In the video below, Government Ethics Associate Reporter Richard W. Painter discusses the treatment of gifts to and financial transactions and relationships with public servants. Included below the video is the Black Letter and Comment from the 2018 Annual Meeting draft.

Project Feature: Government Ethics – Gifts From and Financial Relationships With Prohibited Sources from The American Law Institute on Vimeo.

§ 201. Restrictions on Gifts, Financial Transactions, and Financial Relationships

A public servant should not solicit or accept any gift or engage in any financial transaction or financial relationship under circumstances in which a reasonable person would infer that the gift or transaction could affect the public servant’s performance of official duties.

Comment:

a. Purpose. The restrictions on gifts to and financial transactions and financial relationships with public servants are intended to avoid the possibility that the public servant might be influenced by the gift or financial benefit to take or desist from taking official action, or appear to take or desist from taking official action. Bribery is one of the oldest problems in government ethics. See John T. Noonan, Jr., Bribes: The Intellectual History of a Moral Idea (1984) (tracing incidents of bribery and efforts to combat bribery over 2000 years). Bribes and illegal gratuities are prosecutable as crimes, but convictions may be hard to achieve because of the difficulty of proving, under the “beyond a reasonable doubt” standard the criminal law requires, actual quid pro quo arrangements in which a gift is given in exchange for or in response to an official decision. Moreover, in many instances, there is no actual quid pro quo, but the gift may nonetheless subtly influence the public servant’s official decisionmaking or appear to do so. Gifts or financial benefits provided even without strings attached may cause a grateful public servant to be unduly favorably disposed to his or her benefactor’s interest in a government action. So, too, the acceptance of such gifts or benefits can create an appearance of favoritism that undermines public confidence in government. By prohibiting gifts, financial transactions, and financial relationships in circumstances in which a reasonable person would infer that the gift, transaction, or relationship could influence public decisionmaking, ethics rules can deter both actual corruption and undue influence short of criminal misconduct and thereby promote public confidence in the integrity of government.

b. Ethics principles, criminal laws, and other regulations. These general principles impose obligations separate from the prohibitions on bribes and gratuities and attempted bribes and gratuities in criminal law. A gift or transaction that is not a bribe or gratuity under the criminal law may still violate ethical restrictions. So, too, a gift or transaction that technically complies with government ethics rules can still be prosecuted as a bribe or gratuity in situations in which the facts suggest that the elements of those crimes have been met, for example because there is a quid pro quo exchange of a technically permissible gift for official action by a public servant. Federal, state, and local laws and regulations may impose additional restrictions on the financial relationships between specific categories of public servants and certain persons or entities.

c. Disclosure. This Section is used to determine whether a public servant may or may not accept a gift or enter into a particular transaction. Whether ethics rules should require a public servant to disclose those gifts or transactions that are permitted is a separate question. For example, a gift above a threshold level from a close personal friend might be permitted under these Principles but it might still have to be disclosed on an annual or other financial-disclosure report required under applicable laws and regulations. An important purpose of such disclosure is to assist the public in monitoring compliance with the principles set forth here governing gifts and transactions. The role of disclosure in securing compliance with ethical restrictions is addressed more fully in Chapter 6 of these Principles.

d. Circumstances suggesting an improper gift or financial transaction. The most common circumstance in which a reasonable person would infer that a gift or financial transaction could affect a public servant’s judgment is when the gift comes from or the transaction is with a person seeking official action from, doing business with, or conducting activities regulated by the public servant’s agency, or whose interests may be substantially affected by the performance or nonperformance of the public servant’s official duties. These are considered to be “prohibited sources” from whom gifts and with whom transactions are restricted unless it is clear that the gift or transaction has no connection with the public servant’s official position. “Prohibited source” is defined and the concept more fully examined in §§ 211 through 215 of these Principles.

e. Gifts motivated by official position. A public servant must not solicit and probably should not accept any gift or any advantage in a transaction in circumstances in which a reasonable person could infer that the gift or transaction is motivated by the public servant’s official position. This prohibition applies regardless of whether the gift is given by a “prohibited source.” Some jurisdictions may choose to prohibit acceptance of these gifts, although doing so involves a subjective inquiry into the intent of the gift-giver. Another approach is to prohibit only solicitation of gifts given because of official position, but not their acceptance if there is no solicitation and the gift-giver is not a prohibited source. Application of such a solicitation prohibition would focus on whether the public servant intended to use his or her official position to solicit the gift.

f. Scope of gift restriction. Restricted gifts include, inter alia, (i) free admission to social functions or other events for which other attendees pay admission, if a reasonable person would infer that the acceptance of free attendance could influence the public servant’s official actions; and (ii) free travel, meals, or lodging provided by a prohibited source. Exceptions may be made to the restriction on free admission if the public servant’s agency or department determines that it is in the public’s interest for the public servant to attend the event. Similarly, the public servant’s agency or department may, consistent with applicable law, authorize acceptance of travel, meals, and lodging provided in connection with official business. These restrictions and exceptions are discussed more fully in §§ 216 and 217

g. Scope of restriction on financial transactions and financial relationships. (i) A public servant may engage in consumer transactions, including the purchase of goods and services, only on the same terms that are available to the general public. (ii) A public servant may engage in personal financial transactions, including borrowing and lending, only on the same terms that are available to the general public or that would be agreed upon by similarly situated parties in an arm’s-length transaction. (iii) A public servant may engage in business transactions and investments only on the same terms that would be agreed upon by similarly situated parties in an arm’s-length transaction, and should not accept business or investment opportunities that are not also available to similarly situated persons who are not public servants. (iv) Similarly, a public servant may provide professional and other services for compensation only if the consideration paid to the public servant and other terms of the agreement for services are the same as the terms that would be obtainable by similarly situated service providers who are not public servants. Compensation should not be paid to the public servant for services by the public servant or anyone else by a person seeking to influence the government of which the public servant’s agency or department is a part, and the compensation should not be enhanced because of the public servant’s official position.

h. Gifts from and transactions with friends and family. A public servant may accept a gift or advantage in a transaction from a family member or personal friend who is a prohibited source but only in circumstances in which a reasonable person would conclude that it is motivated solely by the family relationship or personal friendship and not by the public servant’s official position.

i. Gifts to and transactions involving spouses and dependents of public servants. A public servant should discourage a spouse, dependent, or other person living in the public servant’s home from accepting a gift or other advantage that the public servant should not accept. To the extent practical, a public servant should do the same with respect to persons with whom the public servant has an engagement to marry or a long-term relationship.

j. Gifts between public servants. Gifts and financial transactions between public servants who are employees of the same agency or department should be permitted only in circumstances in which a reasonable person would not believe that the gift, financial transaction, or financial relationship creates a risk of favoritism or other distortion of decisionmaking within the agency or department. In general, gifts from subordinates to superiors—other than nominal gifts given at holidays or ceremonial occasions when gift-giving is customary—should be prohibited.

k. Campaign-finance practices not covered. Campaign contributions or expenditures supporting or opposing the campaign of an elected official or a person seeking elected public office present many of the ethical concerns raised by gifts. To be sure, contributions are typically given to a candidate’s campaign committee rather than to the candidate personally, but the fact of political benefit to the candidate and the concern about undue influence are just the same. Campaign contributions and expenditures are, however, protected by the First Amendment. They are crucial for enabling candidates without independent means to run for office, and they provide an avenue for participation by politically engaged voters. Because of the special role campaign-finance activities play in our democracy, campaign contributions and expenditures are almost always separately regulated by campaign-finance laws rather than by ethical constraints. These laws also typically limit the use of campaign contributions to campaign-related activities, such as persuading and mobilizing voters, while barring their use for the personal expenses of candidates that would exist even if the candidates were not running for office. Campaign contributions and expenditures may also be subject to bribery, gratuity, and other applicable criminal laws.

l. Legislative and executive branches. These Principles do not distinguish between the legislative and executive branches, although some distinctions are made between elected and unelected officials (for example, with respect to political fundraisers, see §§ 216 and 217).

m. Part-time and advisory public servants. Although the concerns that gifts may improperly influence public servants’ decisionmaking or may appear to the public to do so apply to all public servants, certain categories of public servants—part-time government employees, individuals serving in purely advisory positions, public members of boards or commissions, uncompensated volunteers—may present special cases. Jurisdictions may choose to take a less restrictive approach to public servants in these positions.

n. Solicitation of gifts to charities, relief efforts, and similar causes. Public servants should not solicit prohibited sources to make gifts to charities, relief efforts, and similar causes benefiting third persons if there is a substantial personal benefit also for the public servant. Such a substantial personal benefit could involve the public servant’s name or that of a family member being associated with the charity, a family relationship or close personal friendship between the public servant and an individual who is an officer or employee of the charity, or a similar circumstance. Public servants may, however, solicit prohibited sources to make gifts to charities, relief efforts, and similar causes benefiting third persons if there is no substantial personal benefit to the public servant that is disproportionate to the benefit to the larger group of people who are the intended beneficiaries of the gift. Even when the public servant receives no private benefit, the public servant may not use public resources—including but not limited to the public servant’s official title, official letterhead, government e-mail account, or government computer—in making any such solicitation.

 

Richard Painter

Associate Reporter, Government Ethics

Richard W. Painter is the S. Walter Richey Professor of Corporate Law at University of Minnesota Law School.  From February 2005 to July 2007, he was associate counsel to the president in the White House Counsel’s office, serving as the chief ethics lawyer for the president, White House employees, and senior nominees to Senate-confirmed positions in the executive branch. He has also been active in the Professional Responsibility Section of the American Bar Association. He is a board member and vice chair of Citizens for Responsibility and Ethics in Washington as well as a founding board member of Take Back our Republic, a campaign finance reform organization.

Richard Briffault

Reporter, Government Ethics

Richard Briffault is the Joseph P. Chamberlain Professor of Legislation at Columbia Law School. His research, writing, and teaching focus on state and local government law, legislation, the law of the political process, government ethics, and property. In 2014, he was appointed chair of the Conflicts of Interest Board of New York City. He was a member of New York State’s Moreland Act Commission to Investigate Public Corruption from 2013 to 2014, and served as a member of, or consultant to, several city and state commissions in New York dealing with state and local governance.

Kathleen Clark

Washington University in St. Louis

Kathleen Clark, John S. Lehman Research Professor at Washington University in St. Louis, is a leading expert on legal ethics and serves on the D.C. Bar Rules of Professional Conduct Review Committee. She also teaches and writes about ethics standards for current and former government officials and government contractors as well as the law of whistleblowing. Her extensive academic work on government ethics and corruption has been cited in hundreds of books and articles, and her scholarship has been excerpted in casebooks. She has led ethics workshops in Nigeria, Venezuela, Russia, Japan, Poland, Australia & Canada and conducted in-person and web-based ethics training for federal, state and local agencies. Clark recently served as Special Counsel to the Attorney General of the District of Columbia; wrote an Ethics Manual for the District’s 32,000 employees; and provided advice on ethics, open government and campaign finance laws.

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