such a program should proceed with caution.
The rule at issue is the House gift rule. Broadly, the gift rule prohibits a member from accepting a “gift” from anyone unless an exception applies.
As you may recall, VIP programs caused quite a stir years ago when several senators faced ethics complaints for receiving loans through a VIP mortgage program at Countrywide bank. Ultimately, the Senate Ethics Committee dismissed the complaints, stating that the conditions of the senators’ loans were available to members of the general public with similar loan profiles.
Last year, the House Ethics Committee concluded its own review of House members’ and staffers’ participation in Countrywide’s VIP program. The committee reached largely the same conclusion. Mere participation in the VIP program is not, by itself, an ethics violation. Nonetheless, the committee warned, participation in such programs is not always free of problems. The committee used the opportunity to issue a memorandum on how to avoid such problems.
First, the memo makes clear that members and staffers need not disqualify themselves altogether from businesses’ discount programs. Nor must they refuse to participate in normal negotiations. The memorandum does suggest, however, that members and staffers proceed with caution when they have “specific reason to believe they may be treated differently based on their position.”
Under such circumstances, there are several steps the committee says members and staffers may take. For one, they make seek “reasonable assurances or certifications” that the offer they are receiving is in fact “commercially reasonable” and would be available to others based entirely on reasons unrelated to their position in the House. In addition, they may seek the advice of the committee itself in assessing the offer and negotiations.
These steps are not necessary unless there is specific reason to suspect special treatment. In the case of the Countrywide VIP loans, for example, the memorandum notes that, in almost all cases, there was no evidence that the members and staffers had any knowledge that the bank had included them in something labeled a “VIP” program.
Of course, there can be other indicia of special treatment or using one’s position for personal gain. For example, the committee said that its “greatest concern” in its review of the Countrywide loans was evidence that some staffers directly contacted in-house lobbyists at Countrywide for assistance with their personal loans.
This the committee did not like. It is improper, the committee said, for a member or staffer to meet with a representative of an organization seeking action or assistance from the member of staffer, and then make a request for assistance with one’s own personal finances at the same meeting. “This conduct is not made any less improper,” the committee said, “merely because there is some separation in time between a past or future meeting and the personal request.”
This last warning is particularly noteworthy. It means that members and staffers should take special care when dealing with in-house lobbyists and other business employees or representatives.
Many of us outside Congress are accustomed to seeking help from friends who might be able to help to facilitate a major purchase. The committee’s warning implies that members and staffers should think twice about doing so, particularly where the “someone you know” is an in-house lobbyist or similar official for a company with interests before the member or staffer.
As the committee puts it: “when your relationship with a representative of a particular business or outside organization is based on your power to affect that person’s organization, and their efforts to influence you or your office in the exercise of that power, that is a relationship that should never be used for your personal benefit.”
C. Simon Davidson is a partner with the law firm McGuireWoods. Submit questions to firstname.lastname@example.org. Questions do not create an attorney-client relationship. Readers should not treat his column as legal advice.