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Monday
Nov272017

Shruti Shah and Marian Currinder: Friends don't shower money and gifts on friends

Recently U.S. Senator Robert Menendez joined the (growing) list of politicians who have managed to beat back corruption charges despite engaging in ethically questionable behavior.

Like former Virginia Governor Bob McDonnell (about whom we’ve written here and here), Menendez claimed that the extravagant gifts he accepted over a number of years, including first-class travel, luxury hotel stays, and lavish vacations, were nothing more than presents from a good friend. Never mind the fact that he helped his good friend, Salomon Melgen, obtain visas for his foreign girlfriends, handle an $8.9 million Medicare overbilling dispute, and pressure the State Department to take actions to benefit Melgen’s business interests in the Dominican Republic. In the Menendez-Melgen version of events, these kinds of exchanges between good friends are routine.

Except that they’re not. Most of us don’t routinely spend thousands of dollars on our friends, and most of us are not in positions to wield political favors. Even so, the Menendez bribery and corruption case ended in a mistrial after jurors said they were unable to reach a verdict. Ten of the 12 jurors reportedly believed that the prosecution did not prove its case.

Without evidence of a direct quid-pro-quo, bribery and corruption are difficult to prove in the wake of the U.S. Supreme Court’s ruling in McDonnell v. United States, where the court narrowed the definition of what constitutes “official action” in corruption cases.

Following the McDonnell decision, former New York Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos saw their high-profile convictions overturned. And former U.S. Rep. William J. Jefferson, who was famously caught with $90,000 of bribe money in his freezer and was sentenced to 13 years (the longest prison term ever handed down to a member of Congress convicted of corruption charges), was released from prison after seven of the 10 counts against him were vacated. This does not bode well for federal prosecutors who are tasked with proving corruption in cases involving politicians and their wealthy friends.  

The McDonnell decision has likely made it easier for politicians to engage in ethically questionable behavior. Changing federal bribery laws in the current political climate seems like a monumental task. Gift laws in the 50 states, however, are remarkably varied and present many opportunities for reform. For example, many state laws exempt gifts from “personal friends” and make no distinction between friends and lobbyists. Other states exempt travel and hospitality expenses as long as 20 or 25 people attend an event. And lawmakers consistently reject efforts to tighten these laws. For example, the Virginia General Assembly tightened its gift laws earlier this year by approving an aggregate $100 annual cap on gifts, but lawmakers rejected amendments that would have modified the definition of “personal friend” and required more stringent disclosure.

In the absence of much stricter gift laws or precedent changing court decisions, what can be done? For one, politicians can simply pledge to not accept extravagant gifts from their friends. Politicians should treat gifts from friends the same as gifts from any other source. Aggregate limit and disclosure rules should apply across the board.

Unfortunately, lawmakers have shown little proclivity toward applying gift cap and disclosure laws to their wealthy, gift-bearing friends. This doesn’t mean that voters can’t still demand that they do so. Last summer, we launched the Virginia Integrity Challenge and asked all candidates running for statewide office and for the House of Delegates to voluntarily disclose on their campaign websites all gifts that they receive while running for or serving in office, including gifts given to their immediate family members.

We also asked them to disclose their campaign contributions and expenditures, and their personal financial disclosure forms. Candidates running for statewide office were asked to disclose their most recent federal and state tax returns, as well. We firmly believe that when candidates are transparent about their personal and campaign finances, citizens can make informed choices and hold those who serve them accountable.

We were pleased to report that candidates in almost 20 percent of all House of Delegate races pledged their support for the Integrity Challenge and provided links on their campaign websites to their disclosures. This level of support was an encouraging start and demonstrated that there are politicians who are willing to be proactively transparent, whether or not the law requires them to be. Our goal is to have these lawmakers establish new voluntary disclosure standards that will eventually become the norm.

No statewide candidate responded to our calls asking them to pledge support for the Virginia Integrity Challenge. While this was troubling, it was not altogether surprising. Candidates for Governor, Lt. Governor and Attorney General run higher profile campaigns, costing millions of dollars. Governor-elect Ralph Northam spent approximately $23 million on his campaign while his Republican opponent, Ed Gillespie, spent about $15 million. These lawmakers serve in a full-time capacity (unlike members of the General Assembly) and deal with a broader array of policy issues. Disclosure is all the more important for candidates running at this level, yet more difficult to achieve.

But it’s not impossible as long as the desire to campaign and serve transparently exists. We urge Governor-elect Northam to lead by example and disclose all gifts he and his immediate family receive, regardless of the source. We also urge the governor to revive ethics reform in Virginia and push to do away with friend exemptions in the state’s gift laws. These actions would go a long way toward assuring Virginia voters that their voices matter as much as those of the wealthy and politically connected. 

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Shruti Shah is a contributing editor of the FCPA Blog. She's the Vice President of Programs and Operations at Coalition for Integrity (formerly Transparency International-USA). She can be contacted here.

Marian Currinder is the Policy Director for the government accountability portfolio at Coalition for Integrity