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Wednesday
Jul172013

Virginia’s Shamefully Inadequate Ethics Laws, Part II: Disclosure Regime Deserves a Failing Grade 

Yesterday, in Part I of my series on Virginia’s ethics laws, I discussed the corruption scandal threatening to end Governor Bob McDonnell’s political career. While the list of gifts and payments he has accepted from Jonnie R. Williams Sr. and Star Scientific sound egregious, it is likely that under Virginia law, some of the gifts may have been legal. Why? Because Virginia’s ethics laws are a joke.

In Virginia, elected officials may accept personal gifts of UNLIMITED value so long as they disclose gifts worth more than $50. If that doesn’t blow your mind, consider this: elected officials are not required to disclose gifts provided to their immediate family members. That’s right -- an official’s family member, such as a spouse or child, may accept gifts of unlimited value, and the official is not required to tell anyone about it. You can drive a Mack truck through that loophole.

Virginia, a state that has been described by its politicians as a model of ethics and transparency, has ethics laws that are so woefully lax, it permits gifts like these:

  • $19,000 in tickets to a Redskins game suite from the Washington Redskins to Bob McDonnell
  • $6000 worth of vacation lodging from Jonnie R. Williams, Sr. to Attorney General, Ken Cuccinelli, II.
  • $10,307 in air fare to fly the McDonnell family to a Notre Dame football game (courtesy of Alexander B. McMurtrie, Jr).
  • Food supplements valued at more than $6,000 from Jonnie R. Williams, Sr. to Attorney General, Ken Cuccinelli, II.
  • Free use of a Caribbean vacation home valued at $18,000 from James B. Murray, Jr. to former Governor, Timothy Kaine.
  • An $8,056 “Texas hunt weekend” and football tickets from Foster Friess to Ken Cuccinelli, II.
  • Nearly $6000 in personal air travel from Armada Hoffler Enterprises, Inc. to former Governor, Mark Warner. 

Virginia's failure to pass reasonable gift restrictions has created a system in which paying for an elected official's luxury vacation is considered common and proper. Since 2010, Delta Star, a Lynchburg manufacturer of power transformers, has provided Governor McDonnell with over $10,000 worth of lodging, entertainment, meals and "activities." When asked why the company has provided the Governor with such generous gifts, CFO Steve Jones explained: “Delta Star appreciates the Governor’s pro-business stance on assisting small businesses in Virginia. We know as Governor, it may be hard to get away with family to rest, and our Company is pleased we were able to offer this to him during the summer months.” Yikes. 

Although many politicians from Virginia believe this “disclosure only” system is effective, a cursory review of their disclosures indicates otherwise. The disclosures are utterly void of detail -- a consequence of a disclosure regime that requires very little disclosure. The disclosure form does not require details about the gift, the specific date on which the gift was received, the actual cost of the gift, or a breakdown of the costs associated with the gift. As a result, the disclosures are limited to cryptic descriptions and a lot of round numbers. Hardly the picture of transparent government.

What’s worse, despite the absurdly generous allowances provided under Virginia ethics laws, some individuals still find compliance to be difficult. For example, Attorney General (and Gubernatorial candidate) Ken Cuccinelli failed to report thousands of dollars in gifts from Star Scientific (yes, that Star Scientific, from yesterday’s post). After he filed an amended disclosure, the public learned that he had actually accepted over $18,000 in “gifts” from Star Scientific (additional details about the troubling Cuccinelli/Star Scientific relationship are provided in this helpful timeline).   

When compared to the gift restrictions of other states, it is no wonder that Virginia received a grade of F and was ranked 47th out of 50 states by the State Integrity Investigation. Despite Virginia’s belief that it is the standard bearer of clean government, the F rating is well-deserved. Per the State Integrity Investigation, it is one of only nine states without a statewide ethics commission and one of four states without campaign finance limits. Moreover, according to the National Conference of State Legislators, Virginia is one of just ten states in the country that, as noted above, does not limit the value of personal gifts provided to elected officials.  

The recent scandals that have dragged Virginia’s ethics laws into the spotlight have some politicians calling for reforms (a subject that will be discussed tomorrow, in Part III of this series). Before readers get their hopes up, this is not the first time an ethics scandal has elicited promises from politicians to tighten Virginia’s ethics laws -- promises that were ultimately broken. Of course, when officials operate in a system that considers luxury gifts and vacations to be lawful perks of office, there is little incentive for change. 

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Jessica Tillipman is a Senior Editor of the FCPA Blog. She's the Assistant Dean for Field Placement and Professorial Lecturer in Law at The George Washington University Law School, where she teaches an Anti-Corruption seminar. She also advises companies on FCPA compliance and government procurement-related issues. She can be contacted here.