Policies Underlying Disclosure
Members, officers, and certain employees must annually disclose personal financial interests, including investments, income, and liabilities.15 Financial disclosure provisions were enacted to monitor and to deter possible conflicts of interest due to outside financial holdings. Proposals for divestiture of potentially conflicting assets and mandatory disqualification of Members from voting were rejected as impractical or unreasonable.16 Such disqualification could result in the disenfranchisement of a Member’s entire constituency on particular issues.17 A Member may often have a community of interests with the Member’s constituency, and may arguably have been elected because of and to serve these common interests, and thus would be ineffective in representing the real interests of the constituents if the Member was disqualified from voting on issues touching those matters of mutual concern. In rare instances, the House rule on abstaining from voting may apply where a direct personal interest in a matter exists.18
Members of Congress enter public service owning assets and having private investment interests like other citizens. Members should not “be expected to fully strip themselves of worldly goods.”19 Even a selective divestiture of potentially conflicting assets could raise problems for a legislator. Unlike many officials in the executive branch, who are concerned with administration and regulation in a narrow area, a Member of Congress must exercise judgment concerning legislation across the entire spectrum of business and economic endeavors. Requiring divestiture may also insulate legislators from the personal and economic interests held by their constituencies, or society in general, in governmental decisions and policy.
As noted by the Bipartisan Task Force on Ethics:
The problem of conflicts of interest involves complex and difficult issues, especially with respect to the legislative branch. A conflict of interest is generally defined as a situation in which an official’s private financial interests conflict or appear to conflict with the public interest. Some conflicts of interest are inherent in a representative system of government, and are not in themselves necessarily improper or unethical. Members of Congress frequently maintain economic interests that merge or correspond with the interests of their constituents. This community of interests is in the nature of representative government, and is therefore inevitable and unavoidable.
At the other extreme, a conflict of interest becomes corruption when an official uses his position of influence to enhance his personal financial interests. Between these extremes are those ambiguous circumstances which may create a real or potential conflict of interest. The problem is identifying those instances in which an official allows his personal economic interests to impair his independence of judgment in the conduct of his public duties.20
Each situation must be reviewed on a case-by-case basis to determine if an actual conflict of interest exists. The Standards Committee has admonished all Members “to avoid situations in which even an inference might be drawn suggesting improper action.”21
Thus, public disclosure of assets, financial interests, and investments has been required as the preferred method of regulating possible conflicts of interest of Members of the House and certain congressional staff. Public disclosure is intended to provide the information necessary to allow Members’ constituencies to judge their official conduct in light of possible financial conflicts with private holdings. Review of a Member’s financial conduct occurs in the context of the political process. As stated by the House Commission on Administrative Review of the 95th Congress in recommending broader financial disclosure in lieu of other restrictions on investment income:
In the case of investment income, then, the Commission’s belief is that potential conflicts of interest are best deterred through disclosure and the discipline of the electoral process. Other approaches are flawed both in terms of their reasonableness and practicality, and threaten to impair, rather than to protect, the relationship between the representative and the represented.22
The House has required public financial disclosure by rule since 1968, and by statute since 1978. The Commission on Administrative Review noted: “The objectives of financial disclosure are to inform the public about the financial interests of government officials in order to increase public confidence in the integrity of government and to deter potential conflicts of interest.”23 The Bipartisan Task Force on Ethics cited two further goals underlying statutory disclosure requirements: (1) Requiring disclosure of only those items that are relevant to potential conflicts of interest; and (2) developing reporting requirements that avoid unnecessary invasions of privacy or excessively burdensome recordkeeping. In short, the financial disclosure requirements must effectively balance the privacy rights of the reporting individual with the governmental interests in informing the public and deterring conflicts of interest.24
15 Title I of the Ethics in Government Act of 1978, as amended, 5 U.S.C. app. 4 §§ 101-111.
16 See House Comm’n on Admin. Review, Financial Ethics, H. Doc. 95-73, 95th Cong., 1st Sess. 9-10 (1977) (hereinafter “Financial Ethics”).
17 Congress and the Public Trust, supra note 1, at 40.
18 House Rule 8, cl. 1; see Chapter 5 of this Manual for further discussion of this provision.
19 Congress and the Public Trust, supra note 1, at 47.
20 House Bipartisan Task Force on Ethics, Report on H.R. 3660, 101st Cong., 1st Sess. 22 (Comm. Print, Comm. on Rules 1989), reprinted in 135 Cong. Rec. H9253, H9259 (daily ed. Nov. 21, 1989) (hereinafter “Bipartisan Task Force Report”).
21 House Comm. on Standards of Official Conduct, Investigation of Financial Transactions Participated in and Gifts of Transportation Accepted by Representative Fernand J. St Germain, H. Rep. 100-46, 100th Cong., 1st Sess. 3, 9, 43 (1987).
22 Financial Ethics, H. Doc. 95-73, supra note 16, at 9.
23 Id. at 4.
24 Bipartisan Task Force Report, supra note 20, at 22; 135 Cong. Rec. H9259.