September 2009

From the editors of Wolters Kluwer Law & Business, this update describes important developments from CCH ethics and government publications.

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Contracting

DII Panel Discusses New Conflicts of Interest for Contractors
The past year has seen the growth of new conflict of interest requirements and risks for government contractors. A panel at the Defense Industry Initiative Annual Best Practices Forum held in Washington DC in June 2009 sought to identify these new requirements and to offer best practices to accommodate the new requirements and mitigate the new risks. Judy Kim, the Director of Compliance Programs at SAIC, Kim Rupert, SAIC’s senior vice president of Contracts, Procurement and Pricing and Leigh Bradley, Director of the Standards of Conduct Office, spoke on this panel which was moderated by Steve Epstein, the Ethics and Compliance Leader for PricewaterhouseCoopers, L.L.P. The presentation focused on personal conflicts of interest (“PCIEs”), organizational conflicts of interest (“OCI”) and revolving door issues, including the new ethics pledge. (CCH Federal Ethics Report, September 2009, Vol. 16, Iss. 9)

Business Ethics

Defending an E & C Program to the Department of Justice
The Department of Justice (“DOJ”) looks very closely at corporate ethics and compliance (“E & C”) programs when deciding whether to charge an organization, according to Jeff Kaplan, of Kaplan & Walker LLP. Kaplan and Joe Murphy, the Director of Public Policy for the Society of Corporate Compliance and Ethics, gave a unique presentation outlining what DOJ is looking for in an E & C program. After discussing their views, they concluded by having E & C officers from three companies engage in role-playing to display how they would present the strengths and effectiveness of their programs to DOJ attorneys, Kaplan and Murphy played the roles of the DOJ attorneys in this presentation at the Conference Board’s annual Ethics and Compliance Program held in New York City on April 15-16, 2009. Kaplan explained that the presentation was aimed at providing a brief overview of C & E programs used as a legal “defense” that could occur both in court and in connection with charging decisions. The presentation was based on case law and governmental practice that focused on criminal and regulatory law. (CCH Federal Ethics Report, September 2009, Vol. 16, Iss. 9)

Little Connection between Executive Compensation and Business Ethics and Compliance
At this critical time when the public, government leaders and others are calling for executive compensation and employee bonus reforms, it appears that there is relatively little connection between business ethics and corporate compensation, according to a recent survey conducted by the Society of Corporate Compliance and Ethics (“SCCE”) and its sister organization, the Health Care Compliance Association (“HCCA”). This new research among compliance and ethics professionals reveals that when it comes to compliance and ethics metrics, very little has been done to incent ethical behavior. September Federal Ethics Report, Vol. 16, Iss. 9

Cases

Congressman’s Testimony to Ethics Committee Constitutionally Protected
The Speech or Debate Clause protected a former U.S. Congressman’s statements made to the House Standards of Conduct Committee (‘congressional ethics committee”) about possible violations of House Rules, according to the U.S. Court of Appeals for the District of Columbia ruling decided on June 23, 2009 and unsealed on July 9, 2009. The ruling did not name the Congressman, but the media has identified him as former Rep. Thomas Feeney (R.-Fla.). In addition, Feeney announced on August 5, 2009, that the Department of Justice had informed him he that it had dropped a criminal investigation into his participation in the Scotland golf trip with Jack Abramoff. The now infamous golf trip has created legal problems for most of the participants. (CCH Federal Ethics Report, September 2009, Vol. 16, Iss. 9)

Court Denies Safavian’s Appeal of Second Trial Conviction
The U.S. District Court for the District of Columbia issued an Opinion on July 21, 2009, denying a motion for acquittal and a motion for a new trial filed by David Safavian, a former high-ranking executive branch official who was involved in the Jack Abramoff lobbying scandal. Safavian served as the Chief of Staff for the Administrator of the General Services Administration (“GSA”). On August 3, 2002, Safavian joined Abramoff, other lobbyists who worked with Abramoff, a member of House of Representatives and members of the Representative’s staff on a trip to Scotland to play gold at St. Andrew’s golf course. They traveled by private jet. (CCH Federal Ethics Report, September 2009, Vol. 16, Iss. 9)

Jefferson Found Guilty in Bribery, Money Laundering Schemes
After a six-week trial, former Congressman William J. Jefferson of Louisiana was convicted by a jury on August 6, 2009, of 11 of 16 counts that included federal charges of solicitation of bribes and money laundering relating to African business deals. The case was made famous by $90,000 discovered in a freezer during a raid by federal investigators of Jefferson’s home in 2005. The charges against Jefferson related to his performing various official acts to facilitate multiple business deals in West Africa. Jefferson sought hundreds of thousands of dollars in bribes from a number of companies for telecommunications, sugar, oil, and other energy-related projects, among others. The government’s indictment, issued June 4, 2007, alleged facts reflecting seven separate bribery schemes. (CCH Federal Ethics Report, September 2009, Vol. 16, Iss. 9)

Investigations

Senate Dismisses Ethics Complaints Regarding Mortgages
The Senate Committee on Ethics informed Senator Chris Dodd (D.-Conn.) and Senator Kent Conrad (D.-N.D.) on August 7, 2009, that it was dismissing a June 13, 2008 complaint from Citizens for Responsibility and Ethics in Washington (“CREW”). Crew had requested that the Committee investigate whether mortgages the two Senators had obtained from Countrywide Financial violated the Senate Gift rule. The Committee spent a year investigating the charges and reviewing more than 18,000 pages of documents. In addition to investigating whether the Senators violated the gift rules, the Committee also considered whether their conduct violated Senate Rule 37, which prohibits Senators from using their official position for personal gain. (CCH Federal Ethics Report, September 2009, Vol. 16, Iss. 9)

Federal Election Campaign Financing

Real Truth Preliminary Injunction Denied
Real Truth About Obama’s appeal of a denied preliminary injunction that would have prevented the Federal Election Commission (Commission) from enforcing certain regulations was denied because the organization did not show that it was likely to succeed on the merits as to any of its challenges, the U.S. Court of Appeals for the Fourth Circuit held. Further the court found that Real Truth would not have been irreparably harmed if the preliminary injunction was not granted, and issuing the injunction would have been against public policy. Real Truth sought to block the enforcement of regulations that prevented corporations from expressly advocating the election or defeat of a clearly identified candidate, defined campaign contributions to include funds “to support or oppose the election of a clearly identified Federal candidate,” and regulated corporate and labor organization funds expended for electioneering communications. Considering the definition of “expressly advocating,” the federal appeals court found that it was likely constitutional because the definition was facially consistent with the language in FEC v. Wisconsin Right to Life, Inc., 127 S. Ct. 2652 (2007) [CCH Federal Election Campaign Financing Guide ¶14,013]. Also, the group challenged as unconstitutionality vague the words “support or oppose the election of a clearly identified federal candidate” when used to identify regulated campaign funds. Contrary to the group's argument, however, the court noted that the language had been expressly sanctioned. The group also challenged the regulations governing corporate and labor organization funds for certain electioneering communications. Again, the court found the language mirrored that of Wisconsin Right to Life by limiting its application to communications which could not be interpreted reasonably in any way other than as an appeal to vote for or against a clearly identified federal candidate. (The Real Truth About Obama, Inc. v. Federal Election Commission, et al. (4th Cir.) CCH Federal Election Campaign Financing Guide ¶14,029)

Texas Senatorial Campaign Fundraising Clarified
The Bill White for Texas senatorial committee could accept contributions for a senatorial primary and general elections to be held in 2012 in Texas, and could currently accept contributions for a special or emergency election or runoff in 2009 or 2010 that had not been scheduled and that might not occur the FEC concluded. Due to the current Senator Kay Bailey Hutchinson announcing her intent to run for state office, the candidate could possibly be up for election in five elections for the same U.S. Senate seat. The Commission made several specific findings including: (1) that an undesignated contribution of up to $2,400 would be available to the committee to use for the senate special election that was called after the contribution was made; (2) the committee could accept up to $2,400 from an individual contributor for the 2012 primary or, in the alternative, a special election that had not yet been scheduled, and could accept up to $2,400 from that same individual contributor for the general election in 2012 or, in the alternative, for a runoff for a not-yet-declared special election; (3) the proper designation of contributions; (4) the disposition of funds raised for a special election or runoff that did not occur; and (5) how to identify the contributions to the Commission. (CCH Federal Election Campaign Financing Guide ¶6584)