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Further Analysis of the Waters Case

As discussed in my prior posts (see here and here), the ethics investigative subcommittee does not allege that Representative Waters violated any rules simply by arranging the initial meeting with Treasury officials to discuss the a bailout of OneUnited and other minority-owned banks.  Instead, the subcommittee alleges that Waters violated the rules by her actions—or, more precisely, her inaction—following the meeting.  Specifically, the subcommittee states that Waters should have, but failed to, instruct her chief of staff to refrain from assisting OneUnited following the meeting.  (see Statement of Violation ¶ 47).

This claim appears to be based on two premises.  The first is that “all other actions [taken by Waters’ office], other than the initial request for a meeting with Treasury, were on behalf of OneUnited, not the NBA.”  (Subcommittee Memorandum of 7-15-10, at n. 51).  Exactly how the subcommittee determined who the actions were “on behalf of” is not clear.  Is this based on OneUnited’s motives (i.e., that its requests to Waters’ office were for its own benefit, not for the benefit of minority-owned banks generally), or on the motives of Waters and her staff, or on an objective assessment that OneUnited was the primary or sole beneficiary of the legislative efforts that were made to obtain a bailout?

The second premise is that Waters herself came to the conclusion, sometime after the Treasury meeting, that she “should not be involved” with OneUnited’s requests for assistance.  This is based on Representative Frank’s recollection of a conversation he had with Waters sometime after the Treasury meeting.  The subcommittee interprets Waters’ statement as a “determin[ation] that it would be ethically improper for her to advocate on behalf of OneUnited.”

Based on these premises, the subcommittee concludes that it was improper for Waters’ staff to continue to assist OneUnited in its efforts to obtain legislation that would allow it to receive a bailout from the government.  Although the subcommittee does not contend that Waters herself did anything further for OneUnited, or that she was even aware of what her staff was doing in this regard, it holds her responsible for failing to prevent these efforts from occurring.  Specifically, in its Memorandum of 7-15-10 at pp. 3-4, it states:  “Despite previously instructing her Chief of Staff to work with the OneUnited executives, [Waters] failed to instruct her Chief of Staff that he should not advocate on behalf of the bank.”

The subcommittee’s theory is not as cut and dried as it appears to believe.  In the first place, it fails to draw a distinction between efforts to assist OneUnited in dealing with the Treasury Department or other executive agencies, which is casework, and efforts to assist OneUnited with obtaining legislation.  For the reasons discussed in my last post, it would have been inappropriate for Waters’ chief of staff to “advocate” on behalf of OneUnited with respect to executive agencies.  It is less clear, however, that Waters or her staff were required to recuse themselves entirely from involvement with OneUnited’s proposed legislative solution.

Under House rules and precedents, the circumstances under which a Member is supposed to refrain from voting on a legislative matter because of a personal financial interest are extremely limited, and it is largely up to the Member to determine when it is appropriate to do so.  If Waters was permitted to vote on matters related to OneUnited’s legislative solution (and the subcommittee has not suggested she was not), it would seem that her staff could properly monitor and discuss the status of the legislation with other congressional staff.

Moreover, the Ethics Manual suggests that a Member who faces a conflict of interest with regard to a legislative matter may be advised to refrain from taking an active role in the legislation, such as sponsoring a bill, even though she is ethically permitted to vote on questions regarding the particular matter.  It might be argued, therefore, that Waters’ statement to Frank that she “should not be involved” in the OneUnited matter was merely a recognition that she should not personally play a lead role in sponsoring or pushing the legislation, rather than an acknowledgment that her staff should have no involvement either.

No doubt it would have been preferable, from the standpoint of avoiding the appearance of impropriety, had Waters instructed her staff to avoid or at least limit any involvement in matters relating to OneUnited.  If the investigative subcommittee had merely admonished Waters for failing to take this course (or, alternatively, for failing to seek specific guidance from the Ethics Committee), it would be hard to quibble with its findings.  One could make a similar (indeed, perhaps stronger) argument that Waters ought to have done greater due diligence regarding OneUnited’s interest before agreeing to set up the initial meeting with Treasury.

Whether these are the types of ethical mistakes that merit formal charges, however, is another question.  For example, the subcommittee cites the Caribe News case, in which Representative Charles Rangel was held responsible for the actions of his chief of staff.  In that case, Rangel had authorized his chief of staff to sign travel forms on his behalf, and the chief of staff had submitted forms containing information that he knew, and Rangel knew or should have known, was false.  The Ethics Committee found under those circumstances that Rangel could not escape responsibility for the clear ethics violation committed by his chief of staff.

Rangel’s case is distinguishable from Waters’ situation.  Rangel had delegated a personal ethical responsibility to his staff; Waters did not.  Moreover, Rangel’s case involved a clear cut ethical duty, ie, to disclose any corporate sponsors of the event which he was attending, and there was strong evidence to suggest that Rangel knew or should have known both that there were corporate sponsors of the event and that it could not be approved if there were corporate sponsors.  On the sparse record before the Waters subcommittee, there is little comparable evidence of “deliberate ignorance” with respect to her staff’s activities.  It is not clear that Waters expected her staff to remain involved in the OneUnited matter, much less that she knew or should have known that they would be active advocates for OneUnited (or, for that matter, that they in fact were).

Finally, in Rangel’s case the investigative subcommittee did not press formal charges, but merely recommended that the Ethics Committee admonish him in its final report.  I have to assume that Waters was offered a similar deal by the investigative subcommittee, but declined to take it.  This may explain why the subcommittee felt obligated to proceed with formal charges.  Nevertheless, this strikes me as a borderline case at best.

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