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WANG: Another House ethics problem

Hypocrisy taints caucus members who rail against Wall Street ways

- The Washington Times - Wednesday, October 6, 2010

The Congressional Black Caucus (CBC) has not had a good run of luck before the House ethics committee lately. Two of its senior members face trials before the panel. Rep. Charles B. Rangel, New York Democrat, is accused of cheating on his taxes, abusing New York rent-control laws and improperly using congressional stationery. Rep. Maxine Waters, California Democrat, is alleged to have steered bailout money to a bank in which her husband had a sizable financial interest. Now come Rep. Eddie Bernice Johnson, Texas Democrat, and Rep. Sanford D. Bishop Jr., Georgia Democrat, who have admitted to improperly doling out Congressional Black Caucus Foundation scholarship funds to their relatives and a staffer's children.

As of now, it remains unclear whether the House ethics apparatus, which has its hands full, will ultimately take up Scholarshipgate, but the conduct at issue may present yet another ethics headache for the caucus. Although House rules do not directly regulate the CBC Foundation's spending and internal governance, they do regulate how it raises money. Because the CBC's scholarship funds could not have been awarded improperly without first having been raised, the House ethics committee ultimately may have jurisdiction over this matter.

Under the Ethics Reform Act of 1989, government officials, including members of Congress, generally may not solicit anything of value from any person seeking official action from, or whose interests may be substantially affected by, the official's agency or department. Both the Senate and House ethics committees have created a limited exception to allow members to solicit on behalf of charities, provided that the members do not benefit personally from the solicitations.

Applying these rules to the CBC Foundation scholarship, the conduct of the members at issue appears to be somewhat problematic. According to the foundation's most recent annual report, it has indeed solicited funds from entities with interests pending before Congress, such as Wal-Mart, Bank of America, Exxon Mobil, BP, United Parcel Service, FedEx, Toyota, AT&T, Verizon, Lockheed Martin and Boeing, just to name a few.

As for the members' personal benefit in this case, Mrs. Johnson has admitted to awarding 23 foundation scholarships totaling $31,000 to her grandsons, great nephews and two children of her district director. Moreover, none of these recipients (including the district director's children) resided in Mrs. Johnson's district, and they were ineligible under the foundation's own rules. Thus, Mrs. Johnson had to have gone out of her way to award the funds to her own kin notwithstanding the scholarship's general eligibility requirements. Similarly, Mr. Bishop awarded scholarships of unspecified amounts to his stepdaughter and niece.

The fact that Mrs. Johnson has served on the CBC Foundation's board of directors naturally raises questions as to whether she also solicited donations for the scholarship fund. If she did, the personal benefit she derived from the scholarships may violate House ethics rules. Moreover, regardless of whether any members personally solicited donations for the CBC Foundation, House ethics rules also generally treat prohibitions applicable to individual members as being applicable to their caucuses. Thus, if the CBC as a whole solicited donations to its foundation, the ethics rules may also generally prohibit any of its members from personally benefiting from the scholarships.

In addition to the ban on receiving personal benefits, another House rule generally prohibits solicitations for any entity that members establish or control. If a member wishes to make solicitations for such entities, he or she must receive prior written approval from the ethics committee. An organization like the CBC Foundation, which bears in its name the imprimatur of the congressional caucus and has, at any given time, several members on its board of directors and a member as its chairperson, probably would qualify as an entity established or controlled by members. Indeed, dozens of lobbying interests, which are required to report donations they make to such entities, have listed donations to the CBC Foundation in their disclosures.

According to a House ethics spokesperson, the committee cannot publicly disclose whether it has given the CBC Foundation an exemption to solicit as an entity established or controlled by members.

At the end of the day, when millions of Americans are still hurting for economic relief and the government is racking up debt like there's no tomorrow, Scholarshipgate may seem like a blip on the radar. But to the extent certain members of Congress recently have railed against the ethics of student-loan lenders, Wall Street and oil companies, it is fair game to turn the ethics scrutiny on Congress itself.

Eric Wang, a political law attorney, has advised clients on all aspects of government ethics laws.

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