The Federal Conflict-of-Interest Law

The Bribery, Graft, and Conflicts of Interest Act, signed October 23, 1962, rewrote the federal ethics laws. Its central provision, 18 U.S.C. 208, makes it a crime for an executive branch employee to participate personally and substantially in a particular government matter that affects the financial interests of the employee, a spouse or minor child, a business partner, an organization the employee serves, or a prospective employer. Violations can bring up to five years in prison, though most cases are handled administratively.

The law allows waivers when an interest is too small to affect the employee's work or when the need for the employee's services outweighs the risk. In practice, Senate-confirmed nominees sign ethics agreements with the Office of Government Ethics promising to sell holdings that could conflict, resign outside positions, or recuse from certain matters, and a certificate of divestiture lets them defer capital gains taxes on required sales. Related laws restrict outside payments for government work and lobbying by former officials.

A separate section, 18 U.S.C. 202(c), excludes the President, the Vice President, members of Congress, and federal judges from the conflict rule. The Justice Department concluded in 1974 that applying it to the President would raise constitutional problems, since a President cannot recuse from the duties of the office. Members of Congress are governed instead by their chambers' rules and judges by recusal statutes and codes of conduct. Supporters of extending the law to the President say the exemption invites conflicts, while others say the Constitution's emoluments clauses, disclosure, and elections are the proper checks.