CONFLICT OF INTEREST LAWS AND THE PENALTIES FOR VIOLATIONS THEREOF

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03089R000100020035-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 3
• Document Creation Date: December 12, 2016
• Document Release Date: March 1, 2001
• Sequence Number: 35
• Publication Date: February 18, 1969
• Content Type: MFR

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OGC Has Reviewed
UGC 69-0309
18 February 1969
MEMORANDUM FOR THE RECORD
SUBJECT: Conflict of Interest Laws and the Penalties for
Violations Thereof
1. Because of the appointment of a Task Force within the
Agency to study the plausibility of creating an employee pension-
investment program and the possibility of a conflict of interest
arising from within the Task Force, Mr. Q asked me to 25X1A
research the conflict of interest laws. The following appear to be
the applicable authorities.
2. The prohibited action which is paraphrased and quoted
below is a felony, punishable by a fine of up to $10, 000 or imprison-
ment of up to two years or both. Any "officer or employee of the
executive branch of the United States Government, "... who... "partic-
ipates personally and substantially as a Government officer or em-
ployee, through decision, approval, disapproval, recommendation,
the rendering of advice, investigation, or otherwise, in a judicial
or other proceeding, application, request for a ruling or other deter-
mination, contract, claim, controversy, charge, accusation, arrest,
or other particular matter in which to his knowledge, he, his spouse,
minor child, partner, organization in which he is serving as an
officer, director, trustee, partner or employee, or any person or
organization with whom he is negotiating or has any arrangement con-
cerning prospective employment, has a financial interest," shall be
subject to the penalties set out above. 18 U. S. C.A. 208.
3. In addition to this statutory proscription, the President,
by Executive Order 11222 of 8 May 1965, set forth certain "standards
of ethical conduct for Government officers and employees." Pertinent
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sections of the Executive Order are:
Section 101. Where government is based on the
consent of the goverxred, every citizen is entitled to have
complete confidence in the integrity of his government.
Each individual officer, employee, or adviser of government
must help to earn and must honor that trust by his own integrity
and conduct in all official actions.
Section 201. (a) Except in accordance with regulations
issued pursuant to subsection (b) of this section, no employee
shall solicit or accept, directly or indirectly, any gift, gratuity,
favor, entertainment, loan or any other thing of monetary value,
from any person, corporation, or group which--
(1) has, or is seeking to obtain, contractual or
other business or financial relationships with his agency;
(2) conducts operations or activities which are
regulated by his agency; or
(3) has interests which may be substantially
affected by the performance or nonperformance of his
official duty.
(c) It is the intent of this section that em-
ployees avoid any action, whether or not specifically prohibited
by subsection (a), which might result,tn, or create the appearance
of--
(1) using public office for private gain;
(2) giving preferantial treatment to any organization
or person.
(3) impeding government efficiency or economy;
S (4) losing complete; independence or impartiality
of action;
2
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4ry.
(5) making a government decision outside
official channels, or
a affecting adversely the confidence of the
public iR he i.tcgrty of the Government.
4. Agency reguations on conflict of interest are found in
Therein a conflict of interest is defined as "a
situation in w ? ch a.n Agency e:rrxnloyee's private inte~?a:st, usually
but not necessarily of an economic nature, conflicts or appears to
conflict with his Agency duties and responsibilities. The situation
is of concern to the Agency whether the conflict is real or on-I.-tY
apparent.
5. With respect to the possible conflict of interest a Task
Force member might have, i believe it is particularly important to
make certain that no member has a financial interest in or is an ern-
ployee of an investment companyr. The statute and the Executive
Order prohibit, and indeed make it a crime, for such a person to
participate in any way in the business of the Task Force. With respec
to an employee who is not a member of the Task Force but who is
investments as a sideline, I believe the conflict of interest would be
apparent of he should recornznend a, particula yyoo of investment or
e'-f ,`Ic a. particular corn an to a membe of the Task Force. That person
',ctu~ woe be using the knowledge he has as a Government employee to
.t e,,,,C ,ins"rr promote his own private and outside financial interest. The reverse
.tat k of these apparent conflicts is also true. An employee who sells mutual
funds as a sideline might feel it would be to his advantage to discourage
e t--;t the establishment of the pension-investment fund because it would cut
?~~ /CZ U " into his sales to fellow employees.
signed
office of General Counsel
OGC:GMB: sab
Distribution:
Orig. - C ONF LILT OF INTEREST
14?DM
1 - GMB Signer
1 - Chrono
3
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