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Campus Notebook: Ethics Committee unveils rules for member service on private boards

Some ethics experts say the rules fall short of properly mitigating conflicts of interest

The case of former Rep. Chris Collins, R-N.Y., spurred the House Ethics Committee to craft rules around outside positions. (Bill Clark/CQ Roll Call file photo)
The case of former Rep. Chris Collins, R-N.Y., spurred the House Ethics Committee to craft rules around outside positions. (Bill Clark/CQ Roll Call file photo)

Former Rep. Chris Collins sat on the board of an Australian biotechnology company and used his privileged, insider knowledge that the stock would imminently plummet to help his family and others avoid $768,000 in losses, a decision that led to the demise of his political career and leaves him facing prison time.

Those actions forced the House Ethics Committee to grapple with how to deter such a breach of public trust in federally elected officials in Congress. House Resolution 6 created a new clause in the Code of Official Conduct — set to take effect Jan. 1, 2020 — that prohibits members, delegates, the resident commissioner, officers and employees of the House from serving as an officer or director of any public company. The measure also outlaws them from serving on a company traded on a foreign market, such as Innate Immunotherapeutics, the company Collins worked for.

On Dec. 11, a working group tasked with determining what other parameters should be set around House employees’ work outside the chamber finalized additional rules that prohibit members from working at a company that gets money from a federal agency—like government contractors—that falls within a member’s committee jurisdiction. It also outlaws a lawmaker from working at an entity that is regulated by a federal agency, such as a bank, if that member sits on a committee that has jurisdiction over that space. 

However, there is a list of seven exceptions, enabling members to maneuver around the rules.

The new regulations—along with the exceptions—were crafted by Reps. Susan Wild, a Pennsylvania Democrat, and Van Taylor, a Republican from Texas.

UNITED STATES - JULY 25: Rep. Susan Wild, D-Pa., left, and Rep. Van Taylor, R-Texas, talk before the start of the House Committee on Ethics’ Outside Positions Working Group discussion in the Longworth House Office Building on Thursday, July 25, 2019. The group is working to draft proposed regulations governing House Members, officers, and employees’ outside positions. (Photo By Bill Clark/CQ Roll Call)
Rep. Susan Wild, D-Pa., left, and Rep. Van Taylor, R-Texas, led the House Committee on Ethics Outside Positions Working Group discussion in July. (Bill Clark/CQ Roll Call file photo)

If the member served on the board of a private company for at least two years before being elected to Congress, they can continue in that role. If it’s a family business, trust, or charitable trust, members can still be involved. This also applies to nonprofits. The Ethics Committee can also issue a waiver or suspension for a period of time (no longer than 120 days) in “exceptional circumstances only” upon written request. Members cannot be paid for their service on boards. 

Some of the ethics experts who spoke at the panel’s public session in July see some positive strides toward ferreting out conflicts of interest, but they also highlight several areas that need to be improved.

Donald K. Sherman, deputy director of Citizens for Responsibility and Ethics in Washington, said he was encouraged by the new rules, but noted that they don’t fully mitigate conflicts of interest in the House.

“I am pleased the Ethics Committee has strengthened the rules related to conflicts arising from outside positions, but the changes approved last week do not go nearly far enough,” Sherman said. “The Committee’s revised provisions continue to allow a Member to maintain outside positions, albeit uncompensated, with private companies, nonprofits, and family businesses, as long as the Member does not sit on a committee of jurisdiction related to that entity.”

Craig Holman, a government affairs lobbyist for the group Public Citizen, who also spoke to the working group over the summer, said he is disappointed by the rules.

“The new rules fall far short of addressing the conflicts of interest that we see within Congress,” Holman said. “They apply to a very limited class of corporate sources of conflicts of interest. Most of which no members pose anyway.”

Holman added, “The conflicts that needed to be addressed are serving on private boards and LLCs — and those have been overlooked altogether.”

He said the move to extend a prohibition to include banning members from serving as officers on entities that receive federal funds constitutes a “minor improvement” because of the plentiful exemptions.

The Ethics Committee had no comment.

Collins, a former New York Republican, resigned from Congress in October after he pleaded guilty in an insider trading scheme related to his position at Innate Immunotherapeutics. He sat on the board of directors for the company and was among the company’s largest shareholders.

Collins didn’t trade himself and his Innate stock declined by millions of dollars when adverse drug trial results were publicly revealed on June 26, 2017. Collins, however, provided insider information to his son, who then relayed it to others, resulting in them avoiding substantial financial losses. He tipped off family members and others about a failed drug trial test with Innate that led to Collins’ indictment and subsequent resignation from Congress.

Collins listed 17 outside positions as director or partner for several entities, including Audubon Machinery Corp., Volland Electric Equipment Corp., Wurlitzer Capital Group LLC, a position with the Boy Scouts of America, and Innate Immunotherapeutics Ltd.

Collins noted in his 2018 financial disclosure statement that Innate Immunotherapeutics changed its name to Amplia Therapeutics Ltd. He also listed that he resigned five of those 17 positions in 2018. 

Other House members have investments in entities they also serve on.

Chris Pappas serves as vice president and director of Puritan Confectionary Co. Inc. He also is a member of Pilgrim Realty LLC. He has between $250,000-$500,000 in Pilgrim Realty assets. The New Hampshire Democrat has between $1 million and $5 million in Puritan Confectionary, according to his 2018 financial disclosure report.

Rep. K. Michael Conaway serves on the board of directors for Conawell Corp. and Kidwell Exploration. The Texas Republican also holds the position of president at Conabain Corp. Conaway has between $1,000 and $15,000 in Conabain assets and between $500,000 and $1 million invested in Conawell. His spouse has between $1,000 and $15,000 in Kidwell Exploration. Conaway is a former chairman of the Ethics Committee. 

Blanton confirmed as Architect of the Capitol

UNITED STATES - DECEMBER 12: J. Brett Blanton, nominee to the Architect of the Capitol, arrives for his confirmation hearing in the Senate Rules and Administration Committee on Thursday, Dec. 12, 2019. (Photo By Bill Clark/CQ Roll Call)
Architect of the Capitol J. Brett Blanton. (Bill Clark/CQ Roll Call file photo)

J. Brett Blanton was confirmed by a Senate voice vote last night to be Architect of the Capitol for a 10-year term. 

He has more than 25 years of experience in facilities operations and construction management, recently as deputy vice president for the Metropolitan Washington Airports Authority.

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