At 40 Years Old, The Ethics in Government Act is in Need of a Tune-up

Issues
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Red pen underlining the word "ethics"

The Ethics in Government Act (EIGA) turned 40 this week. Born out of the post-Watergate scandal reforms, EIGA is one of the most important laws on our books ensuring transparency at our highest levels of government and accountability from our nation’s most senior decisionmakers.

EIGA’s key reforms, such as the creation of the Office of Government Ethics (OGE) and the requirement that public officials disclose their financial interests, helped restore some confidence in government after Watergate showcased the ugly underbelly of abuse of public trust.

Recent scandals, however, have demonstrated the limits of EIGA—and have underscored the need to once again strengthen the federal ethics program to ensure that public officials are using their authority to advance the public interest.

James Madison believed that the great challenge of a government is obliging it to control itself. The people are the primary control, but “experience has taught mankind the necessity for auxiliary precautions.” EIGA created two major “auxiliary precautions” to ensure public officials serve the public’s interest, and not their own.

First, EIGA created OGE to oversee the executive ethics program and to prevent and resolve conflicts of interest. For the most part, OGE is not an enforcement agency; instead, it provides guidance, seeks voluntary compliance, and coordinates with agency officials responsible for directing the daily activities of an agency's ethics program.

Second, EIGA required senior government employees to make their financial interests public. Senior employees must disclose their sources of income, liabilities, gifts, and transactions (like the sale or purchase of securities), which notify the public of any potential conflicts that may arise by virtue of an official’s personal finances.

Congress believed that these mechanisms would preserve and promote the integrity of public officials and institutions, and ensure that the basic obligation of public service—to put the need of the public above personal financial gain—is met. 

For most of its forty-year history, the system worked reasonably well. Both Republican and Democratic administrations generally collaborated with OGE. Public officials disclosed their financial holdings and divested from those interests that might pose a conflict. Executive branch officials not only abided by EIGA’s ethics rules, but also the ethical norms set by their predecessors (and common sense).  

The last two years have demonstrated that EIGA is in need of a tune-up.

The power of public office carries with it the perennial desire to use the power for financial gain. If financial disclosure reports don’t paint an adequate—and importantly, accurate—picture of a government official’s financial interests, the public can’t know if those officials are acting impartially.

One issue is that President Trump’s cabinet is the wealthiest in modern American history, and the administration’s wealth and the accompanying chaotic financial disclosures have shone a light on EIGA’s shortcomings.

The unfortunate reality is that the current financial disclosure system, especially when applied to the ultra-wealthy, is ill equipped to provide the transparency Congress originally desired. When financial portfolios are large and complex, it becomes more difficult for ethics officials, and in turn the public, to discern potential conflicts of interest.

Commerce Secretary Wilbur Ross, for example, submitted a 57-page financial disclosure report when he was nominated to his position. The form showed that Ross’s wealth was tied up in a web of LLCs, carried interests, and funds identified only by a jumble of initials and roman numerals. The form only shows the public the most basic information about the assets. That barebones document may not tell the full story of the filer’s financial situation.

CLC conducted a public records review of Secretary Ross’s financial situation and found credible evidence that he had violated the criminal conflict of interest law by participating in matters that affected some of his financial holdings. His ability to obfuscate in the financial disclosure reports what financial interests he held, and when he held them, permitted his conflicts to go temporarily undetected. Members of the public shouldn’t need a finance background to ascertain whether or not their public servants are working in their interest.

The issues with Ross are a combination of process and personality. Ross, like other administration officials, showed little regard for the ethics program and for longstanding ethical norms—and abused EIGA’s shortcomings to obfuscate his conflict-producing financial holdings. While EIGA’s weaknesses aren’t new, the administration’s willingness to exploit them is.

EIGA has given the American people forty years of financial disclosure and ethics oversight. A few common sense changes can bring EIGA into the 21st century and continue to provide Americans with the transparency they deserve.

For example, Congress could establish an independent inspector general with the authority to conduct ethics investigations of senior political appointees. Congress could also establish an administrative mechanism to adjudicate any executive branch employee’s failure to produce ethics-related information or records. For more detailed explanations of these and other solutions for specific problems plaguing the federal government’s ethics program, read CLC’s 13 Proposals.

Delaney's work focuses on government ethics, accountability, and transparency.