EXECUTIVE CONFLICT OF INTEREST ACT OF 1960

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00965R000400260002-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: November 11, 2016
• Document Release Date: June 4, 1999
• Sequence Number: 2
• Publication Date: February 23, 1960
• Content Type: OPEN

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1960 CONGRESSIONAL. RECORD - SENATE 2889
By Mr. SMATHERS:
S.J. Res. 169. Joint resolution authorizing
the President to issue a proclamation des-
ignating the 7-day period beginning May
24, ?1960, as "All-American Family Week";
to the Committee on the Judiciary.
By Mr. CHURCH:
S.J. Res. 170. Joint resolution to authorize
the participation in an international con-}
vention of representative citizens from the ;
North Atlantic Treaty nations to examine
how greater political and economic coopera-
tion among their peoples may be promoted,
to provide for the appointment of U.S. dele-
gates to such convention, and for other pur-
poses; placed on the calendar.
(See the reference to the above joint res-
olution when reported by Mr. CHuxcH, which
appears under the heading "Reports of Com-
mittees.")
CONCURRENT RESOLUTION
ADDITIONAL COPIES OF HEARINGS
BEFORE SUBCOMMITTEE ON
AGREEMENTS- FOR COOPERATION
OF THE JOINT COMMITTEE ON
ATOMIC ENERGY
Mr. ANDERSON submitted the follow-
ing concurrent resolution (S. Con. Res.
91) ; which was referred to the Commit-
tee on Rules and Administration:
Resolved by the Senate (the House of Rep-
resentatives concurring), That there be re-
printed for the use of the Joint Committee
on Atomic Energy two thousand additional
copies of the hearings before the Subcom-
mittee on Agreements for Cooperation of the
Joint Committee on Atomic Energy on
Amending the Atomic Energy Act oR 1954
with respect to exchange of military infor-
mation and material with allies during the
second session of the Eighty-fifth Congress.
EXECUTIVE CONFLICT OF INTEREST
ACT OF 1960
Mr. JAVITS. Mr. President, on behalf
of myself, and my colleague the junior
Senator from New York [Mr. KEATING],
I introduce, for appropriate reference-
and I shall ask unanimous consent in a
moment for permission to have other
Senators cosponsor the bill-the "Ex-
ecutive Conflict of Interest Act of 1960,"
a comprehensive ethics bill applying to
the 2,266,000 civilian employees of the
Federal Government, regular and tem-
porary, and to the 2,632,000 members of
the Armed Forces. Representative JOHN
LINDSAY, Republican, of New York, will
introduce the bill in the House of Repre-
sentatives.
The proposed legislation was drafted
by the special committee on the Federal
conflict-of-interest laws of the associa-
tion of the bar of the city of New York
and is being introduced Tuesday to coin-
cide with the public release by the asso-
ciation of the results of its 2-year study.
At this point in my remarks, I ask
unanimous consent to have printed in
the RECORD a list Of the distinguished
members of the committee, headed by
Roswell B. Perkins, of New York, and
including our colleague in the other
body, Representative LINDSAY.
There being no objection, the list was
ordered to be printed in the RECORD, as
follows:
The members of the committee are Ros-
well B. Perkins, of New York, former Assist-
ant Secretary of Health, Education, and Wel-
fare, chairman; Howard F. Burns, of Cleve-
land, Ohio, member of the council of the
American Law Institute; Charles A. Coolidge,
of Boston, former Assistant Secretary of De-
fense for legal and legislative affairs; Paul
M. Herzog, of New York, former Chairman,
National Labor Relations Board; Alexander
C. Hoagland, Jr., of New York; Everett L.
Hollis, former General Counsel, Atomic En-`
ergy Commission; Charles A. Horsky, former
Assistant Prosecutor at Nuremberg with the
Chief of Counsel for War Crimes; Congress-
man John V. Lindsay, Republican, of New
York, former executive assistant to the At-
torney General; John E. Lockwood, of New
York, former General Counsel, Office of In-
ter-American Affairs; and Samuel I. Rosen-
man, pf New York, former Special Counsel
to Presidents Roosevelt and Truman.
Mr. JAVITS. Mr. President, the pro-
posed statute would. codify various con-
flict-of-interest laws, repeal those now
outdated, and extend its application to
those engaged in the full range of mod-
ern Federal activity, including Govern-
ment consultants to a more limited ex-
tent, with civil and criminal enforcement
provisions. Charged with overseeing the
operations of the act would be an Ad-
ministrator to be designated by the Pres-
ident and to serve within the Executive
Office.
Specifically prohibited under this con-
flict-of-interest proposal would be, first,
receipt of gifts, gratuities, or favors
when offered to an employee because
of his post with the Federal Government,
or if the giver is one who does business
with the employee's agency or is regu-
lated by it; second, receipt of pay from
an outside source in return for personal
services, unless such work is performed
outside Government hours and is not
otherwise prevented by agency regula-
tions; and, third, ex-employees from as-
sisting others, whether or not for com-
pensation, in transactions with the Gov-
ernment in which the persons were pre-
viously involved; nor may the former
Government workers' partners under-
take such work for a period of 2 years.
Again, that refers to the case where the
ex-employee was involved in the activity.
Upon entering Government service in
the executive branch, and periodically
thereafter, every employee would be re-
quired to sign a statement that he or she
has read a summary of the rules on con-
flicts of interest set up under the act and
the accompanying regulations. Under
the act there is specific provision for the
retention of certain Outside economic
interests by Government employees such
as participation in company pension
plans.
The Nation's conscience has been
deeply troubled during the last few
months over disclosures of practices re-
flecting a breakdown in ethical conduct
on the part of a small minority in various
businesses and industries. In recent
years, the misconduct or the alleged mis-
conduct of a very few Federal employees
have subjected Government workers to
similar criticism, which as in business,
unfairly reflects discredit on the great
majority of loyal, hardworking employees
whose integrity and devotion should be
beyond question.
Therefore, this comprehensive report
and recommended draft legislation on
executive conflicts of interest as prepared
by the special committee of the Associa-
tion of the Bar of the City of New York
is truly an invaluable document which
makes a real contribution to one of the
most perplexing personnel problems of
government-the recruiting and retrain-
ing at all levels of government service
of individuals of high ability and integ-
rity. Well known is the fact that many
government salaries are not always com-
patible with pay levels for similar jobs
in private industry. And in many in-
stances, genuine confusion and misun-
derstanding about existing conflict of in-
terest rules or regulations have, arisen
and led to most unfortunate situations
which have embarrassed many Govern-
ment employees not immediately in-
volved. At the same time, the public is
absolutely entitled to the reassurance
that understandable, uniform, and equi-
table standards of conduct have been es-
tablished to give guidance to employees
in the executive branch-guidelines for
action in every modern field of activity
by the Federal Government which we be-
lieve are genuinely desired by executive
department employees.
We are interested to note that the spe-
cial committee recommends a study be
made of what type of ethics legislation
should apply to members of the legisla-
tive branch. We have previously Intro-
duced ethics legislation which calls for
just that-the establishment of a Com-
mission on Ethics in the Federal Govern-
ment to study and develop legislative
recommendations while an interim code
of ethics patterned after that presently
in force in New York State is in opera-
tion at the Federal level.
I pause here in my prepared remarks
to emphasize that we do not feel that
Members of this legislative body, the
U.S. Congress, are entitled to any spe-
cial position or status, but that they,
too, should be covered by conflict of
interest legislation.
We hope very much that as the bill is
considered, since it is a splendid demon-
stration of how citizens can help our
Government, we shall at one and the
same time consider proposed ethics
legislation for members of the legisla-
tive branch.
Mr. President, as my colleague from
Wisconsin [Mr. PROXMIRE] has already
noted, there is a very important pro-
vision which gives to Senate commit-
tees considering the confirmation of the
nominations of persons to be officials of
the executive department an oppor-
tunity to get the benefit of the advice
and factual information which is avail-
able to the Government administrator.
Mr. President, of particular signifi-
cance in evaluating the work of the As-
sociation of the Bar of New York is the
fact that it has been largely performed
by lawyers previously in the employ of
the Federal Government who are cogni-
zant of the various ethical problems
which normally arise. Second, this
carefully drawn report is the output of
many months of exhaustive work. Too
often, we tend to wait until headlines
about one person's unethical conduct
hit us right between the eyes before we
act. Here is a reasoned, practical ap-
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proach to the problem translated into
specific legislative recommendations.
The hodgepodge of conflict of interest
laws now on the books should be re-
vised or replaced as soon as possible if
the public and the public servantsare to
receive the protection to which both are
entitled.
Our bill would place chief reliance on
administrative and civil remedies for
those who violate the proposed rules an
regulations developed by the adminis-
trator and the heads of agencies and
departments under the direction of the
President. Under the civil enforcement
provisions, an individual may be sus-
pended or dismissed following appro-
priate hearings and appeals. In addi-
tion, any Government action or con-
tract involved in the ethics violation may
be received by the Government; the At-
torney General may sue to recover three
times the value of any improper acquisi-
tion obtained by the violator, and a civil
penalty of up to $5,000 can be recovered
for some of the most serious infractions.
Criminal penalties include the imposi-
tion of a $10,000 fine, imprisonment up
to 1 year or both if the violation was
with specific intent.
In conclusion, Mr. President, I should
like to emphasize that we are very seri-
ous about this matter. This is a very
serious bill. The association of the bar
has done a magnificent job in the public
interest. The foundation which financed
the work has done a magnificent job in
the public interest.
It is the intent of my colleague [Mr.
KEATING] and myself not to let this mat-
ter rest. People in our free society are
entitled to the best kind of government,
but more than anything else they are
entitled to honest government, especially
when we have a thorough job done, such
as this, which does not go into im-
practioalities but really applies prac-
tical, well-recognized, and accepted
standards in a moral tone, as it were,
which the whole community wishes to
apply to a measure of this kind.
Mr. President, I hope that this will not
be considered another exercise in fine
thinking or in` bar association drafts-
manship. I appeal directly to the lead-
ers of the majority and minority in the
Senate to see that we get action upon
this particular measure, and to see that
we do not wait until some other scandal
breaks upon us before we get all excited
about the matter once again. We
should. act on the matter in advance,
when thoughtful consideration may be
given to a very thoughtful and repre-
sentative job such as this.
Mr. President, I ask unanimous con-
sent that the bill which we are introduc-
ing, for appropriate reference, may be
printed in the RECORD, together with a
memorandum of explanation on the bill
which I have received from the Associa-
tion of the Bar of the City of New York;
and, Mr. President, following the desire
of the Senator from Wisconsin [Mr.
PROXMIRE], I ask unanimous consent
that the name of the Senator from Wis-
consin. may be added as a cosponsor.
The PRESIDING OFFICER (Mr. Me-
NAMARA in the chair) .. Is there objection
Mr. EASTLAND. Mr. President, re-
serving the right to f object, what was the
unanimous-consent request?
The PRESIDING OFFICER. The
Senator wishes to aid the name of the
Senator from Wiscosin as a cosponsor
of the bill.
Mr. JAVITS. M.,. President, I also
asked unanimous -consent, for the bene-
fit of the Senator 'rom Mississippi, to
have the text of the bill printed, as well
as a memorandum of explanation.
Mr. EASTLAND. Printed in the
RECORD?
Mr. JAVITS. Pri iced in the RECORD.
The PRESIDING DFFICER. Is there
objection to the request of the Senator
from New York? TI Le Chair hears none.
The bill will be received and appropri-
ately referred; and without objection,
the bill and memora:-ldum will be printed
in the RECORD, and t: le name of the Sen-
ator from Wisconsin [Mr. PROXMIRE]
will be added as a c :)sponsor of the bill.
The bill (S. 3080) to supplement and
revise the laws pre scribing restrictions
against conflicts of interest applicable
to employees Of the executive branch of
the Government of the United States,
and for other purposes, introduced by
Mr. JAVITS (for himself and Mr. KEAT-
ING), was received, read twice by its title,
referred to the Committee on the Judi-
ciary, and 'ordered lo be printed in the
RECORD, as follows:
Be it enacted by the Senate and -House of
Representatives of tie United States of
America in Congress a rsembled,
TABLE OF CONTENTS
Title I-Prohibited ,conduct, administra-
tion, and procedure
Sec. 1. Preamble; decl s,ration of policy and
purpose.
Sec. 2.' Definitions.
Sec. 3. Acts affecting a personal economic
interest.
Sec. 4. Assisting in traisactfons involving the
Government. .
Sec. 5. Compensation for regular Govern-
ment employees from non-Govern-
ment sources, -
Sec. 6. Gifts.
Sec. 7. Abuse of office.
Sec. g. Postemploymert.
Sec. 9. Illegal paymen s.
Sec. 10. Administratio:i.
Sec. 11. Preventive measures.
Sec. 12. Remedies; ci /il penalties; proce-
dures.
Title II-Criminal penalties
Sec. 21. Acts in yiolatLon of Executive Con-
flict of Inter est Act.
Title III-Amendment and repeal of exist-
ing laws
Sec. 31. Amendment o' title 18, United States
Code, sections 216 and 1914.
Sec. 32. Amendment o! title 18, United States
Code, sectio as 281, 283, and 434.
Sec. 33. Amendment o; title 18, United States
Code, sectio a 284.
Sec..34. Amendment o' title- 22, United States
Code, section 1792.
Sec. 35. Amendment of title 5, United -States
Code, section 30r(d).
Sec. 36. Repeal of par titular substantive re-
straints.
Sec. 37. Repeal of particular substantive re-
straints api clicable to retired offi-
cers. -
Sec. 38. Repeal of exe nptions from particu-
lar conflict- of-interest statutes. -
Title IV-Miscell zneous provisions
to the request of the Senator from New Sec. 41. Short title.
York? Sec. 42. Effective date
TITLE I-PROHIBITED CONDUCT, ADMINISTRATION
AND PROCEDURE
1. Preamble; declaration of policy and pur-
pose
(a) The proper operation of a democratic
government requires that officials be inde-
pendent and impartial; that government de-
cisions and policy be made in the proper
channels of the governmental `structure;
that public office not be used for personal
gain; and that the public have confidence in
the integrity of its government. The attain-
ment of one or more of these ends is Im-
paired whenever there exists, or appears to
exist, an actualor potential conflict between
the private interests of a government em-
ployee and %his duties as an official. The
public interest, therefore, requires that-the
law protect against such conflicts of interest
and establish appropriate ethical standards
with respect to employee conduct in situa-
tions where actual or potential conflicts
exist.
(b) It is also fundamental to the effective-
ness of democratic government that, to the
maximum extent possible, the most qualified
individuals in the society serve its govern-
ment. Accordingly, legal protections again
conflicts of interest must be so designed as
not unnecessarily or unreasonably to impede _
the recruitment and retention by the gov-
ernment of those men and women who are
most qualified to serve it. An essential
principle underlying the staffing of our gov-
ernmental structure is that its employees
should not be denied- the opportunity; avail-
able to all other citizens, to' acquire and
retain private economic and other interests,
except where actual or potential conflicts
with the responsibility of such employees to
the public cannot be avoided.
(c) It is the policy and purpose of this
Act is promote and balance the dual objec-
tives of portecting Government integrity and
of facilitating the recruitment and retention
of the personnel needed by Government, by
prescribing essential restrictions against
conflicts of interest in the executive branch
of-the Government without creating unnec-
essary barriers to public service.
? 2. Definitions
Unless the -context of this Act otherwise
clearly requires, for purposes of this Act
the terms defined in this section shall have .
the respective meanings hereinafter set
forth. The terms defined in this section In-
clude: "agency"; "agency head" said.. "head
of an agency"; "assist"; "compensation";
"Government action"; "Government em-
ployee'; "intermittent Government em-
ployee"; "participate"; "person"; "regular
Government employee"; "responsibility";
"State"; "thing of economic value"; and
"transaction involving the Government".
(a) "Agency" means-
(1) the Executive Office of the President;
(2) an executive department;
(3) an independent establishment within
theexecutive branch; and
(4) a Government corporation.
For purposes of this subsection (a)-
(I) the executive departments are the De-
partments of State; Defense; Treasury; Jus-
tice; Post Office; Interior; Agriculture; Com-
merce; Labor; and Health, Education, and
Welfare; and
(ii) "independent establishment within
the executive branch" means any establish-
ment, commission, board, committee or
other unincorporated instrumentality of the
United States which is not-
(A) part of an executive department or
Government corporation; - or
(B) part of the legislative or -judicial
branches of the United States.
(iii) "Government corporation" means any
corporation which is either defined .as a
"wholly owned Government corporation" in
the Government Corporations Control Act
of 1946 or is designated as a Government
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1960 CONGRESSIONAL RECORD -SENATE
2891
corporation for purposes of this Act by the requires the retention of such employee's value, and includes, without limiting the
President by regulations issued pursuant to services during a further specified period. A generality of the foregoing-
section 10. ' statement of the pertinent facts and of the (1) any loan, property Interest, interest
(b) "Agency head" and "head of an President's determination of national inter- In a contract, or other chose in action, and
agency" mean the chief executive officer of est shall be published in the Federal Regis- any employment or other arrangement in-
an agency, who shall be the chairman in ter; volving a right to compensation;
the case of an independent establishment (2) a Reserve of the Armed Forces, unless (2) any option to obtain a thing of eco-
which is a commission, board, or committee, otherwise a regular Government employee, nomic value, irrespective of the conditions
The Secretary of Defense may delegate to the shall be classified as an intermittent Gov- to the exercise of such option; and
Secretaries of the Army, the Navy, and Air ernment employee for purposes of this Act (3) any promise or undertaking for the
Force such of his responsibilities as an while on active duty solely for training, Ir- present or future delivery or procurement of
agency head as he may deem appropriate, respective of the number of working days a thing of economic value.
(c) "Assist" means to act, or offer or agree of such training; In the case of an option, promise, or un-
to act, in such a way as to help, aid, advise, (3) irrespective of the fact he has per- dertaking, the time of receipt of the thing
furnish information to, or otherwise provide formed services on less than fifty-two work- of economic value shall be deemed to be,
assistance to, another person with knowl- ing days, a Government employee shall be respectively, the time the right to the option
edge that such action is of help, aid, advice, deemed a regular Government employee, as becomes fixed, irrespective of the conditions
or assistance tosuch person and with intent defined in subsection (j) of this section, and to, its exercise, and the time the promise or
so to assist such person. not an intermittent Government employee, undertaking is made, irrespective of the
(d) "Compensation" means any thing of if- conditions to its performance.
economic value, however designated, which (A) he was appointed to a position calling (n) "Transaction Involving the Govern-
is paid, loaned, granted, or transferred, or for regular and continuing full-time serv- ment" means any proceeding, application,
to be paid, loaned, granted, or transferred ices, and submission, request for a ruling, or other
for, or in consideration of, personal serv- (B) his appointment did not evidence an determination, contract, claim, case, or other
ices' to any person or to the United States, intent that his services would be for a period such particular matter-
(e) "Government action" means any of less than one hundred and thirty working (1) which the Government employee or
action on the part of the executive branch days in the three hundred and sixty-five former Government employee in question be-
of the United States, including, but not calendar day period following such appoint- lieves, or has reason to believe, is, or will
limited to- ment. be, the subject of Government action; or
(1) any decision, determination, finding, The termination of.any particular term of (2) in or to which the United States is
ruling, or order, including the judgment or employment of an intermittent Government a party; or
verdict of a military court or board; and employee shall take effect on the day when (3) in which the United States has a direct
(2) any grant, payment, award, license, the earliest of the following events occurs: and substantial proprietary interest.
contract, transaction, sanction or approval, (1) He becomes a regular Government em-
or the denial thereof, or failure to act with ployee, as defined In subsection (j) of this ? 3. Acts affecting a personal economic in-
respect thereto. section; terest
(f). "Government employee" means any (ii) He resigns, retires, or Is dismissed, or (a) ECONOMIC INTERESTS OF A GOVERNMENT
individual who is- the termination of his status is otherwise EMPLOYEE.-No Government employee shall
(1) appointed by one of the following clearly evidenced; or participate in a transaction involving the
acting in his official capacity- (iii) Three hundred and sixty-five calen- Government in the consequences of which
(A) the President of the United States, or der days shall have elapsed since the last he has a substantial economic interest of
(B) a person who 'qualifies as an em- working day on which he shall have per- which he may reasonably be expected to
ployee. under this definition; and formed services as an intermittent Govern- know.
(2) engaged in the performance of a ment employee, unless his appointment was (b) ECONOMIC INTERESTS OF PERSONS IN
Federal function under authority of the expressly for a longer period. WHICH A GOVERNMENT EMPLOYEE HAS AN IN-
Constitution, an Act of Congress, or an An Intermittent Government employee TEREST.-No Government employee shall par-
Executive act; and shall be in such status on days on'which he ticipate in a transaction involving the Gov-
(3) under the supervision or authority of performs no services as well as days on ernment in the consequences of which, to his
one of the persons listed in (A) or (B) which he performs services. actual knowledge, any of the following per-
under (1). -(h) "Participate," In connection with a sons has a direct and substantial economic
Notwithstanding the foregoing, the term transaction involving the Government, Interest:
"Government employee" shall not include means to participgte in Government action (1) His spouse or child; or
any of the following-, or a proceeding personally and substantially (2) Any person in which he has a sub-
(s) officers and employees in the legislative as a Government employee, through approv- stantial economic interest of which he may
and judicial branches of the United States; al, disapproval, recommendation, decision, reasonably be expected to know; or
(ii) employees of the District of Columbia; the rendering of advice, investigation, or (3) Any person of which he is an officer,
(iii) employees of corporations other than otherwise, director, trustee, partner, or employee; or
Government corporations as defined in sub- (I) "Person" means any- (4) Any person with whom he is nego-
section' (a) (iii) of this section; and (1) individual; tiating or has any arrangement concerning
(iv) a reserve of the Armed Forces, when (2j partnership, association, corporation, prospective employment; or
he is not on active duty and is not other- firm,-institution, trust, foundation, or other (5) Any person who is a party to an
wise a Government employee, entity (other than the United States or an existing contract with such Government em-
An individual, shall not be deemed an em- agency), whether or not bpera.ted for -profit; ployee or an obligee of such Government
ployee solely by reason of his receipt of a (3) State or municipality of the United employee as to a thing of economic value
pension, disability payments, or other pay- States or any subdivision thereof, including and who, by reason thereof, is in a position
ments not made for current services, 'or by public districts and authorities; and to affect directly and substantially such em
reason of his being subject to recall to (4) foreign country or subdivision thereof. ployee's economic interests. 'Government
active service. (c) DISQUALIFICATION.-Every
Every Government employee shall be means " any y Government Government
employee employee" employee shall disqualify himelf from par-
deemed either "intermittent" or "regular", yee other than pare
an intermittent Government employee, as ticipattng in a transaction involving the
as determined by the definitions contained Government in subsection section.
Government when a violation of subsection
in subsections (g) and (j), respectively, of (g) of this
The termination of a) or (b) would otherwise result. The
this section. any particular term of ( Pro-
employment of a regular Government em- cedures for such disqualification shall be
(g) "Intermittent Government employee"
m -u his status is otherwise clearly evidenced. (d) SUBSTANTIAL ECONOMIC INTEREST.-The
more than fifty-two working days (which term "substantial economic interest" ma be
shall not include Saturdays, Sundays, and (k) "Responsibility," in connection with y
holidays) out of the preceding three a transaction involving the Government, defined by regulations issued by the Presi-
holidays) and sixty-five calendar days: Pro- means the direct administrative or operating dent pursuant to section 10, but the. term
vided, however, That- authority, whether intermediate or final, and shall not include-
(1) the President may issue an Order in. either exercisable alone or with others, and (1) the interest of a Government employee
creasing to not more than one hundred and either personally or through subordinates, Sn his grade, salary, or other matters arising
thirty days the number of working days effectively to approve, disapprove, or other- solely from his Government employment;
within a three hundred and sixty-five cal- wise direct Government action in respect of (2) the interest of a Government em-
subsec-
endar day period on which a particular Gav- such transaction. ployee, or of a person referred to in general
tion (b) solely as a member of the eneral
ernment employee may perform services (1) "State" means any State of the United public, or of any significant economic or
while still being classified as an intermittent States and the District of Columbia, Puerto other segment of the general public.
Government employee for purposes of this Rico, Guam, and the Virgin Islands. (e) PRESIDENTIAL EXEMPTION,-The Presi-
Act: Provided, That the President shall make (m) "Thing of economic value" means dent may issue an order suspending the op-
a determination that the national interest any money or other thing having economic eration of subsections (a) and (b), in whole
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or in part, as to a particularemployee with
respect to transactions involving the Gov-
ernment of a particular category or in con-
nection with a particular assignment, pro-
vided that the President shall make a deter-
mination that under all the circumstances
the national interest in such employee's par-
ticipation exceeds the public interest in his
disqualification. A full statement of the
pertinent facts and of the President's deter-
mination of national interest shall be pub-
lished in the Federal Register.
? 4. Assisting in transactions Involving the
Government
(a) GENERAL RULE FOR ALL EMPLOYEES.-
Except in the course of his official duties or
incident thereto, no Government employee
shall assist another person, whether or not
for compensation, in any transaction involv-
ing the Government-
(1) in which he has at any time partici-
pated; or
(2) if such transaction involving the Gov-
ernment Is or has been under his official re-
sponsibility at any time within a period of
two years preceding such assistance.
(b) ADDITIONAL GENERAL RULE FOR REGULAR
EMPLoyEEs.-Except in the course of his offi-
cial duties or incident thereto, no regular
Government employee shall-
(1) assist another person for compensa-
tion in any transaction involving the Gov-
ernment;
(2) assist another person by representing
him as his agent or attorney, whether or not
for compensation, in any transaction, involv-
ing the Government.
(C) NO SHARING IN COMPENSATION.-NO
Government employee shall share in any
compensation received by another person
for assistance which such Government em-
ployee is prohibited from rendering pursuant
to subsection (a) or (b).
(d) PARTNERSHIPS.-NO partnership of
which a Government employee is a partner,
and no partner or employee of such a part-
nership, shall assist another person in any
transaction Involving the Government if
such Government employee is prohibited
from doing so by subsection (a).
(e) PERMITTED EXCEPTIONS.-(l) Nothing
In this section shall prevent a Government
employee, subject to conditions or limita-
tions set forth in regulations issued pur-
suant to section 10, from assisting, in a
transaction involving the Government-
(A) his parent, spouse, or child, or any
thereof for whom he is serving as guardian,
executor, administrator, trustee, or. other
personal fiduciary;
(B) a person other than his parent,
spouse, or child - for whom he is serving as
guardian, executor, administrator, trustee,
or other personel fiduciary;
(C) another Government employee in-
volved an disciplinary, loyalty, or other per-
sonnel administration proceedings; or
(D) another person in the performance of
work under a contract with or for the bene-
fit of the United States: .
(E) in the case Of clauses (A) and (B),
such -Government employee shall not have
at any time participated in such transaction,
nor, in the case of clause (B), shall such
transaction have been under his official re-
sponsibility; and
(F) in the case of clauses (A), (B), (C),
and (D), the circumstances of the assistance
shall have been disclosed to the head of
the employee's agency and approved by him
,in advance of the assistance; and
(G) in the case of clause (D), the head
of such employee's agency shall have certi-
fied in writing that in his opinion the na-
tional interest will be promoted by per-
mitting the special knowledge or skills' of
such Government employee to be made
available to assist such other person In con-
nection with such performance.
(2) Nothing in this iieetion shall prevent
a Government employee from giving testi-
mony under oath or from making statements
required to -be made u rider penalty of per-
jury or contempt.
? 5. Compensation for regular Government
employees front non-Government
sources
(a) UNCOMPENSATED ] IMPLOYEss.-For pur-
poses of this section the term "regular Gov-
ernment employee" shall not include any
Government employee who, in accordance
with the terms of his 6ppointment, is serv-
ing without compensal ion from the United
States or is receiving fr )m the United States
only reimbursement of expenses incurred or
a -predetermined allowance for such ex-
penses.
(b) PAYMENTS FOR SERVICES TO THE UNITED
STATES.-No regular G avernment employee
shall receive any thin; of economic value,
other than his comensation from the.
United States, for or' in consideration of
personal services rende -ed or to be rendered
to or for the United ? Mates. Any thing of
economic value received by a regular Gov-
ernment employee pri )r to or subsequent
to his Government employment shall be
presumed, in the abse ace of a showing to
the contrary by a clear preponderance of
evidence, not to be foi,, or in consideration
of, personal, services re adered or to be ren-
dered to or for the United States.
(C) COMPENSATION FOR . SERVICES TO
OTHERS.-No regular C overnment employee
shall receive any thing of economic value
(other than his conpensation from the
United States) in cow ideration of personal
services rendered, or lo be rendered, to or
for any person during the term of his Gov-
ernment employment unless such services
meet each of the following qualifications.
(1) The services are bona fide and are ac-
tually performed by such employee;
(2) The services are not within the course
of his official duties;
(3) The services sae not prohibited by
section 4 or by applicable laws or regula-
tions governing non-Government employ-
ment for such employe e; and
(4) The services are neither performed for
nor compensated by any person from whom
such employee would be prohibited by sec-
tion 6(b) from receiving a gift; or, alter-
natively, the services mnd compensation are
fully disclosed in writing to the head of the
employee's agency andare approved in writ-
ing by him.
(d) PAYMENTS FOR FUTURE SERVICES TO
OTHERS.-No regular iovernment employee
shall receive, directly or indirectly, any thing
of economic value dhaing the term of his
Government empioyme nt in consideration of
personal services to le rendered to or for
any person subsequen; to the term or such
iemployment. Nothing contained in this
subsection (d) shall fie deemed to prevent
a Government employee from entering into
a contract for prospective employment dur-
ing the term of his Government employment.
(e) COMPENSATION FROM LOCAL GOVERN-
MENTs.-Nothing contained in this section
shall prevent a Gover ament -employee from
receiving compensation contributed out of
the treasury of any Mate, county, or mu-
nicipality if-
(1) the compensation Is received pursuant
to arrangements entem ed into between such
State, county, or mun cipality and such em-
ployee's agency; or
(2) the compensation and the services for
which it Is received are fully disclosed in
writing to the head of the employee's agency
and are approved in writing by. him.
- (f) CONTINUATION nr CERTAIN PENSION AND
OTHER PLANS.-(1) z othing contained in
this section shall prey, ant a Government em-
ployee's continuation n a bona fide pension,
retirement, group lift o, health, or accident
insurance, or other em,loyee welfare or bene-
fit plan maintained by a former employer
but to which such former employer makes
no contributions on behalf of such em-
ployee in respect of the period of his Gov-
ernment employment.
(2) Nothing contained in this section shall
prevent a Government employee's continua-
tion in a bona fide plan, maintained by a
former employer and to which such former
employer makes contributions on behalf of
such employee, in the case of-
(A) a pension or retirement plan qualified
under the provisions of the Internal Reve-
nue Code, or
(B) a group life, health, or accident in-
surance plan: Provided, That the contribu-
tions by such employer are not made for a
period longer than five consecutive years of
Government employment (or an aggregate
of five years out of,the preceding ten).
(3) Nothing contained in this section shall
require the termination of the rights of a
Government employee acquired under a bona
fide profit-sharing or stock bonus plan main-
tained by a former employer and qualified
under the provisions of the Internal Reve-
nue Code: Provided, That no contributions
are made by such former employer on behalf
of the Government employee based on profits
attributable to any portion of the period of
his Government employment.
(4) The provisions of this subsection (f)
shall be subject to any additional conditions
or limitations, Including limitations on max-
imum amounts, set forth in regulations
Issued pursuant to section 10.
(g) TRAVEL AND RELATED ExPENSES.-Travel
and related expenses received other than
from the United States shall be deemed to
be for or in consideration of personal serv-
ices rendered to or for a person only to the
extent provided In regulations issued pur-
suant to section 10..
? 6. Gifts
(a) GENERAL RULE FORALL EMPLOYEES.-NO
Government employee shall receive, accept,
take, seek, or solicit, directly or .indirectly,
any thing of economic value as a gift, gra-
tuity, or favor from anyperson If such Gov-
ernment employee, has reason 1?6belfeve the
`conor_would not give the `gift, gratuity, or
~.v"or "but for such employee's office or posi-
7fion within the Government:
(b) ADDITIONAL GENERAL RULE FOR REGULAR
EMPLOYEES.-No regular Government em-
ployee shall receive, accept, take, seek, or
solicit, directly or indirectly, any thing of
economic value as a gift, gratuity, or favor
from any person, or from any officer or direc-
tor of such person, If such regular Govern-
ment employee has reason to believe such
person-
(1) has or Is seeking to obtain contractual
or other business or financial relationships
with such employee's agency; or
(2) conducts operations or activities which
are regulated by such employee's agency; or
(3) has Interests which may be substan-
tially affected by such employee's perform-
ance or nonperformance of official duty.
(c) PERMITTED EXCEPTIONS.-Exceptions to
subsections (a) and (b) may be made by
regulations issued pursuant to section 10
in situations where the circumstances do
not lead to the inference that the official
judgment or action of the Government em-
ployee receiving, directly or indirectly, the
gift, gratuity, or favor was intended to be
influenced thereby.
? 7. Abuse of office
Except in the course of his official duties
or incident thereto, no Government em-
ployee shall, in his relationships with any
person specified in the succeeding sentence.
use the power or authority of his office or .
position within the Government in a man-
ner intended to induce or coerce such other
person to provide such Government em-
ployee or any other person with any thing of
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economic value, directly or indirectly. This
section shall apply to relationships with any
person, or any officer or director of such
person, from whom such Government em-
ployee, if he were a regular Government em-
ployee, would be prohibited by section 6(b)
from receiving a gift.
? B. Postemployment
(a) GENERAL RULE.-NO former Govern-
ment employee shall at any time subsequent
to his Government employment assist an-
other person, whether or not for compen-
sation, in any transaction involving the
Government-
(1) in which he at any time participated
during his Government employment; or
(2) if such transaction involving the Gov-
ernment was under his official responsibility
as a Government employee at any time with-
in a period of two years preceding such as-
sistance.
(b) No SHARING IN COMPENSATION.-No
former Government employee shall share in
any compensation received by another per-
son for assistance which such former Gov-
ernment employee is prohibited from render-
ing by subsection (a).
(e) PARTNERSHIPS.-(1) No partnership of
which a former Government employee is a
partner, and no partner or employee of such
a partnership, shall, for a period of two
years following the termination of his Gov-
ernment employment, assist another person
in any transaction involving. the Govern-
ment in which such former Government
employee at any time participated during
his Government employment. For purposes
of this subsection (c) (1), the termination
of the former Government employee's em-
ployment with the agency by which he was
employed when he so participated shall be
deemed to be the termination of his Gov-
ernment employment.
(2) Whenever subsection (c) (1) would be
applicable but for the expiration of the pe-
riod of two years referred to therein, the
circumstances of the former Government
empolyee's participation in the transaction
during his Government employment, if the
individuals acting for the partnership are
aware of such participation, shall be dis-
closed to the agency principally involved in
the transaction involving the Government,
and an affidavit of such former employee to
the effect that he has not assisted in such
transaction involving the Government shall
be furnished to such agency.
(d) SPECIAL RULE FOR COMPUTATION OF TWO-
YEAR PERIOD FOR CERTAIN FORMER INTERMITTENT
EMPLOYEES.-For purposes of this section, a
former intermittent Government employee
whose employment terminated under clause
(iii) of section 2(g) shall be deemed to have
terminated such employment on the last
working day on which he performed services
as an intermittent Government employee.
(e) PERSONS FORMERLY ON ACTIVE DUTY AS
COMMISSIONED OFFICERS OF ARMED FORCES.-
The President shall, in furtherance of this
section 8, issue regulations of the nature
herein described applicable to persons who
have been commissioned officers on active
duty in one of the armed forces of the
United State. Such regulations shall have
the effect of prohibiting such persons, for
the periods therein specified, from personally
dealing with personnel of the Department of
Defense, or of such units thereof as may be
specified in such regulations, with the pur-
pose of assisting in the sale of anything,
including services, to the United States
through the Department of Defense or such
units thereof as may be specified in such
regulations. The retirement pay of any re-
tired commissioned officer who violates such
regulations shall be terminated pursuant to
the regulations issued hereunder for the pe-
riods therein Specified.
(f) PERMITTED EXCEPTIONS.-The permitted
exceptions applicable to Government em-
ployees under section 4(e) shall also be ap-
pilcable to former Government employees
under this section 8, subject to conditions
or limitations set forth in regulations issued
pursuant to section 10. For purposes of this
section 8, references in such section 4(e) to
the Government employee providing assist-
ance shall be deemed to be to the former
Government employee, and references to his
agency shall be deemed to be to his former
agency.
? 0. Illegal payments
(a) PAYMENTS AS COMPENSATION, ETC.=NO
person shall give, pay, loan, transfer, or de-
liver, directly or indirectly, to any other per-
son any thing of economic value believing
or having reason to believe that there exist
circumstances making the receipt thereof a
violation of section 4, 5, or 8.
(b) GIFTs.-No person shall give, transfer,
or deliver, directly or indirectly, to a Gov-
ernment employee any thing of economic
value as a gift, gratuity, or favor if either-
(1) such person would not give the gift,
gratuity, or favor but for such employee's
office or position within the Government;
(2) such person is in a status specified in
clause (1), (2), or (3) of section 6(b).
Exceptions to this subsection (b) may be
made by regulations issued pursuant to sec-
tion 10 in situations referred to in section
6(c).
? 10. Administration
(a) RESPONSIBILITY OF THE PRESIDENT.-(1)
The President shall be responsible for the
establishment of appropriate standards to
protect against actual or potential conflicts
of interest on the part of Government em-
ployees and for the administration and en-
forcement of this Act and the regulations
and orders issued hereunder.
(2) The President may, and shall do so
when required by this Act, issue regulations
extending, supplementing, Implementing, or
interpreting the provisions of this Act.
Such regulations shall take precedence over
any regulations issued by agency heads pur-
suant to subsection (c).
(3) The President shall have particular
responsibility for the enforcement of this
Act as applied to employees of the Executive
Office of the President and to agency heads,
and for this purpose the President shall have
all the powers of an agency head.
(4) The President may conduct investiga-
tions of facts, condition or conditions, prac-
tices, or other matters in carrying out his
responsibilities and powers under this sub-
section (a) and in obtaining information to
serve as a basis for recommending further
legislation related to the purposes of this
Act. In connection with any such investiga-
tion the President shall have all the powers
with respect to oaths, affirmations, sub-
penas, and witnesses as are provided in sec-
tion 12(b) (2). The President may delegate
any or all of his powers under this subsec-
tion (a) (4) to the Administrator referred
to in. subsection (b) or to others, either gen-
erally or in particular instances.
(b) EXECUTIVE CONFLICT OF INTEREST ACT
ADMINISTRATOR.-(1) the President shall des-
ignate an official from within the Executive
Office of the President or create an office
within the Executive Office of the President
(such official or the head of such office being
hereinafter referred to as the "Administra-
tor") to perform the following functions:
(A) To assist the President In carrying
out his responsibilities under subsection
(a);
(B) To receive copies of all regulations
issued by agency heads pursuant to subsec-
tion (c), to analyze the same, and make
recommendations to agency heads with re-
spect thereto;
(C) To receive reports from agencies and
to collect information with respect to, and
conduct studies of, personal conflicts of in-
terest of Government employees within the
executive branch;
(D) To consult with the Attorney Gen-
eral, the Chairman of the Civil Service Com-
mission, the Comptroller General, and other
appropriate officials with respect to conflict-
of-interest matters affecting more than one
agency;
(E) To consult with agency heads, and
with appropriate officers designated by them,
as to the administration of this Act within
their respective agencies and the regulations
issued hereunder applicable to their respec-
tive agencies;
(F) To give advice with respect to the
application of this Act and regulations is-
sued hereunder, when so requested by the
President or agency heads;
(G) To undertake and conduct, in con-
junction with agency heads, a study of the
extent to which any of the principles of this
Act should be made applicable to persons
and to the employees of persons having con-
tracts, subcontracts, licenses, or similar rela-
tionships with or from the United States;
and
(H) To provide reports and information
to the President and the Congress concern-
ing the administration of this Act and con-
flict-of-interest matters generally.
(2.) The Administrator is authorized to
employ personnel and expend funds for the
purposes of this Act, to the extent of any
appropriations made for the purposes hereof.
(c) RESPONSIBILITY OF AGENCY HEADS.-(1)
Each agency head shall be responsible for
the establishment of appropriate standards
within his agency to protect against actual
or potential conflicts of interest on the part
of employees of his agency, and for the ad-
ministration and enforcement within his
agency of this Act and the regulations and
orders issued hereunder.
(2) Each agency head may, subject to the
regulations issued by the President under
subsection (a) (2), issue regulations extend-
ing, supplementing, Implementing, or inter=
preting the provisions of this Act as applied
to his agency. He shall file copies of all
such regulations with the Administrator.
(3) Each agency head may conduct in-
vestigations of facts, conditions, practices,
or other matters in carrying out his respon-
sibilities and powers under this subsection
(c). In connection with any such investi-
gation the agency head shall have all the
powers with respect to oaths, affirmations,
subpenas, and witnesses as are provided in
section 12 (b) (2) : The agency head may del-
egate any or all of his powers under this sub-
section (c) (3). to any officer designated by
him, either generally or in particular instan-
ces.
? 11. Preventive measures
The head of an agency may, and shall do
so if so provided in regulations issued by the
President, require
(a) individuals entering Government em-
ployment with such agency and, periodically,
the employees or particular categories of em-
ployees of such agency, to sign a statement
that they have read an appropriate sum-
mary of the rules established by this Act and
the regulations issued hereunder;
(b) employees of such agency, or particu-
lar categories thereof, to report periodically
as to their non-Government employment or.
self-employment, if any;
(c) representatives of other persons before
an agency to certify that, to the best of
their knowledge, their representation will
not violate section 4 or 8 or the regulations
issued thereunder; and
(d) persons who are principals in trans-
actions involving the Government to certify
that, to the best of their knowledge, they
have not received assistance under circum-
stances which would violate section 4 or 8
or the regulations issued thereunder.
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$ 12. Remedies; civil penalties; procedure
(a) ADMINISTRATIVE ENFORCEMENT AS TO
CURRENT GOVERNMENT EMPLOYEES.-
(1) Remedies and Civil Penalties: The
head of an agency may dismiss, suspend, or
take such other action as may be appropri-
ate in the circumstances in respect of any
Government employee of his agency upon
finding that such employee has violated this
Act or regulations promulgated :hereunder.
Such action may include the imposition of
conditions of the nature described in sub-
section (b) (1).
(2) Procedure: The procedures for any
such action shall correspond to those appli-
cable for disciplinary action for employee
misconduct generally, and any such action
shall be subject to judicial review to the ex-
tent provided by law for disciplinary action
for misconduct of employees of the same
category and grade.
(b) ADMINISTRATIVE ENFORCEMENT AS TO
FORMER GOVERNMENT EMPLOYEES AND OTHERS:
(1) Remedies and Civil Penalties: The
head of an agency, upon finding that any
former employee of such agency or any other
person has violated any provision of this Act,
may, In addition to any other powers the
head of such agency may have, bar or impose
reasonable conditions upon-
(A) the appearance before such agency
of such former employee or other person, and
(B) the conduct, or negotiation or compe-
tition for, business with such agency by
such former employee or other person,
for such period of time as may reasonably
be necessary or appropriate to effectuate the
purposes of this Act.
(2) Procedure:
(A) Hearings.-Findings of violations re-
ferred to in subsection (b) (1) shall be made
on the record after notice and hearing, con-
ducted in accordance with the provisions
governing adjudication in title 5, United
States Code, sees. 1005, 1006, 1007, 1008, and
1011 (Administrative Procedure Act). For
the purposes of such hearing any agency
head, or any officer designated by it, is em-
powered to administer oaths and aflirma.-
tions, subpena witnesses, compel their at-
tendance, take evidence, and require the
production of any books, papers, corre-
spondence, memoranda, contracts, agree-
ments, or other records which the agency
-head finds relevant or material to the in-
quiry. Such attendance of witnesses and the
production of any such records may be re-
quired from any place in the United States
at any designated place of hearing. Wit-
-nesses summoned by the agency head to
appear shall be paid the same fees and mile-
age that are paid witnesses in the courts
of the United States.
(B) Judicial review.-(i) Any party to a
proceeding under subsection (b) aggrieved
by an order issued by the agency head pur-
suant hereto, may obtain a review of such
order in the court of appeals of the United
States for any circuit wherein said party is
located or has its principal place of business,
or in the United States Court of Appeals
for the District of Columbia, by filing in
such court within sixty days after the order
of the agency upon a written petition pray-
ing that such order be modified or set aside
in whole or in part.
(I) A copy of such petition shall forth-
with be transmitted by the clerk of the
court to the agency head involved, and
thereupon such agency head shall file with
the court therecord upon which the order
complained of was entered. Upon the filing
of such petition, such court shall. have juris-
diction, which upon the filing of the record
with it shall be exclusive, to affirm, modify,
or set aside such order in whole or in part.
(iii) No objection to the order of the
agency head shall be considered by the court
unless such objection shall have been urged
before the agency or there is reasonable
ground for failure to do so.
(iv) The findings of the agency head as
to the facts, if supported by substantial evi-
dence, shall be con?;lusive. If any party
shall apply to the coi Lrt for leave to adduce
additional evidence, ;6nd shall show to the
satisfaction of the Court that such addi-
tional evidence is n iaterial in that there
were reasonable grounds for failure to ad-
duce such evidence in the proceedings be-
fore the agency, the court may order such
additional evidence to be taken before the
agency and to be adduced upon the hearing
in such manner and upon such terms and
conditions as to the-court may seem proper.
(v) The agency lead may modify his
findings as to the facts by reason of the
additional evidence ED taken and shall file
with the court such modified or new find-
ings which, if supported by substantial evi-
dence, shall be cone usive, and his recom-
mendation, if any, f )r the modification or
setting aside of the original order. The
judgment and decree of the court, affirming,
modifying, or settini aside in whole or in
part, any such order of the agency head,
shall be final, subj let to review by the
Supreme Court of the United States upon
certiorari or certifk ation as provided in
sections 346 and 347 of title 28. The com-'
mencement of proceC dings for review under
this subsection shall not, unless specifically
ordered by the tour:, operate as a stay of
the agency head's orc.er.
(C) RESCISSION OF GOVERNMENT ACTION.-
The President or any agency head may can-
cel or rescind any Government action with-
out contractual liebility to the United
States where-
(1) he has found that _a violation of this
Act has substantiall; - influenced such Gov-
ernment action; and
(2) in his judgment the interests of the
United States so re luire under all of the
circumstances, inch ding the position of
innocent third parts; s.
The finding referred to in clause (1) shall
be made in accordance with the procedures
set forth in subsection (b) (2) and shall be
subject to judicial review in accordance
with the provisions o'subsection (b) (2) (B) :
Provided, That the Fresident or such agency
head may suspend G wernment action pend-
ing the determination, pursuant to this sub-
section, of the merits of the controversy.
The exercise of judgment pursuant to clause
(2) of this subsectiol shall not be subject to
judicial review.
(d) CIVIL REMEDY :'OR DAMAGES AGAINST EM-
PLOYEES AND FORMER EMPLOYEES.-The Attor-
ney General of the United States may bring
a civil action In ary district court of the
United States again:.t any Government em-
ployee or former Go Ternment employee who
shall, to his economic advantage, have acted
in violation of this ?kct, and in such action
may recover on behLlf of the United States,
in partial reimbur;ement of the United
States for its expenses of administering this
Act, damages in an amount equal to three
times the amount o' such economic advan-
tage.
(e) CIVIL PENALTIES FOR ILLEGAL PAY-
MENTS.-Any person who shall violate section
9 shall pay a civil p malty of not more than
$5,000, in partial reimbursement of the
United States for its expenses of administer-
ing this Act. The C iovernment employee or
former Government employee involved shall
not be subject to prosecution under title 18,
United States Code section 2, or title 18,
United States Code, section 371, or any other
provision of law des ping with criminal con-
spiracy, by reason o1 the receipt of any such
payment.
(f) PUBLICATION CF CERTAIN FINDINGS AND
DECxsxoNs.-Whenever the head of any
agency, or the President, exercises the au-
thority conferred by subsections (a), (b), or
(c) of this section, copies of the findings and
decision therein sha .1 be filed with the Presi-
dent and shall be published at least once
each year as part of a volume collecting
such findings and opinions. Such volumes
shall be made available for public inspection
and shall also be made available for distri-
bution or sale to interested persons.
(g) INTERESTS OF NATIONAL SECURITY.-
When any provision of this Act requires pub-
lication of information and the President
finds that publication of part or all of such
information is inconsistent with national
security, he may suspend the requirement of
such publication to the extent and for such
period of time as he shall deem essential for
reasons of national security.
(h) STATUTE OF LIMITATIONS.-NO admin-
istrative or other action under subsections
(b), (c), (d), or (e) of this section to en-
force any provision of this Act shall be com-
menced after the expiration of'six years fol-
lowing the occurrence of the alleged viola-
tion.
TITLE II-CRIMINAL PENALTIES
? 21. Acts in violation of Executive Conflict
of Interest Act
Title 18 of the United States Code is
amended by adding a new chapter thereto,
to be designed chapter 16 and reading as
follows:
"Chapter 16-Conflicts of interest
301. Acts in violation of Executive Con-
flict of Interest Act
"Any person who shall purposely or know-
ingly violate any provision of the Executive
Conflict of Interest Act shall be fined not
more than $10,000, or imprisoned for not
more than one year, or both. For purposes
of this section, the terms 'purposely' and
'knowingly' shall have the respective means
set forth in subsections (a) and (b) :
"(a) 'Purposely': A person acts purposely
with respect to a material element of an
offense when-
"(1) if the element involves the nature of
his conduct or a result thereof, it is his
conscious object to engage in conduct of
that nature or to pause such a result; and
"(2) if the element involves the attend-
ant circumstances, he knows of the exist-
ence of such circumstances.
"(b) "Knowingly': A person acts know-
ingly with respect to a material element of
an offense when-
"(1) if the element involves the nature of
his conduct or the attendant circumstances,
he knows that his conduct is of that nature
or he knows of the existence of such cir-
cumstances; and
"(2) if the element involves a result of
his conduct, he knows that his conduct will
necessarily cause such a result."
TITLE III-AMENDMENT AND REPEAL OF EXIST-
ING LAWS
? 31. Amendment of title 18, United States
Code, sections 216 and 1914
Section 216 of chapter 11 and section 1914
of chapter 93 of title 18 of the United States
Code are each amended by adding the follow-
ing as a new paragraph to precede the pres-
ent text of each such section:
"From and after the effective date of the
Executive Conflict of Interest Act, this sec-
tion shall not apply to (1) any person who
is a Government employee as defined in sec-
tion 2(f) of that Act, and (2) any act of
another person which is directed toward
such a Government employee."
? 32. Amendment of title 18, United States
Code, sections 281, 283, and 434
Sections 281 and 283 of chapter 15 of title
18 of the United -States Code are each
amended by deleting the second paragraph
thereof. Each of such sections is further
amended and section 434 of chapter 23 of title
18 of the United States Code is amended by
adding the following as a new paragraph to
precede the present text of each such section:
"From and after the effective date of the
Executive Conflict of Interest Act, this sec-
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tion shall not apply to any person who is
a Government employee as defined in section
2(f) of that Act"
? 33. Amendment of title 18, United States
Code, section 284
Section 284 of chapter 15 of title 18 of
the United States Code is amended by add-
ing the following as a new paragraph to pre-
cede the present text of such section:
"From and after the effective date of the
Executive Conflict of Interest Act, this sec-
tion shall not apply to any person who has
been a Government employee as defined in
section 2 (f) of that Act."
? 34. Amendment of title 22, United States
Code, section 1792(a)
Section 532 (a) of the Mutual Security Act
of 1954 (68 Stat. 859), as amended by sec-
tion 10(d) of the Act of July 18, 1956 (70
Stat. 561; 22 U.S.C. 1792(a), is amended to
read as follows:
"(a) Service of an individual as a mem-
ber of the Board established pursuant to.
section 308 of this Act or as an expert or
consultant under section 530(a) shall not
be considered as employment or holding of
office or position bringing such individual
within the provisions of section 6 of the Act
of May 22, 1920 (5 U.S.C. 715), or section
212 of the Act of June 30, 1932 (5 U.S.C. 59a),
or any other Federal law limiting the reem-
ployment of retired officers or employees or
governing the simultaneous receipt of com-
pensation and retired pay or annuities.
Contracts for the employment of retired mil-
itary personnel with specialized research and
development experience, not to exceed ten
In number, as experts or consultants under
section 530(a), may be renewed annually,
notwithstanding section 15 of the Act of
August 2, 1946 (5 U.S.C. 55(a) )."
? 35. Amendment of title 5, United States
Code, section 30r(d)
Section 29 (d) of the Act of August 10, 1956
(70A Stat. 632; 5 U.S.C. 30r(d), is amended
to read as follows:
"(d) When he is not on active duty, or
when he is on active duty for training, a
reserve is not considered to be an officer or
employee of the United States or a person
holding an office of trust profit or discharg-
ing any official function under, or in con-
nection with, the United States because of
his appointment, oath, or status, or any
duties or functions performed or pay or
allowances received in that capacity: Pro-
vided, however, That a reserve on active duty
for training shall be deemed an employee
of the United States for purposes of the
Executive Conflict of Interest Act."
36. Repeal of particular substantive re-
straints
The following sections are repealed:
(a) Section 190 of the Revised Statutes (5
U.S.C. 99) (relating to postemployment
prosecution of claims by employees in de-
partments); and
(b) Section 244 of the Revised Statutes
(5 U.S.C. 254) (relating to certain business
interests of clerks in the Treasury Depart-
ment) ;
? 37. Repeal of particular substantive re-
straints applicable to retired officers
The following sections are repealed:
(a) Section 1309 of the Act of August 7,
1953 (67 Stat. 437; 5 U.S.C. 69c). (relating
to loss of retirement pay by retired commis-.
sioned officers engaged in certain selling
activities).
(b) Section 6112 of chapter 557 of title 10
of the United States Code (relating to the
loss of pay or retirement pay by certain offi-
cers who sell naval supplies to the Navy
Department).
? 38. Repeal of exemptions from particular ? 42. Effective date
conflict-of-Interests statutes This Act shall take effect ninety days after
The following sections are repealed: the date of its enactment, except that sec-
(a) Section 173(c) of chapter 7 of title tion 37 shall not take effect until the effec-
10 of the United States Code (providing cer- tive date of the regulations issued by the
tain conflicts exemptions for advisers to the President pursuant to section 8(e).
Secretary of Defense).
(b) Section 1583(b) of chapter 81 of title The memorandum of explanation pre-
10 of the United States Code (authorizing sented by Mr. JAVlxs is as follows:
conflicts exemptions for persons employed by TEXT OF THE OFFICIAL SUMMARY OF THE RE-
the Secretary of Defense to serve without PORT RELEASED TODAY BY THE SPECIAL COM-
compensation). MITTEE ON FEDERAL CONFLICT-OF-INTEREST
(c) Section 5153(d) of chapter 513 of title LAws OF THE ASSOCIATION OF 'THE BAR OF
10 of the United States Code (providing cer- THE CITY OF NEW YORK
tain conflicts exemptions for members of the
(d) Section 807 of the Act of August 2, We are today releasing a prepublication
1954 (68 Stat. 645; 12 U.S.C. 1701h) (pro- edition of a report based upon more than 2
viding certain conflicts exemptions for mem- years of study of the so-called conflict-of-
bers of advisory committees of the Housing interest laws of the Federal Government.
and Home Finance Agency). Also, we expect that there will be introduced
(e) Section 5 of the Act of June 4, 1956 today in both Houses of Congress a proposed
(70 Stat. 243; 16 U.S.C. 933) (providing cer- Executive Conflict-of-Interest Act, which
tain conflicts exemptions for commissioners has been drafted by this committee and
and members of advisory committees ap- which is designed to remedy the manifold
pointed under the Great Lakes Fishery At defects of the present law. Our findings
of 1956). and recommendations, which are set forth in.
(f) Section 5 of the Act of September 7, the report, are expressed in statutory form in
1950 (64 Stat. 778; 16 U.S.S. 954) (providing the proposed act.
certain conflicts exemptions for commis- report will be published in the fall by
stoners and members of advisory committees the Harvard University press.
appointed under the Tuna Conventions Act This committee is issuing this prepublica-
of 1950). tion mimeographed edition of its report so
(g) Section 5 of the Act of September 27, that it will be available at the public hear-
ings on of the conflict-of-
1950 (64 Stat. 1068; 16 U.S.C. 984) (providing
certain laws whichecompmenced on February 17,t1960,
conflicts exemptions for commis- before the Antitrust Subcommittee of the
sioners and members of advisory committees Committee on the Judiciary of the House of
appointed under the Northwest t Atlantic, Representatives. The House Judiciary Com-
mittee, under the chairmanship of Re resen-.
(h) Section 5 of the Act of August 12, tative EMANUEL CELLER, of ew York, has
1954 (68 Stat. 698; 16 U.S.C. 1024) (provid- already made an important
ing certain conflicts exemptions for com- y contribution
missioners and members of advisory com- the wider understanding g and mittees appointed under the NorthPacific of this confused, but crucial, area of law and
Fisheries Act of 1954). public administration. The public hear-
(1) Section 1003 of the Act of September ings, which have just opened, should further
re-
2, 1958 (72 Stat. 1603; 20 U.S.C. 683) (pro- advance the cause of urgently needed re-
viding certain conflicts exemptions for form. Accordingly, we have distributed
members of advisory committees and rotor- some 200 mimeographed copies of a prepub-
mation councils appointed under the Na- Congress, edition of the report to Members of
tional Defense Education Act of 1958). Congress, the press and to various Federal
(j) Section 14(f) of the Act of May 10, departments and agencies.
y This official summary has been prepared
1950 (64 Stat. 154, 155; 42 U.S.C. 1873 (P)) for the information and guidance of those
(providing certain conflicts exemptions for interested persons to whom the report Is not
members of the National Science Board and
under the National Science Foundation Act A. Objectives
Of 1950). The report of the committee has two
(k) Section 163 of the Atomic Energy Act themes. The first Is that ethical standards
of 1954 (68 State. 951), as amended by sec- within the Federal Government must be
tion 2 of the Act of September 21, 1959 (73 beyond reproach, and that there must, ac-
Stat. 574; 42 U.S.C. 2203) (providing cer- cordingly, be effective regulation of conflicts
tain conflicts exemptions for members of of interest in Federal employment. The
the General Advisory Committee and Ad- second is that the Federal Government
visory boards appointed under the Atomic must be in a position to obtain the person-
Energy Act of 1954). nel and information It needs to meet the
(1) Section 1(t) of the Act of June 19, demands of the 20th century.
1951 (65 Stat. 87: 50 U.S.C. App. 463(a)) These themes are coequal. Neither may
(providing certain conflicts exemptions for be safely subordinated to the other. What
particular Selective Service officials). is needed is balance in the pursuit of the
of 1951 (65 Stat. 22), as amended by section tional policy which neither sacrifices gov-
13 of the Act of August integrity for opportunism nor
gust (70 Stat.
drowns practical staffing in moralism.
792; 50 U.S.C. App. 1223) (providing certain n g
conflicts exemptions for employees of de- We need a careful regulatory scheme that
partments and agencies to which the Re- effectively restrains official conflicts of inter-
negotiation Act of 1951 is applicable and of eat without generating pernicious side effects
the Renegotiation Board). on recruitment.
(n) Section 7(b) (4) of the Act of Au- The basic conclusion of the committee is
gust 9, 1955 (69 Stat. 582; 50 U.S.C. App. that such a scheme can be worked out. The
rec-
2160(b) (providing certain conflicts ex- report and the proposed act contain a rec-
o . d new program for achieving this
emptions for persons serving without com- result.
pensation under the Defense Production Act
of 1950). B. Assessment of existing restraints
TITLE IV-MISCELLANEOUS PROVISIONS The committee has concluded that the
? 41. Short title legal and administrative machinery of the
Federal Government for dealing with the
This Act shall be known and may be cited problem of conflicts of Interest is obsolete,
as the "Executive Conflict of Interest Act". Inadequate for the protection of the Gov-
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ernment, and a deterrent to the recruitment
and retention of executive talent and some
kinds of needed consultative talent.
1. Obsolescence: The statutory law-most
of it a century old-is not broad enough to
protect the Government against the mani-
fold modern forms of conflict-of-interest.
Most of the statutes were and are pointed
at areas of risk that are no longer particu-
larly significant, mainly the prosecution of
Government claims. Today, with the greatly
expanded regulatory functions of the Fed-
eral Government, applications for rulings,
clearances, approvals, licenses, certifications,
grants and other forms of Government ac-
tion are far more significant in the daily
operation of Government than the prosecu-
tion of claims. Several of the basic statutes
now on the books do not concern them-
selves at all with these modern Governmen-
tal activities.
Other aspects of obsolescence in the pres-
ent statutes are:
(a) Their focus of interest upon a class
of lower ranking politically appointed clerks
that has disappeared. The Government to-
day obtains Its manpower through a vast
civil service, a top layer of short term polit-
ical appointees, an increasing group of ad-
visory and part-time personnel, and through
an unlimited variety of contracts for serv-
ices provided by non-Government personnel.
(b) Their failure to recognize internal
procedures of modern government, such as
the flexible processes of personnel admin-
istration available to assist in enforcement.
(c) Their lack of recognition of the facts
of modern economic life, such as the exist-
ence of private pension plans.
(d) Their failure to recognize the essential
blending of public and private endeavor in
the modern American. society, as illustrated
by the partnership of government, industry,
and educational institutions in the science
field.
2. Inadequate administration: Partly by
reason of the deficiencies in the statutory
law, administration of the conflict-of-inter-
est restraints has always been weak. The
Government has failed to provide a rational,
centralized, continuing, and effective ma-
chinery to deal with the problem. If the
statutes presented a coordinated whole-a
unified program-and if they imposed direct
responsibility on the President to carry out
that program, the central coordination and
leadership missing in the past would im-
prove. A well-administered program could,
and should, guide the thousand good men as
well as snare the one bad one.
3. Uncertainty in interpretation: Enacted
fitfully over a 100-year span, the uncoordi-
nated statutes are inconsistent, overlapping,
and at critical points defy interpretation.
4. The Congress: Congress has done a use-
ful and constructive job in its capacity as
investigator. But the Senate confirming
committees have seldom considered the over-
all issue of conflict of interests in relation
to recruitment. The Armed Services Com-
mittee has applied a wavering standard of
stock divestment, useful for certain pur-
poses, but overemphasizing one single source
of conflict-of-interest problems and having
little bearing on the question of actual of-
ficial conduct.
5. Recruitment: The main adverse effect
of the present system is its deterrent effect
on the recruitment and retention of execu-
tive talent and some kinds of consultative
talent. The restrictions tend to encircle the
Government with a barricade against the in-
terflow of men and information at the very
time in the Nation's history when such an
inter:fiow is most necessary.
C. Recommendations
The defects in the present law cannot be
cured by tinkering. A thoroughgoing recon-
struction is called fora new program of
controls designed for modern needs, pro-
viding for adequate administration, and
written as an integrated unit. The program
must achieve a balanw a between the Nation's
need for protection s ,gainst conflicts of in-
terest and its need fo ^ personnel.
The committee's basic recommendation are
these:
1. Conflict-of-inter sst problems should be
recognized and treatel as an important, com-
plex, and independent subject of attention
and concern in the management of the gov-
ernmental establishr. lent.
2. The present Sc ittered and uncoordi-
nated statutes relatilg to conflicts of inter-
est should be consolti sated into a single uni-
fied act, with a comm, rn set of definitions and
a consistent approach. Archaic provisions
should be repealed.
3. The restraints contained in the present
statutes should be greatly expanded in their
scope by making them applicable to essen-
tially all matters in which the public deals
with the modern Federal Government.
4. Certain importa at restraints now cov-
ered in regulations, or not at all, should be
included in the basic statutes, particularly
restraints relating t) receipt of gifts and
coercive use of office
5. The statutes sh )uld permit the reten-
tion by Governmen-; employees of certain
security-oriented eco iomic interests, such as
continued participation in private pension
plans.
6. Wherever it is : afe, proper, and essen-
tial from the viewpc int of recruitment, the
statutes should diff ;rentiate in treatment
between regular employees and citizens who
serve the Governme at only intermittently,
for short periods, as s dvisers and consultants.
7. Regular, contin zing, and effective en-
forcement of the law and regulations should
be assured by emp aasizing administrative
remedies, rather than the clumsy criminal
penalties of present law.
8. The statutes should create the frame-
work for active and effective administration
of the system of conflict-of-interest re-
straints, headed up with clear responsibil-
ity in the President The -President should
designate, pursuant to the proposed act, an
Administrator to ass.st him in this function.
9. In addition to he statutes themselves,
there should be a s-;cond tier of restraints,
consisting of Presic ential regulations am-
plifying the statutes, and a third tier con-
sisting of agency re?ulations tailored to the
needs of particular .agencies. The responsi-
bility for day-to-dsy enforcement of the
statutes and regulations should rest upon
agency heads.
10. At all levels o. administration, poten-
tial conflict-of-inter est problems should be
headed off by prever tive action, such as, for
example, orientatior. programs for all new
employees to acquai:it them with the appli-
cable conflict-of-int' rest rules, and periodic
reminders as to suci, rules.
11. There should ')e more effective prohi-
bitions and penaltb s applicable to persons
outside Government who induce or partici-
pate in- conduct by Government employees
in violation of the ;onflict-of-interest laws.
12. Each committs a of the Senate consid-
ering a Presidential nominee for confirma.
tion should be given the benefit of a full
analysis, prepared l y the Administrator in
consultation with 1 he Department of Jus-
tice, of any conflict-of-interest problems the
nominee's particular situation may present.
The confirming committee should give due
consideration to thie analysis and to the pro-
tections afforded by D. modern and effectively
administered overal scheme of conflict-of-
interest restraints, if one is put into effect.
13. The Congress should initiate a thor-
ough study of the (onflict-of-interest prob-
lems of Members of Congress and employees
of the legislative bre nch of the Federal Gov-
ernment.
The program advanced here will not solve
the problem of'conflict of interests in Fed-
eral employment. Like most real problems,
this is one we must live with permanently,
strive to mitigate, and adjust to. The pro-
gram proposed, however, will do several
things.
It meets the flaws of the present pattern
of conflict-of-interest restraints-obsoles-
cence, weakness of administration and faulty
drafting. It would greatly strengthen the
main policy of the conflict-of-interest stat-
utes-preservation of the integrity of govern-
ment. It would provide for an integrated
and comprehensible system of standards and
sanctions, together with an effective ma-
chinery for administering that system. It
is grounded upon a realistic conception of
the problem of conflicting interest as it ap-
pears in the modern setting of American
government and society. It would make a
significant contribution toward intelligent
staffing of the Federal Government for world
leadership.
II. MORE DETAILED STATEMENT OF THE
PROGRAM
The committee recommends a thorough
reconstruction of the entire legal and admin-
istrative machinery for dealing with the prob-
lem of conflict in interest in the executive
branch of the Government. A summary of
its principal recommendations appears
below:
Recommendation 1
"Conflict-of-interest problems should be
recognized and treated as an important, com-
plex, and independent subject of attention
and concern in the management of the gov-
ernmental establishment."
Up until the present time, the subject of
conflict in interest in the executive branch
has been conceived of and dealt with only
peripherally as an aspect of the general
problem of ethics in Government. The fact
is that its unique and complex nature and
the variety of difficult problems it raises,
particularly the problem of recruitment, de-
mands that it be isolated and identified as
an independent subject of governmental con-
cern. Until it receives the consideration
and attention which it deserves, the problem
of conflict in interest cannot be adequately
resolved.
Recommendation 2
"The present scattered and uncoordinated
statutes relating to conflicts of interest
should be consolidated into a single unified
act, with a common set of definitions and a
consistent approach. Archaic provisions
should be repealed."
One of the principal shortcomings of the
present law is that it is composed of many
diverse elements scattered throughout the
statute books and containing inconsistencies,
overlapping and exemptions. The chaotic
nature of the law is an impediment to under-
standing and a deterrent to recruitment.
The proposed act would unify the general
law of conflict of interest in one compre-
hensive statute. Basic terms would be de-
fined and then used consistently through-
out. Examples of key terms, carefully
defined at the outset and then, used con-
sistently throughout the proposed act, in-
clude: "Government action"; "transaction
involving the Government"; "assist"; "par-
ticipate" and "responsibility".
The proposed act would treat the basic
forms of conflict of interest in a logical
progression. The first of the six substantive
restraints deals with action by a Govern-
ment employee in his official capacity in a
matter in which he has a personal interest.
The second deals with action by a Govern-
ment employee in his private capacity in
furtherance of an interest adverse to the
Government. The third -deals with receipt
of pay from outside sources. The fourth
deals with receipt of gifts from outside
sources. The fifth deals with action as
a Government official designed to incl'ice
payments from outside sources. The sixth
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deals with postemployment activities in
furtherance of an interest adverse to the
Government.
As an example of the close integration
of these sections, the second and sixth pro-
hibition are almost precisely parallel in
their application to the intermittent Gov-
ernment employee and the recent former
employee, reflecting rthe basic similarity of
the two situations from the conflict-of-
interest viewpoint.
The points in the total statutory scheme
where it is important to supplement the
statutes by regulation are clearly identified.
A few archaic statutory restraints 'super-
ceded by the new act would be repealed.
Others of the existing statutes would be'
amended to exclude from their coverage all
executive branch employees (i.e., those cov-
ered by the new act).
Fourteen special exemption provisions
contained in present law for members of
various advisory committees and persons
holding other part-time posts would be re-
pealed, as being unnecessary in the light
of the realistic approach of the new act
to the intermittent employee problem. (See
recommendation 6 below.)
Such a unified act would be more en-
forceable and more rational in its applica-
tion. It would, by its very drafting, rem-
edy many of the fundamental shortcom-
ings of the present law.
Recommendation 3
"The restraints contained ip-the present
statutes should be greatly expanded in their
scope by making them applicable to essen-
tially all matters in which the public deals
with the modern Federal Government."
Six of the seven conflict-of-interest stat-
utes on the books today have their roots
in the problems of a century ago; they are
directed primarily against corruption in the
prosecution of claims against the govern-
ment and the process of letting contracts
by the Government. Claim prosecution and,
to a lesser degree, procurement procedures
have, however, been brought largely under
control by administrative devices other
than the conflict-of-interest statutes. In
their places have grown up other risks that
the draftsmen of the present statutes did
not foresee and. provide for. The proposed
Act strikes hard at those deficiencies.
The proposed Act would extend the con-
flict-of-interest restraints to every kind of
transaction in which today's Government
engages with the private segment of the
economy. The term "transaction involving
the Government" Is broadly defined as "any
proceeding, application, submission, request
for a ruling or other determination, con-
tract, claim, case or other such particular
matter" which will be the subject of Gov-
ernment action. The effect of this broad
definition in expanding the scope of the
present restraints would be very great.
In this respect recommendation 3 is con-
sistent with one made by the Justice Depart-
ment to Congress several years ago in. re-
sponse to a court decision holding that the
present postemployment restraints apply
only to assisting in the prosecution of claims
against the Government for money or prop-
erty. In that case an application for a pre-
merger clearance ruling from the Antitrust
Division of the Justice Department was held
not to be a "claim" within the scope of the
statute.
The proposed act would expand present of-
fenses in other respects. To cite a few exam-
ples, present law forbids a governmental em-
ployee to transact business as an agent of the
Government with any "business entity" in
the'pecuniary profits of which he is inter-
ested. The comparable rule in the proposed
act would apply not only to business transac-
tions with business organizations, but to any
kind of transaction with any kind of entity
in which the employee has a substantial eco-
nomic interest. Furthermore, unlike, the
present law, the statute specifies a number
of specific situations where the employee Is
deemed to hold an economic interest, such
as where that interest is in fact owned by
his wife or child, or where he has an under-
standing as to future employment with a
private person or firm.
Recommendation 4
"Certain important restraints now covered
in regulations or not at all should be in-
cluded in the basic statutes, particularly re-
straints relating to receipt of gifts and co-
ercive use of office."
Present law would be further strengthened
by the addition of two important areas of
conduct heretofore treated only in regula-
tions or not at all.
The first would forbid an employee of the
Government to receive a thing of economic
value as a gift, gratuity, or favor from any-
one who the employee has reason to believe
would not give the gift but for the employee's
office or position with the Government. Fur-
thermore, regular government employees are
forbidden to receive gifts or favors from any-
one who does business with or is regulated by
his agency. Somd room is left in the statute
for minimal exceptions to be provided for in
regulations.
The second new offense would,forbid a
government employee to use his otnce or
position with the Government in a manner
intended to induce or coerce a person or com-
pany doing business with him to provide him
with any thing of economic value.
Recommendation 5
"The statutes should permit the retention
by government employees of certain secu-
rity-oriented economic interests, such as con-
tinued participation in private pension
plans."
Hallmarks of modern American society are
the pension plan, the group insurance plan,
ad other kinds of security-oriented arrange-
ments. They are the basis of long-range
economic planning by millions. Under pres-
ent conflict-of-interest laws-passed when no
such plans existed-there is some doubt
whether an employee of the Government may
legally continue as a member of some plans
maintained by his former employer, at least
if contributions to the plan by the employer'
are regularly made which benefit the Gov-
ernment employee. This overhanging doubt
falls hard upon the noncareer employee.
The proposed act permits Government em-
ployees to continue their participation in
certain private plans under some circum-
stances and with adequate safeguards. For
example, it would permit a Government em-
ployee to remain a member of a pension,
group insurance or other welfare plan main-
tained by his former private employer so
long as the employer makes no contribution
to the plan on behalf of the man in Gov-
ernment service. Similarly, a Government
employee could. continue to belong to cer-
tain of these plans even if the former em-
ployer does make contributions on his
behalf, so long as the plans are qualified
under the Internal Revenue Code and so
long as the payments by the former employer
continue for no longer than 5 years of Gov-
ernment service.
Recommendation 6'
"Wherever It is safe, proper, and essential
from the viewpoint of recruitment, the stat-
utes should differentiate in treatment be-
tween regular employees and citizens who
serve the Government only intermittently,
for short periods, as advisers and con-
sultants."
_ To an ever increasing extent the Govern-
ment Is dependent for information and ad-
vice-for learning not only how to do it, but
what to do-upon part-time, temporary, and
intermittent' personnel. These serve Indi-
vidually, or as members of committees, but
that service Is in addition to their regular
private work as scientists, technicians,
2897
scholars, lawyers, businessmen and so on.
Technically, they are, however brief their
service, employees of the Government, and at
present, all of the, conflict-of-interest stat-
utes apply to them. This fact has brought
about both refusals to serve and conscious or
unconscious ignoring of the statutes by
those who do serve. It has also resulted in
a welter of special statutory exemptions.
The proposed act distinguishes, in a few
key places where It Is safe and proper, be-
tweenrules for regular full-time Government
employees and rules for what are defined
as "intermittent employees." Under the
proposed act, an "intermittent employee" is
anyone who, as of any particular date, has
not performed services for the Government
on more than 52 out of the immediately pre-
ceding 365 days. For such individuals, there
are certain special rules under the proposed
act. For example, regular full-time em-
ployees are forbidden to assist private par-
ties for pay in transactions involving the
Government; intermittent employees, who
have to earn a living in addition to their
occasional Government work, are allowed to
assist others for pay in such transactions, ex-
cept in cases where the particular transac-
tion Is, or within 2 years has been, under
the intermittent employee's official responsi-
bility or where he participated in the trans-
action personally and substantially on behalf
of the Government.
Similarly, since intermittent employees, by
definition, are employed by organizations in
addition to the Government, they are not
subject to the rule forbidding their Gov-
ernment pay to be suplemented from private
sources in return for personal services. Fi-
nally, the rules as to receipt of gifts are
different for the two classes of employees.
Recommendation 7
"Regular, continuing, and effective en-
forcement of the law and regulations should
be assured by emphasizing administrative
remedies, rather than the clumsy criminal
penalties of present law."
The basic purpose of a system of conflict-
of-inteerst restraints Is to help maintain
high ethical behavior in the executive
branch of the Government. It Is the judg-
ment of this committee that the flexible and
multiple weapons of the modern administra-
tive process are more fitted to that task than
the criminal law.
Because the present statutes rely on crim-
inal sanctions, they are rarely enforced.
They are, in many respects, too harsh for
offenses they declare. Furthermore, enforce-
ment by criminal law Is difficult, expensive
and time consuming. Accordingly, the pro-
posed act relies basically on ordinary disci-
plinary procedures, including dismissal, for
its sanctions. These procedures are sup-
'plemented by civil remedies particularly apt
for former employees and nonemployees
dealing with the particular agency-such as
bans against appearances before the agency
and civil damage actions.
The proposed act retains classical criminal
penalties for the most flagrant violations:
those committed "knowlingly" or "pur-
posely." The definitions of these terms are
adopted from a draft Model Penal Code pre-
pared by the American Law Institute.
Recommendation 8
"The statutes should create the framework
for active and effective administration of the.
system of conflict-of-interest restraints,
headed up with clear responsibility in the
President. The President should designate,
pursuant to the proposed act, an Adminis-
trator to assist him in this function."
One of the greatest deficiences in the pres-
ent statutes is their failure to recognize the
importance of a continuing administrative
structure to deal with the problem of con-
flict-of-interest. The proposed act would
specifically provide for such an administra-
tive machinery.
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CONGRESSIONAL RECORD -SENATE e ruary 23
Clear overall responsibility would be placed
upon the President "for the establishment -of
appropriate standards to protect against ac-
tual or potential conflicts-of-ipterest on the
part of Government employees and for the
administration and enforcement of this act
and the regulations and orders issued here-
under."
To assist the President in carrying out this
responsibility, the act calls for the designa-
tion by him, from within the Executive
Office of the President, of an "Administrator."
He would be answerable directly to the Pres-
ident. He is given a series of coordinating,
consultative and advisory functions under
the act. He would work closely with the
Department of Justice and agency heads or
their designees, but his would be a small
office, and in no sense charged with central-
ized operation or enforcement of conflict-of-
interest restraints.
Recommendation 9
"In addition to the statutes themselves,
there should be a "second tier" of restraints,
consisting of Presidential regulations ampli-
fying the statutes, and a "third tier," con-
sisting of -agency regulations tailored to the
needs of particular agencies. The responsi-
bility of day-to-day enforcement of the sta-
tutes and regulations should rest upon
agency heads."
The proposed act contemplates the .issu-
ance by the President of a set of regulations
extending, supplementing, implementing and
interpreting the provisions of the act. The
act also visualizes another set of regulations
atthe next lower level-that of the agency
heads. The Presidential regulations would
take precedence over any regulations issued
by agency heads.
Agency regulations would tend to follow
the present pattern, namely, particularized
rules adapted to the special risks of the par-
ticular agency. For example, some agencies
may have special rules on use of confidential
information available within the agency.
Others may adopt special post-employment
restraints which go beyond the statutory
provision. This diversity and particulariza-
tion is realistic and desirable.
Recommendation 10
"At all levels of administration potential
confliot-of-interest problems should be
headed off by preventive action, such as, , for
example, orientation programs for all new
employees to acquaint them with the appli-
cable conflict-of-interest rules, and periodic
reminders as to such rules."
Much can be done to fight the conflict-of-
interests problem by prepentive measures.
Section 11 of the proposed statute makes
several suggestions. New employees can be
required to- certify that they have read the
conflict.-of-interest rules and to report on
their outside employment. In particular, an
effective orientation program would be help-
ful. Agents and attorneys appearing before
agencies can also be required to file an affi-
davit stating that they are not, by such
appearance, violating any conflict-of-interest
law.
Recommendation 11
"There should be more effective prohibi-
tions and penalties applicable to persons
outside Government who induce or-partici-
pate in conduct by Government employees
in violation of the conflict-of-interest laws."
Notinfrequently a Government employee
is found in a conflict-of-interest situation
and penalized for it while theperson respon.
sible for placing him in the situation re-
mains unscathed.
The proposed act contains a new and
broad section making it a violation for a
person to make a payment (or transfer any
other thing of economic value) to a Gov-
ernment employee while "believing or having
reason to believe that there exist circum-
stances making the receipt thereof a viola-
tion of" certain .secticns of the act. This
prohibition also covers the making, of gifts
in the situations corresponding to the situa-
tions in which an emp.oyee may not receive
a gift.
Both administrative and criminal sanc-
tions- are applicable to these violations by
persons dealing With Government em-
"Each committee of the Senate considering
a Presidential nominee for confirmation
should be given the bex.efit of a full analysis,
prepared by the Administrator in consulta-
tion with the Departm ent of Justice, of any
conflict-of-interest problems the nominee's
particular situation m;.y present. The con-
firming committee should give due consid-
eration to this analysts and to the protec-
tions afforded by a m xiern and - effectively
administered overall scheme of conflict-of-
interest restraints, it Cie is put into effect."
There is substantial evidence that the
Government's efforts to recruit top-level ex-
ecutives have been impeded by the require-
ments of stock - divestment imposed by the
Armed Services Commi ttee of the Senate.
This problem canna it be dealt with by
statute. The confrmstion power is a con-
stitutional prerogative. However, this-prob-
lem should be a subjec; of joint concern and
increased cooperation between the executive
branch and the Senate. There is some evi-
dence that recently the executive depart-
ments have taken more pains to prepare
their nominees for confirmation. Legal
opinions have on occas on been furnished by
the Justice Department; -plans have been
worked out in advance of hearing as to
what need be sold ant what could be kept,
and representatives of the appointing de-
partment or agency ;:onfer in advance of
hearing with appropriate authorities of the
committee.
If the proposed act 'sere passed, the "Ad-
ministrator" would become the central re-
pository for all inform Ltion concerning con-
flict-of-interest, and I.e would be expected
to assist the executive branch in working
out regular procedure; for preparing nomi-
nees for confirmation. He could, in cooper-
ation with the Department of Justice and
general counsel to thi; agency in question,
prepare a full analys-s of the conflict-of-
interest problems of tt a particular nominee.
Over a period of time, these analyses might
be given substantial w sight by the confirm-
ing committees.
Furthermore, if a modern and effective
system of statutory : ,estrafnts is adopted
by Congress and implex vented by active exec-
utive branch administration, the confirming
committees might be v filing to place greater
reliance on the statt tory rules and pro-
cedures. One clear exemple is the procedure
for disqualification reognized by the pro-
posed act where a Government official holds
a particular economic interest in a private
"The Congress should initiate a thorough
study of the conflict-o'-interest-problems of
Members of Congress end employees of the
legislative branch of the Federal Govern-
ment."
Primarily because o' their representative
function, - Members of Congress and legisla-
tive branch ? employees are, in matters of
conflict of interests, i a a significantly dif-
ferent position from th it of executive branch
employees. As such, Congress must be con-
sidered separately.
A fresh examination of these problems by
Congress, or by a stu iy of group initiated
by Congress, is need; d. However, such a
study should in no Nay deter immediate
action with respect to the executive branch
along the lines of the proposed act.
The committee's proposed program can be
best assessed against the background of the
more general discussion, analysis, and find-
ings in the report. Appendix A to this state-
ment summarizes some of the more salient
features of this background.
APPENDIX A--SUMMARY OF BACKGROUND
A. HISTORICAL BACKGROUND
The United States is today relying upon
conflict-of-interest laws whose basic design
was largely laid down at around the time
of the War Between the States. It was 1853
and Millard Fillmore was Presidentwhen the
first of the present seven general conflict-
of-interest laws went ,,on the books; it for-
bade employees of theGovernment to prose-
cute claims against the Government. The
second, enacted in 1862, forbade Government
employees to take pay for assisting another
person to obtain a Government contract.
In 1863, employees were forbidden to trans-
act business on behalf of the Government
with any business- entity in which they had
a financial interest. And in 1864, the scan-
dals of the Civil War forced Congress to
reinforce the earlier statutes by making it
unlawful for a Government employee to per-
form services for any private person or in-
stitution if the services involved something
in which the Government was interested and
were performed before a governmental de-
partment or agency. In 1872, as abuses con-
tinued, employees of the Government were
forbidden for 2 years after leaving from
prosecuting against the Government claims
that had been pending in the Government
departments during the -period they held
office.
The general history of the period and the
debates in Congress throw light on the pur-
poses of these statutes. The U.S. Govern-
ment was small in size and limited in- func-
tion. An ordinary. man seldom came into
contact with the Government; when contact
occurred at all, it was likely to take the form
of making a contract with the Government or
making a demand or claim against it for
money or property. Administrative ma-
chinery for making contracts and adjudicat-
ing claims was informal and vulnerable to
corruption.
The Government was not only small and
limited, but rudimentary in its administra-
tive organization. Its employees=few or
none of them specialists-were recruited
through the Spoils System. They tended to
regard a Government job-and what they
could make out of it-as a legitimate reward
for party service. A change of administra-
tion brought a sweeping change in person-
nel; there were few permanent Government
servants. Furthermore, by prevailing legal
and administrative practice, whenever it was
necessary to establish rules for governmental
employees the appropriate vehicle was con-
sidered to be a statute from Congress cov-
ering everybody and backed up with criminal
penalties.
During the mid-1800's, and particularly as
a result of the abnormal strain put on the
inexperienced Governn ent by the Civil War,
a rash of scandals occurred. They centered
upon two areas of governmental activity-
the letting of contracts and the adjudicating
of claims. . Congress responded from time
to time with the statutes which are now-
but were not then-referred to as dealing
with conflict of interests. Little or no
thought was given to making the statutes
consistent or to estimating what effect they
would have on the recruitment of govern-
mental personnel. Nor was any of them in-
tended to reach beyond the precise sort of
corruption that had come to light in the
scandals. Hence, the present law of con-
flict of interest is designed to control ancient
abuses in the prosecution of claims against
the Government and the letting of Gov-
ernment contracts. -
The 20th century has added only two
statutes- to the general law of conflict of
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Interest. One, enacted in 1948, merely rein-
forces the restraints on the prosecution of
claims against the Government by former
employees. The other, passed in 1917, added
a new concept; It forbids a governmental em-
ployee to receive a salary from a private
source for the work he performs for the
Government; and forbids the outside source
to supplement his salary.
The law of conflict of interest, however,
does not end with these statutes. They are
the most important, first, because they pur-
port to cover everybody who works for the
Government, and second, because they pro-
vide the basic framework of .the law. They
are supplemented, however, by a number of
scattered additional statutes that apply only
to particular jobs or particular individuals.
As a result of pressure for manpower, there
has also grown up over the years an enor-
mous number of special and partial excep-
tions and exemptions to the general statutes.
This antique statutory system cannot do
the job that needs to be done today. The
statutes themselves are inconsistent, over-
lapping, vague, and unreasonably compli-
cate, and do not meet current needs.
E. SCOPE OF THE REPORT
The unique principle underlying the gen-
eral laws on conflicts of interest is as sound
today as it was when it first was expressed
in the form of statutes. Suppose an agent
of the Internal Revenue Service is assigned
to check and investigate his own tax returns.
On the, one hand, he represents the interest
of the Government in collecting taxes; on
the other, he has a personal economic inter-
est in paying as little as possible. The evil
Is that the judgment of the agent is likely
to be warped by the position that he is in,
or that the public is likely to think it has
been warped. Laws against "conflict of in-
terest" are designed to head off an actual
corrupt act, or the appearance of one, by
forbidding governmental employees in ad-
vance.to occupy a position where public and
private interests may conflict.
. Conflict of interest is therefore distinct
from theft; the tax agent has not physically
taken anything from the Government. It
is also distinct from bribery, for the agent
has received no payment intended to in-
fluence his official conduct. It- is his official
status-his status as a governmental em-
ployee-that creates the problem; conflict
of interest is essentialy an offense arising
out of that special status. Even If he in
fact properly discharges his duty to the
Government, the offense has been com-
mitted.
A democratic government cannot risk hav-
ing its officials in a position where loyalty
to their official duties conflicts with their
personal economic interest. The history of
man shows that in such a case some will
succumb to temptation to the public in-
jury. A, corrupt government is an inefficient
government. A government that plays fa-
vorites is fundamentally objectionable to
the principle that everybody is equal under
the law, as well as to the belief that public
office is not to be used for private gain.
Then, too, democratic government is derived
from the consent of the governed, and con-
sent requires confidence; if people believe
that the Government is corrupt, they soon
will lose their confidence in it. Even if the
agent is tough with his own tax return, the
situation looks corrupt, and, so far as the
confidence of the public is concerned, the
appearance of corruption is as harmful as
the reality. Finall'r, the proper and ap-
proved channels through which government
decisions are made are subverted when an
official gets something for himself or anoth-
er by the secret and improper use of his own
office. -
This study. is limited to the kind of con-
flict-of-interest situation described above,
official duty versus personal economic inter-
est. There are several other limits. The
study examines the conflict-of-interest
problems of the executive branch only. The
legislative branch is so different from the
executive and so complex that an independ-
ent, separate study project, at least as ex-
tensive as this one, would be needed. Such
a study of conflict-of-interest problems in
the. legislative branch should however be
undertaken. No substantial reasons cur-
rently appear for a similar study of the ju-
dicial branch. -
The personal conflict-of-interest problems
of the President and Vice President are dis-
tinct from those of the rest of the executive
branch and are therefore outside the scope
of the report and of its recommended act,
Finally, although a conflict would arise be-
tween an official's duty to the Government
and, say, his loyalty to his own family or
church or college, the study is restricted. to
conflicts involving the employee's economic
interests only on the grounds that only they
are susceptible to regulation by law.
C. ENFORCEMENT AND ADMINISTRATION
Existing restraints on conflict of interest
are inadequately administered by the Execu-
tive Branch of the Government. This is
partly because the general laws, by their
nature and structure, defy effective and
continuous enforcement. Enforcement also
has lagged because enforcement duties are
widely dispersed and no single coordinating
authority is responsible for dealing with the
problem.
Violation of the general statutes is pun-
ishable by fine and imprisonment, but over
the years, only a relatively few prosecutions
have been brought. The nature of the
statutes themselves make enforcement diffi-
cult. Furthermore, the penalties db not
always fit the crime; over-harsh statutes
often go unenforced.
Since the statutes are inadequate and
largely unenforcible, the task of guarding
against conflicts of interest falls upon the
departments and agencies of the Executive
Branch. No central office in the executive
branch has responsibility for controlling or
coordinating .the administration of ethical
conduct among Government employees.
Although ultimately it is the task of the
Presidency to establish and maintain suit-
able standards of behavior, no President
has built up an organization to carry out
this purpose. Nor has any other agency
with government-wide interests in person-
nel done so; the Civil Service Commission,
the Attorney General, the President's Assist-
ant for Personnel Management, the Bureau
of the Budget, the Cabinet Secretariat-all
of these in minor respects have something
to do with the problem, but for a variety
of reasons none has been given or has as-
sumed authoritative and centralized con-
trol.
The task of promulgation and enforce-
ment of conflict of interest restraints has
ultimately fallen upon the operating de-
partments and agencies. While they have
been far more energetic than the agencies of
general powers, their record is uneven. A
few have done little or nothing; a large ma-
jority have issued regulations, but have
not been active in enforcing them; a small
number have net only developed detailed
regulations but also have vigorously en-
forced them.
Regulations exhibit a healthy diversity as
new and appropriate restraints have been
developed to fit the peculiar problems of
conflict of interest presented by the. par-
ticular task that the agency is perform-
ing. At the same time, most regulations
touch upon five basic kinds of potentially
dangerous conduct by government employ-
ees: (1) acceptance of gratuities; (2) out-
side nongovernmental employment; (3) pri-
vate financial interests; (4) - use and
disclosure of governmental information; and
(5) transaction of business with the agency
by a former employer.
A few agencies have also developed vig-
orous and effective enforcement programs.
A number of techniques are used that are
designed to assure, compliance with the
regulations on a day-to-day basis. Among
them are programs orienting new employ-
ees to the problems of conflict of interest;
rules that employees ceftify in writing that
they have read the laws and regulations
and are in compliance with them;- proce-
dures -under which an employee can dis-
qualify himself from an assignment that
contains a conflict of. interest; procedures
for review of outside employment; and rules
requiring that employees regularly report
outside interests that may be in conflict with
official duties.
A general, and very important, conclusion
of the study is that the administrative proc-
ess, including well-tailored regulations,
imaginative compliance procedures, and
flexible penalties is far better adapted to
deal with the problem of conflict of interest
than the criminal law. At the present time,
a few agencies are making substantial and
well-conceived efforts to use these advanced.
administrative . techniques. What the few
have done, all should do.
D. THE ROLE OF CONGRESS
In addition to its role as legislator of the
statutory conflict-of-interest laws, the Con-
gress plays an important part in the develop-
ment and enforcement'of other restraints on
conflict of interest in the executive branch.
1. Through confirmation of presidential
nominees: In discharging their constitu-
tional duty to confirm nominees of the Pres-
ident for executive office, the various com-
mittees of the Senate can have a considerable
impact on the field of conflict - of interest.
In recent years, the Armed Serviees.Commit-.
tee has been particularly active in forcing
nominees to sell stockholdings in companies
involved in any way with defense, and thus
sever some of their financial ties with pri-
vate life. The committee's concern stems
from the risk of conflict of interest arising
out of the multibillion-dollar procurement
programs of the Department of Defense. A"
survey of its hearings discloses that it pro-
ceeds from case to case, on an -ad hoc and
unpredictable course, sometimes requiring
stringent divestment of stock and sometimes
not. It has shown relatively little interest
in forms of wealth other than stock, though
no real reason exists for this result. There
is evidence that its strict and inconsistent
standards have been a thorn in the side of
the President in seeking high officials for
the Defense Department. It appears, how-
ever, that the executive branch has, been
developing new procedures for preparing
nominees for confirmation and that the
committee itself may be moving away from
its most extreme position of compulsory
divestment.
The conflict-of-interest statutes have
received little mention in the hearings of
the confirming committees; the committee's.
self-created standards emphasize the avoid-
ance of the appearance of conflicts of
interest.
Few other confirmatory committees have
seriously inquired into the conflict-of-
interest position of nominees.
2. Through general investigations: Con-
gress also is active in the conflict-of-interest
field through general investigations of gov-
ernmentwide problems of ethics. Between
1948 and 1953, committees examined alleged
misconduct in a number of agencies, in-
cluding the Department of Justice, the Fed-
eral Housing Administration and the Treas-
ury Department. In 1951, the Douglas sub-
committee, after extensive hearings, warned
the Nation that it faced major ethical prob-
lems throughout the Federal establishment.
Among the direct results of these hearings
was a tightening of the ethical regulations
of the agencies. -
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The first investigation expressly and ex-
clusively addressed to problems of conflict
of interest was commenced in 1957 by the
Antitrust Subcommittee of the Judiciary
Committee of the House of Representatives
(the Geller committee). In 1958, the staff of
that committee produced an extensive study
of the law and regulations on conflict of in-
terest and proposed important legislative
changes.
Only recently the so-called Hebert com-
mittee, after considerable hearings, has rec-
ommended tightening of the law with regard
to the :hiring by defense contractors, of re-
tired, high-ranking military personnel.
3. Through investigations of specific cases:
Finally, by investigating specific cases of
misconduct by governmental officials, Con-
gress has had a significant impact both on
the enforcement of conflict-of-interest re-
straints and the development of new re-
straints. Toward the end; of the Truman
-administration, the cases investigated tended
to involve alleged overt misbehavior, bribery,
influence peddling, improper receipt of gifts
and the use of public office to obtain favors
for friends. During the Eisenhower admin-
istration, ethics cases have inclined more
directly to involve the problem of conflicting
interests.
4. Summary: In the field of conflict of
interests, Congress has been more energetic
and vigorous and in confirmation proceed-
ings and investigations than it has in enact-
ing new legislation. It has, however, moved
ahead of the executive -branch in leadership
in the area of public ethics by inquiring into
the conduct of governmental employees, ar-
ticulating new standards of behavior, devis-
ing proposals for reform, rooting out evil-
doers, and, in general, maintaining constant
pressure for ethical conduct on the part of
the executive branch of the Government.
E. IMPACT OF CONFLICT-OF-INTEREST RESTRAINTS
ON RECRUITMENT OF FEDERAL PERSONNEL
Conflict-of-interest restraints inevitably
require public employees to adjust their per-
sonal affairs and perhaps to sacrifice some of
their personal economic interests. The ques-
tion is how much adjustment, how much
sacrifice, is tolerable? No one, either at the
time the present statutes were passed or
since, has seriously inquired into this im-
portant issue. Although only approxima-
tions are possible in this field, the findings of
this committee are as follows:
1. The present restraints do not deter the
recruitment of full-time employees covered
by the Civil Service System.
2. The present restraints-statutes, regu-
lations, and congressional action-are a
source of substantial deterrence in recruit-
ing the more than 1,000 high-level "political
executives."
(a) The strict requirements of the Senate
Armed Services Committee on the divesti-
ture of stock have matte it difficult for the
Department of Defense to procure top level
executives. Most hard hit by the commit-
tee's rule are men owning and controlling
family businesses.
(b) The restrictions of the statutes are
apt to fall most heavily on the middle rank-
ing and middle income business executive
particularly as a. result of the statute pro-
hibiting the employer to supplement the
employee's salary while on Government serv-
ice. This statute is interpreted by some to
compel the employee to abandon his pension
and insurance plans held with his private
employer.
(c) The statutes fall particularly harshly
on lawyers, for several reasons, but seem not
to have seriously impaired the availability
of lawyers to work full time for the Gov-
ernment.
3. The statutes are serious deterrents to
the recruitment of part-time and intermit-
tent advisers and consultants, particularly
lawyers..
4. The statutes not only discourage citi-
zens from entering the Government, but to
some extent encourag. them to leave it.
5. Because of the ?iifficulties of recruit-
ment, in part becaus- of low salaries and
the rule against outs: de compensation, the
Government has in s )me instances had to
obtain assistance and advice informally and
outside the proper ard regular channels.
8. To the extent t1 at the conflict-of-in-
terest restraints disco irage the flow of pri-
vate citizens Into tl.e Government, they
create a barrier to the flow of vitally needed
information and ideas-particularly in the
scientific and technics 1 fields-to the Gov-
ernment.
F. BASIS FOR A NEW PROGRAM
Present restraints oa conflict of interest
are obsolete, their a iforcement is inade,
quate, and their administration is insuffi-
cient. A thoroughgo .ng reconstruction of
the entire machinery is urgently called for.
Such a reconstruction must be founded on
the relevant realities )f the American Gov-
ernment in the 20th century:
Foremost among tl Lose realities are the
following:
1. The enormous site of the Government:
Today, the Federal Gc vernment is the most
important single - force in economy.
2. The mixed econcmy: Today the Gov-
ernment is deeply in' olved in such things
as housing, roadbuilling, shipping, farm
production, small bus. ness financing, scien-
tific research and atomic energy. It carries
on these activities through contracts, sub-
sidies, guarantees, dir -et financing, techni-
cal advice and other new partnership ar-
rangements between the Government and
private parties. Indec d, there has occurred
an interpenetration of Government and pri-
vate institutions to such an extent that the
classical dichotomy between Government
and non-Government : ias become indistinct.
The merger of private and public interests
brought about by the : nixed economy means
that the simple assumptions of the present
law will no longer hole up.
An additional copse luence has been that
today the Government touches and concerns
the daily lives of citi lens and institutions
in hundreds of ways Conflict-of-interest
laws protecting only , sgainst abuses in the
bringing of claims or the making of con-
tracts are too limited.
3. The modern Federal personnel system:
Unlike the period whe a the present law was
passed, more than 90 percent of the Gov-
ernment's 2.4 million :ivilian employees are
under civil service or. some other merit sys-
tem.
Even in the civil service there is a 20- to
25-percent turnover vvery year, and the
problem of procuring and retaining civil
servants is a very real one.
The Federal personnel system is based on
the civil service, and above it, an ever-
changing group of sox ie 1,000 policymaking
political executives ranging from heads of
agencies down. They serve for relatively
short periods of time and do not expect to
make Government ser rice a career.
Recent administrations have found it in.
creasingly difficult to r;cruitsuch vital lead-
ership. One reason is the low pay scales of
the Government; it cc.nnot compete in the
marketplace with indu ctry, foundations, and
even universities.
Secondly, most Amex leans eligible for such
positions, and particwarly the, business ex-
ecutive in the prime Af his career, are in-
volved in and are meml pert of an organization
and fear that they wi!l lose their place on
the promotional ladder- if they leave. What
is more, the movement of business executives
is restricted by the coriplex network of pen-
sions, insurance, and other security-oriented
forms of compensation.
The basic reality is that for political ex-
ecutives at least, and even for the civil serv-
ant, there is a constant flow out of Govern-
ment and there must be a constant flow into
Government of able personnel..
The Government increasingly has been re-
lying during the last generation On experts,
consultants, and other personnel' who serve
only temporarily and intermittently. Many
of these serve on advisory committees, of
which some 2,000 are estimated to be in
existence. Apparently the needs of the Gov-
ernment can only be served by use of such
personnel. It follows that the Government
and the private sector of the economy have
become in a very real sense merged. Hence,
any modern conflict-of-interest system must
recognize and allow for this vital portion of
the Government's personnel system.
4. The modern administrative procedures:
Today new administrative and legal theories
make it possible to deal with the problem
of conflict of interests with far greater -re-
finement and precision than of old. More-
over, such administrative- techniques have
already succeeded in reducing, if not elimi-
nating, some of the dangers against which
the original statutes were addressed. Thus,
the prosecution of claims is no longer a seri-
ous problem, and even contracting proce-
dures have so improved that there is little
chance of substantial corruption. -
Mr. KEATING subsequently said: Mr.
President, the Executive Conflict of In-
terest Act of 1960 which has been of-
fered today by my distinguished senior
colleague from New York and myself
and cosponsored in the House of Repre-
sentative, by the able Representative
from New York, Mr. LINDSAY is the re-
sult of an exhaustive 2-year study by
the special committee on the Federal
conflict-of-interest laws of the Associa-
tion of the Bar of the City of New York.
The committee was made up of 10 out-
standing attorneys and headed by Ros-
well B. Perkins, of New York City. Its
600-page report is an important contri-
bution to a fuller understanding of the
problems involved in this complex .field
of conflict of interest and offers reason-
able and sound solutions to these
problems.
The legislation we have introduced
seeks to codify the various conflict-of-
interest laws which are now distrib-
uted throughout` our statute books., - It
seeks to modernize those laws and to ex-
tend them to cover all phases of activity
under the Federal Government. The
bill includes within its purview consult-
ants with the Federal Government, and
provides for an administrator to over-
see the operation of the statute from
the Executive Office.
While the language of almost -any bill
can be improved by hearings and study,
I am convinced that this measure is a
significant step in the right direction.
It represents a thoroughly researched
and carefully drafted attempt to deal
with the very real problems in this field.
It should go a long way to curb and
deter those in - the -sma11 minority who
would breach the standards of ethical
conduct which should be adhered to by
all public servants. At the same time, it
provides guidelines to prevent honest
employees from inadvertently straying
from the letter of the law.
Although the legislation we have intro-
duced does not cover the legislative
branch of the Government, it is signifi-
cant to note. that the special committee
which drafted it recommends that this
aspect of the problem be studied. I have
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previously offered legislation in this
field which would establish a Commis-
sion on Ethnics in the Federal Govern-
ment to work for that goal. I feel very
strongly that this branch of Government
should be covered by the same conflict-
of-interest statutes which apply to the
other branches, and I hope before long
we will place such legislatiton on the
statute books.
Mr. President, the American people
have every right to expect the highest
degree of ethical conduct by those who
serve them in the Federal Government.
We must take every step possible to
insure that no taint of corruption or
conflict of interest touches these people.
In fairness to all concerned, we need
to bring our conflict-of-interest laws
up to date, we need to clarify them so
that all can understand their. meaning
and application, and we need to
strengthen and tighten up their provi-
sions. The measure Senator JAVITS and
I have today introduced will substan-
tially achieve those objectives. Its en-
actment will raise the level of personnel
in the Federal service and will raise the
public recognition of the honesty and
integrity of these public servants. I
hope this proposal receives the prompt,
thorough, and favorable consideration it
deserves.
Mr. President, this morning's New
York Times contains a summary of the
report issued by the special committee
on Federal conflict-of-interest laws of
the Association of the Bar of the City
of New York. I ask unanimous con-
sent that it be printed at this point in
the RECORD.
There being no objection, the sum-
mary was ordered to be printed in the
RECORD, as follows:
[From the New York Times, Feb..23, 1960]
SUMMARY OF STUDY ON INTEREST CONFLICTS
IN U.S. Joss
We are today releasing a prepublication
edition of a report based upon more than 2
years of study 'of the so-called conflict-of-
interest laws of the Federal Government.
Also, we expect that there will be introduced
today in both Houses of Congress a proposed
Executive Conflict-of-Interest Act, which
has been drafted by this committee and
which is designed to remedy the manifold
defects of the present law. Our findings and
recommendations, which are set forth in
the report, are expressed in statutory form
in the proposed act.
The report will be published in the fall by
the Harvard University Press.
This committee is issuing this prepublica-
tion mimeographed edition of its report so
that it will be available at the public hear-
ings on the topic of the conflict-of-interest
laws which commenced on February 17,
1960, before the Antitrust Subcommittee of
the Committee on the Judiciary of the
House of Representatives. The House Judi-
ciary Committee, under the chairmanship of
Representative EMANUEL CELLER, of New
York, bas already made an important con-
tribution to the wider understanding and
improvement of this confused, but crucial,
area of law and public administration. The
public hearings, which have just opened,
should further advance the cause of urgently
needed reform. Accordingly, we have dis-
tributed some 200 mimeographed copies of
prepublication edition of the report to Mem-
bers of Congress, the press and to various
Federal departments and agencies.
This official summary has been prepared
for the information and guidance of those
interested persons to whom the report is not
available and as a guide to the report.
OBJECTIVES
The report of the committee has two
themes. The first is that ethical standards
within the Federal Government must be be-
yond reproach, and that there must, accord-
ingly, be effective regulation of conflicts of
interest in Federal emloyment. The second
is that the Federal Government must be in a
position to obtain the personnel and infor-
mation it needs to meet the demands of the
20th century.
These themes are coequal. Neither may
be safely subordinated to the other. What is
needed is balance in the pursuit of the two
objectives. We need a longrun national
policy which neither sacrifices governmental
integrity for opportunism nor drowns prac-
tical staffing needs in moralism. We need a
careful regulatory scheme that effectively
restrains official conflicts of interest without
generating pernicious side effects on recruit-
ment.
The basic conclusion of the committee is
that such a scheme can be worked out. The
report and the proposed act contain a rec-
ommended new program for achieving this
result.
ASSESSMENT OF EXISTING RESTRAINTS
The committee has concluded that the
legal and administrative machinery of the
Federal Government for dealing with the
problem of conflicts of interest is obsolete,
inadequate for the protection of the Govern-
ment, and a deterrent to the recruitment and
retention of executive talent, and some kinds
of needed consultative talent.
OBSOLESCENCE
The statutory law-most of it a century
old-is not broad enough to protect the
Government against the manifold modern
forms of conflict of interest. Most of the
statutes were and are pointed at areas of
risk that are no longer particularly signifi-
cant, mainly the prosecution of Government
claims. Today, with the greatly expanded
regulatory functions of the Federal Govern-
ment, applications for rulings, clearances,
approvals, licenses, certifications, grants and
other forms of Government action are far
more significant in the daily operation of
Government than the prosecution of claims.
Several of the basic statutes now on the
books do not concern themselves at all with
these modern governmental activities.
Other aspects of obsolescence in the pres-
ent statutes are:
(a) Their focus of interest upon a class
of lower ranking politically, appointed clerks
that has disappeared. The Government'to-
day obtains its manpower through, a vast
civil service, a top layer of short-term polit-
ical appointees, an increasing group of ad-
visory and part time personnel, and through
an unlimited variety of contracts for services
provided by non-Government personnel.
(b) Their failure to recognize internal
procedures of modern government, such as
the flexible processes of personnel admin-
istration available to assist in enforcement.
(o) Their lack of recognition of the facts
of modern economic life, such as the ex-
istence of private pension plans.
(d) Their failure to recognize the essential
blending of public and private endeavor in
the modern American society, as illustrated
by the partnership of Government, industry
and educationlal institutions in the science
field.
INADEQUATE ADMINISTRATION
Partly by reason of the deficiencies in the
statutory law, administration of the conflict-
of-interest restraints has always been weak.
The Government has failed to provide a ra-
tional, centralized, continuing and effective
administrative machinery to deal with the
problem. If the statutes presented a coor-
dinated whole-a unified program-and if
they imposed direct responsibility on the
President to carry out that program, the cen-
tral coordination and leadership missing in
the past would improve. A well-administered
program could, and should guide the thou-
sand good men as well as snare the one bad
one.
UNCERTAINTY IN INTERPRETATION
Enacted fitfully over a 100-year span, the
uncoordinated statutes are inconsistent,
overlapping and at critical points defy inter-
pretation.
THE CONGRESS
Congress has done a useful and construc-
tive job in its capacity as investigator. But
the Senate confirming committees have sel-
dom considered the overall issue of conflict
of interests In relation to recruitment. The
Armed Services Committee has applied a
wavering standard of stock divestment, use-
ful for certain purposes, but overemphasiz-
ing one single source of conflict-of-interest
problems and having little bearing on the
question of actual official conduct.
RECRUITMENT
The main adverse effect of the present
system is its deterrent effect on the recruit-
ment and retention of executive talent and
some kinds of consultative -talent. The re-
strictions tend to encircle the Government
.with a barricade against the interflow of men
and information at the very time In the
Nation's history when such an interflow is
most necessary.
RECOMMENDATIONS
The defects in the present law cannot be
cured by tinkering. A thorough-going re-
construction is called for--a new program
of controls designed for modern needs, pro-
viding for adequate administration, and writ-
ten as an integrated unit. The program
must achieve a balance between the Na-
tion's need for protection against conflicts of
interest and its need for personnel.
The committee's basic recommendations
are these:
1. Conflict-of-interest problems should be
recognized and treated as an Important, com-
plex, and independent subject of attention
and concern in the management of the gov-
ernmental establishment.
2. The present scattered and uncoordi-
nated statutes relating to conflicts of inter-
est should be consolidated into a single
unified act, with a common set of definitions
and a consistent approach. Archaic provi-
sions should be repealed.
3. The restraints contained in the present
statutes should be greatly expanded in their
scope by making them applicable to essen-
tially all matters in which the public deals
with the modern Federal Government.
4. Certain important restraints now cov-
ered in regulations or not at all should be
included in the basic statutes, particularly
restraints relating to receipt of gifts and
coercive use of office.
b. The statutes should permit the reten-
tion by Government employees of certain
security-oriented economic interests, such as
continued participation in private pension
plans.
6. Wherever it is safe, proper, and essential
from the viewpoint of recruitment, the
statutes should differentiate in treatment
between regular employees and citizens who
serve the Government only intermittently.
for short periods, as advisers and consultants.
7. Regular, continuing, and effective en-
forcement of the law and regulations should
be assured by emphasizing administrative
remedies rather than the clumsy criminal
penalties of present law.
8. The statutes should create the frame-
work for active and effective administration
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2902 CONGRESSIONAL ] RECORD -.SENATE e ruay 23
of the system of conflict-of-interest re-
straints, headed up with clear responsibility
in the President. The :President should des-
ignate, pursuant to the proposed act, an
administrator to assist him in this function.
9. In addition to ?the statutes themselves,
there should be a second tier of restraints
consisting of presidential regulations ampli-
fying the statutes, and a third tier consist-
ing of agency regulations tailored to the
needs of particular agencies. The responsi-
bility for day-to-day enforcement of the
statutes and regulations should rest upon
agency heads.
10. At all levels of administration poten-
tial conflict-of-interest problems should be
headed off by preventive action, such as, for
example, Orientation programs for all new
emplgyees to acquaint them with the appli-
cable conflict-of-interest rules, and periodic
reminders as to such rules.
11. There should be more effective prohi-
bitions and penalties applicable to persons
outside Government who induce or partici-
pate in conduct by Government employees
in violation of the conflict-of-interest laws.
12. Each committee of the Senate consid-
ering a Presidential nominee for confirma-
tion should be given the -benefit of a full
analysis, prepared by the administrator in
consultation with the Department of Jus-
tice, of any conflict-of-interest problems the
nominee's particular situation may present.
The confirming committee should give due
consideration to this analysis and to the pro-
tections afforded by a modern and effectively
administered overall scheme of conflict-of-
interest restraints, if one is put into effect.
13. The Congress should initiate a thor-
ough study of the conflict-of-interest prob-
lems of Members of Congress and employees
of the legislative -branch of the Federal
Government.
The program advanced here will not solve
the problem of conflict of interests In Fed-
eral employment. Like most problems, this
Is one we must live with permanently, strive
to mitigate, and adjust to. The program
proposed, however, will do several things.
It meets the flaws of the present pattern
of conflict-of-interest restraints-obsoles-
cence, weakness of administration, and
faulty drafting. It would greatly strengthen
the main policy of the conflict-of-interest
statutes-preservation of the integrity of
Government. It would provide for an inte-
grated and comprehensible system of stand-
ards and sanctions, together with an effec-
tive machinery for administering that sys-
tem. It is grounded- upon a realistic con-
ception of the problem of conflicting inter-
est, as it appears in the modern setting of
American Government and society. It would
make it significant contribution toward in-
telligent staffing of the Federal Government
for world leadership.
BAR COMMITTEE'S MEMBERS
WASHINGTON, February 22: Following is
a list of the members of the special commit-
tee on the Federal conflict-of-interest laws
of the Association of the Bar of the City of
New York:
Howard F. Burns, partner, Baker, Hostetler
& Patterson, Cleveland, member of the coun-
cil of the American Law Institute; Charles
A. Coolidge, partner, Ropes, Gray, Best, Cool-
idge & Rugg, Boston, former Deputy Director
of Internal Security Affairs, Department of
State; Paul M. Herzog, executive vice presi-
dent of the American Arbitration Associa-
tion, New York, former Chairman of the Na-
tional Labor Relations Board; former asso-
ciate dean of the Graduate School of Public
Administration, Harvard University; Alex-
ander C. Hoagland, Jr., practicing lawyer as-
sociated with Curtis, Mallet-Prevost, Colt &
Mosle, New York City; Everett L. Hollis, cor-
porate counsel, General Electric Co., New
York City, former General Counsel, Atomic
Energy Commission; Charles A. Horsky, part-
ner, Covington & Bur.ing, Washington, for-
mer assistant prosetutor at Nuremberg
with the Chief of Co xnsel for War Crimes;
John V.- Lindsay, U.S. Representative from
the 17th Congression 11 District, New York,
partner, Webster, She Meld, & Chrystie, New
York City; John E. L)ckwood, partner, Mil-
bank, Tweed, Hope & : iadler, New York City,
former General Con esel, Office of Inter-
American Affairs; Roswell B. Perkins, chair-
man, partner, Debevoise, Plimpton & Mc-
Lean, New York City, former Assistant Sec-
retary of Health, Educltion and Welfare, for-
mer counsel to the Governor of the State of
New York; Samuel Rosenman, partner,
Rosenman, Goldmark, Colin & Kaye, New
York City; former sp.-cial counsel to Presi-
dents Roosevelt and 'I ruman, former Justice
of the Supreme Court of the State of, New
AUTHORIZATION FOR APPROPRI-
ATIONS FOR. ATOMIC ENERGY
COMMISSION
Mr. ANDERSON. Mr. President, I in-
troduce, for appropriate reference, by re-
quest, a bill, S. 3084. to authorize appro-
priations for the AE7 in accordance with
section 261 of the Atomic Energy Act of
1954, as amended.
S. 3084 authorises, in section 101,
$171,256,000 for new AEC construction
projects for the entire atomic energy
program, including :terns for the produc-
tion of special nuclear materials, atomic
weapons, reactor development, physical
research, biology and medicine, commu-
nity, and general pl int projects.
The bill also pro"ides, in section 109,
funds for the cooperative power reactor
demonstration prod ram, amounting to
an increase of $40 million. In section
110 the bill authorizes $5 million for a
cooperative research and development
program with Canada in connection with
heavy water moder tted nuclear power-
plants.
The Joint Comm.ttee an Atomic En-
ergy plans to hold hearings on this bill
March 8-10 and April 5-7, 1960. In the
March hearings, tho-committee plans to
-consider all construction projects in sec-
tion 101;_and in th April hearings, the
committee will concentrate on the coop-
erative atomic pow 3r program and the
proposed cooperation with Canada for
the heavy water noderated reactors.
The hearings will, i or the most part, be
held in public, alts' ough aspects of the
production and atomic weapons pro-
grams will necessai ily be considered in
executive session.
I am introducing this bill be request,
since it is in the fcrm requested by the
Atomic Energy Commission. The Joint
Committee will give lareful and thorough
consideration to el:ch item in the bill
and, as in the past, it is entirely possible
that the Joint Committee may recom-
mend some change; in order to assure
an atomic energy program consistent
with our long-rang: national needs and
objectives.
The PRESIDING OFFICER. The bill
will be received ar Ld appropriately re-
ferred.
The bill (S. 3084) to authorize appro-
priations for the Atomic Energy Com-
mission In accordan,,e with section 261 of
the Atomic Energy Act - of 1954, as
amended, and for other purposes, intro-
duced by Mr. ANDERSON, by request, was
received, read twice by - its title, and
referred to the Joint Committee on
Atomic Energy.
NATIONAL AMERICAN GUILD OF
VARIETY ARTISTS WEEK
Mr. KEATING. Mr. President, I in-
troduce, for appropriate reference, a
joint resolution to designate the week of
June 5-11,. 1960, as National American
Guild of Variety Artists Week. A com-
panion-measure is today being intro-
duced in the other body by that great
champion of the American entertainer,
the Honorable SEYMOUR HALPERN, of New
York.
Designation of this week would be a
fitting-salute-to people who have spread
the sunshine of entertainment and hap-
piness all over the world. It would con-
stitute an appropriate recognition of
their untiring efforts in behalf of a
myriad of worthy causes.
Over the years members of the guild
have been extremely generous in the do-
nation of their time and talents to bene-
fit persons of every race, color, creed, or
national origin. As the president of the
guild, the incomparable Joey Adams has
pointed out, "The variety entertainer is
synonymous With charity."
At the same time, by hewing to the
principle that it is talent and skill alone
that counts-not color of skin, or house
of worship, or some other superficial at-
tribute-American entertainers have set
a fine example for men of good will
everywhere to emulate.
AGVA is now planning to establish a
home in Fallsburg, N.Y., for retired and
indigent members of the profession.
During the week which is proposed by
this joint resolution Americans every-
where would be given an opportunity to
contribute to this most worthy endeavor.
Mr. President, I am pleased to salute
Joey Adams and other members of his
profession for their many past humani-
tarian endeavors. I commend them for
the drive they have launched to provide
a haven for retired entertainers. I hope
the Congress will grasp the opportunity
offered by this joint resolution to ex-
press its appreciation, congratulations,
and best wishes to this outstanding
group. By enacting this joint resolution,
we can resoundingly applaud the 20,000
members and their families who make up
the National American Guild of 'Variety
Artists. -
Mr. President, I ask unanimous con-
sent to have printed in the RECORD the
full text of this joint resolution.
The PRESIDING OFFICER. The
joint resolution will be receivedand ap-
propriately referred; and, without objec-
tion, the joint resolution will be printed
in the RECORD.
The joint resolution (S.J. Res. 168)
designating the week of June 5-11, 1960,
as National American Guild of 'Variety
Artists Week, introduced by Mr. KEAT-
INC, was received, read twice by its title,
referred to he Committee on the Judi-
ciary, and ordered to be printed in the
RECORD, as follows. - -
Whereas for many years performers and
artists in the variety field have circled the
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