One thing the McDonnell gift kerfluffle has highlighted is the need for a comprehensive review of our conflicts of interest laws, primarily the gift rules and disclosure requirements.
Unlike the Federal regime and some other states, Virginia is relatively lenient when it comes to gift rules. Members of the General Assembly are allowed to accept gifts from any source, but are required to disclose all gifts they receive that have a value of more than $50.
Those rules are wide enough to drive a gold plated BMW through. And that’s part of the problem – it certainly led to the issues Bob McDonnell is dealing with. The rules are very loose, but they were also designed to be very loose. Rules that are too strict do have a potential to damage a General Assembly member’s ability to do his job, or would layer yet another costly and time consuming disclosure process on already overworked part-time legislators. Whatever reform we look at needs to tighten up the rules, but also must be workable and must make sense.
We’ve already started to see some suggestions of reform. Terry McAuliffe wants to ban all gifts worth more than $100 to members or their families. Delegate Bob Marshall goes in the opposite direction, tightening up disclosure requirements by requiring anything over $100 be reported within 5 days, and that all gifts from companies or individuals having business before Virginia or the body to which the member belongs be disclosed. I think there are flaws in all of these proposals, for a variety of reasons.
I’ve come up with my own proposal, which I believe is superior to TMac’s and Sideshow Bob’s. My solution to the problem strengthens the disclosure rules, tightens the timeline, focuses on the real potential conflicts issues and balances the need for disclosure with the creation of a bureaucratic boondoggle for members.
Before going over proposals, it’s important that we talk about why we have disclosure requirements at all. What’s the point? Why not just ban gifts outright?
Disclosure does two things very well. First, it allows for oversight by independent third parties. Disclosure puts legislators on the spot and makes them have to defend when they’ve accepted gifts. Lists of gifts are a gold mine for opposition researchers, bloggers and journalists, many of whom don’t scruple to dig through a gift list to find some plums to bash political opponents with. Second, because legislators know they may have to deal with explaining gifts at some point and thus that deters many from accepting the more questionable ones. So disclosure provides both oversight and deterrence.
Banning gifts outright also doesn’t work, because anything could be considered a gift, including things a legislator may need to do their job. If someone wants a legislator to read a book and provides them with a copy, that’s a gift. If they want a legislator to speak at their conference and are willing to cover his travel cost, that’s a gift. Even handing someone a pen could be considered a gift. There has to be some common sense here, and a total ban isn’t common sense. It’s a knee-jerk overregulation. Even banning over a certain threshold has its problems.
So what’s wrong with the current system? As the McDonnell issues have highlighted, the gift disclosure requirements are focused solely on the legislator, not their family. They gift requirements also only deal with gifts, not things like loans (which can easily become gifts if they aren’t repaid). Disclosure is only required on a yearly basis, so there’s no way to hold someone immediately accountable for gifts they’ve received if they’re win the current calendar year and nobody has reported yet.
So here’s my proposal:
1) Disclosure of all gifts of $500 or more to the official and members of his household. This includes just the people he lives with – spouses, partners, kids still at home. The primary reason for restricting it to household is that, besides the fact that someone you live with and knows where you sleep has far more influence on you than someone who doesn’t, is that it’s difficult for the member to know when someone receives a gift if they don’t see it. This is especially true for legislators with adult children. And by using household, rather than ‘family,’ you get around sticky legal issues with gay legislators.
2) Increase the frequency of disclosure from annually to quarterly. Once a year just isn’t enough, but Bob Marshall’s plan of “within 5 days” is far too frequent. Quarterly is more fair and more reasonable.
3) All gift disclosures must be made public on the General Assembly website, with full searchability – no PDF lists. It is unbelievable that even today, unless you’re using VPAP’s site, there is no official website that allows for searching of gift disclosures. That needs to change. This should be something available on the GA website, not done through third parties, even though VPAP is awesome.
4) Loans from non-institutional lenders and non-family members must be disclosed if they are greater than $10,000 and the loan repayment term is either undefined or longer than the term of office of the recipient. Loans from institutional lenders that include special “VIP” interest rates or repayment terms need to be disclosed. A “loan” from a non-institutional lender that doesn’t include repayment terms, or the repayment terms are years down the road isn’t really a loan. It’s a gift. And since anybody can call any gift of money “a loan” if someone finds out about it, these rules must be tightened up. And, as we saw in the Countrywide scandal, even institutional lenders sometimes play these games, so they need to be included.
5) Penalty for failure to disclose violations should include forfeiture of the gift (if tangible goods) and disgorgement (if money). If the gift is given to a household member, the official should pay a penalty equal to the value of the item that wasn’t disclosed. On the flip side, there should be a safe harbor provision that allows a candidate to amend a filed report within one year without penalties. Bottom line should be if you accept a gift and don’t report it, you’re going to lose the gift. Period. So if you really want that framed Redskins jersey signed by RG3, report it.
6) The gift amount of $500 should be reviewed and indexed to inflation every 10 years without requiring General Assembly action. This ensures that the number continues to make sense and isn’t eaten up by inflation to the point where officials are reporting every cup of coffee from Starbucks someone gives them. Not requiring GA action ensures this actually happens without getting caught up in politics.
Will these rules stop everything? No. There is no way to do that, because money is like water – it will always find the cracks. But these rules would address most of the egregious gift issues we’ve seen in the media recently, appropriately balance the need for transparency with the harm of imposing a high paperwork burden on our officials and – most importantly – would go a long way towards restoring the public trust in our elected officials.
That’s what this is all really about. Trust. The current mess of gift scandals has eroded what little public trust remained in our elected officials. And as we face an electorate that is more cynical and more frustrated than any in recent memory, we can’t afford not to take action to address this concern. At the same time, we need to develop a system that is workable, makes sense and doesn’t impose a ridiculous burden on our elected officials.
