Promoting Government Accountability at Home

Overview

While the United States has a comprehensive and mature system of laws and regulations and unparalleled transparency to help ensure the accountability of the U.S. government to the American people, numerous corruption scandals have underscored the need for vigorous and credible action to restore the public’s trust.  In the 2006 U.S. mid-term elections, more than 40 percent of those responding to exit polls identified corruption and ethics in government as more important than any other issue, including the war in Iraq.  TI-USA’s recent advocacy has focused on the accountability of funds committed to bringing the United States out of the financial crisis, reforming government contracting, freedom of information, conflicts of interest and congressional ethics.

 

 

Accountability and the Financial Crisis

US Government efforts to revive the ailing US economy include rapid infusions of large sums of funds into financial institutions (e.g., TARP), job-creating investments, and entitlements (e.g.,, the Stimulus). The enormity of the scale of financial flows and the urgent need for rapid disbursement heightens the risk of corruption, waste, and mismanagement. Transparency International-USA urges the inclusion of strong and explicit transparency and accountability mechanisms and effective oversight in the recovery efforts.

Troubled Assests Relief Program

The Troubled Assets Relief Program (TARP) gives jurisdiction to the Secretary of the Treasury to purchase troubled assets, purchase/insure securities and mortgages, and to purchase other assets from financial institutions in order to restore liquidity and stability to the financial market.


Proper, transparent use of TARP funds is essential to restore stability and rebuild public trust in the U.S. financial system.


Recognizing this, in January 2009, after confirmation of Treasury Secretary Tim Geithner, the Department of the Treasury announced a policy of posting all new investment contracts related to the TARP to a new TARP-related website within five to 10 business days so that citizens can see how tax dollars are being spent.  For contracts already completed, documents will be posted on a rolling basis.  Additional reforms have been promised, although action has been slow.  In addition, numerous reports, including those issued by the General Accounting Office, TARP Congressional Oversight Panel, and the Treasury’s Special Inspector General for TARP (SIGTARP) have noted the urgent need for greater transparency and accountability in:

  • The influence of lobbies on the TARP,
  • The plan for spending funds under the TARP,
  • The decision-making process for TARP fund allocation, and
  • Recipient reports on fund use.


TI-USA has called for Secretary Geithner to address these concerns and monitoring progress going forward.

 

American Recovery & Reinvestment Act (the Stimulus)

The American Recovery and Reinvestment Act of 2009 (the Stimulus) aims to stabilize the U.S. economy by providing tax relief and making supplemental appropriations for America’s roads and bridges, schools, health care, and local governments.  However, the rapid spending mandate under the Stimulus exponentially heightens the risk of waste and malfeasance to public funds, thus threatening the very purpose of the stimulus effort.


President Obama has made transparency and accountability a centerpiece of the Stimulus effort by introducing:

  • A centralized website that will track how, when, and where stimulus funds are spent, (Sec. 1526)
  • Requirements for chief executives overseeing high-risk infrastructure funds to certify their proper use, (ARRA Sec. 1511)
  • Regular reporting by government agencies and government oversight bodies on the use of funds, (ARRA Sec. 1512 - 1515)
  • A Recovery Accountability and Transparency Board to coordinate and conduct oversight at the White House level, (Sec. 1521 – 1530)
  • A Recovery Independent Advisory Panel composed of non-governmental experts to advise the Board on prevention of fraud, waste and abuse of stimulus funds, (Sec 1541 – 1546)
  • Protections for state and local government and contractor whistleblowers, (Sec. 1553) and
  • Special attention to the manner in which contracts under the Stimulus are awarded.   (Sec. 1554)

TI-USA issued recommendations to the Senate as the Stimulus Bill was being drafted, seeking to strengthen the controls introduced in the Bill, and it continues to monitor the Bill’s transparency and accountability provisions.

Reforming Government Contracting

As the world’s largest purchaser of goods and services – with an annual procurement budget of over U.S.$500 billion (and growing) – the U.S. government has an obligation to ensure that taxpayer dollars are not diverted due to corruption and fraud. Clean procurement has been a TI-USA priority focus due to the significant amount of public funds at risk and their vulnerability to corruption. (See, for example TI-USA Review of U.S. Procurement for the Inter-American Convention).

Experts, including the World Bank, estimate that systemic corruption can add 20-25% to the costs of public procurement, resulting in inferior quality purchases and diverting scarce resources from productive uses. TI global experience demonstrates that corruption risk rises exponentially when large sums must be disbursed swiftly. Allegations of fraud and abuse in the Katrina disaster-relief efforts and in U.S. spending for Iraq and Afghanistan reconstruction – and billions more scheduled for infrastructure spending as part of the stimulus package – have heightened concern and the need for reform. (See TI-USA Recommendations on Procurement Controls for the U.S. Stimulus.)

TI-USA welcomed the Presidential Memorandum for the Heads of Executive Departments and Agencies – Subject: Government Contracting, issued in March 2009 by President Obama, requiring important reforms yielding the “best value for taxpayers.” The Office of Management and Budget (OMB) is to issue government-wide guidance to:

  • Maximize the use of full and open competition and limit sole-source and cost-reimbursement contracts;
  • Address inappropriate outsourcing of contracts to the private sector;
  • Strengthen oversight and management of all government contracts; and,
  • Conduct a government-wide review of existing contracts in order to identify those that are wasteful and inefficient and to formulate corrective action, including modification or cancellation.


Strengthening Rules for the Private Sector


Recognizing the importance of government contractor integrity, the U.S. has issued amendments to the Federal Acquisition Regulations or “FAR”:

  • Requiring a written code of business ethics and conduct;
  • Requiring mandatory, “timely” disclosure to the government when there is “credible evidence” to suspect a violation of criminal law related to the award or performance of the contract or subcontract;
  • Establishing a cause for debarment or suspension for “knowing failure” to report contract overpayments or violations of federal criminal law related to the award or performance of the contract or subcontract;
  • Setting minimum standards – as a contractual obligation – for internal control systems, such as regular internal review to detect criminal conduct and regular assessments of the code’s effectiveness; and,
  • Mandating “full cooperation” with government audits, investigations and corrective action.


These rules apply to contracts over $5 million with a performance period of 120 days or more, regardless of whether they are performed wholly outside the U.S. Small businesses are exempt form the training program and internal control system requirements only.


The amendments build on earlier compliance program requirements for most contractors and subcontractors to have ethics codes, training, internal controls and hotlines.

Ethics programs, internal controls and training were widely adopted after the 2002 Sarbanes Oxley Act and the 204 Federal Sentencing Guidelines and represent what TI-USA considers to be good practice for all prudent companies. They not only protect the company, but U.S. taxpayer expenditures.

Expanding Access to Information

In January 2009, President Obama, acting on his campaign commitments, issued the Presidential Memorandum on the Freedom of Information Act, ordering all U.S. government agencies and departments to “adopt a presumption in favor” of acting on Freedom of Information Act (FOIA) requests.  Reversing a Bush Administration policy restricting access, the President noted that “[i]n responding to requests under the FOIA, executive branch agencies should act promptly and in a spirit of cooperation, recognizing that such agencies are servants of the public.”  TI-USA welcomed the Executive order.

The FOIA gives citizens the right to obtain government information and establishes a general presumption that all records in the possession of the agencies and departments of the U.S. Executive Branch should be accessible to the public.  If an agency denies a request, the burden of proof is on the government to demonstrate that the information falls under one of nine statutory exceptions to the rule requiring it to provide the records requested.

In the Clinton Administration, the government’s capacity to invoke discretionary exceptions was limited.  The government had the burden of demonstrating that foreseeable harm would occur from disclosure.  The Bush Administration reversed that presumption, permitting the government to determine whether there is a “sound legal basis” for relying on an exception to withhold information.

President Obama’s Executive Order on Presidential Records also reversed prior restrictive practices with respect to the use of executive privilege to limit access to historic documents.  TI-USA welcomed the Executive order.

Closing the Revolving Door

In his first day in office, President Obama responded to long-standing public concern about the undue influence of special interests on public policy and decision-making by issuing an Executive Order on Ethics Commitment by Executive Branch Personnel that establishes stringent new rules for those who serve in his administration.  The order prohibits high level officials in the administration from accepting gifts from lobbyists and imposes numerous restrictions on their ability to lobby the government after leaving public service.  The order also contains “reverse” revolving door provisions preventing lobbyists who join the Administration from participating in matters related to their former employers.  The Office of Government Ethics is tasked with reporting annually on implementation of the order.  TI-USA welcomed the Executive order.

Congressional Ethics and Lobby Reform

Public pressure, including from TI-USA and a coalition of non-profits from across the political spectrum, led to the adoption of rules to strengthen congressional ethics and lobbying requirements.  In 2007, Congress enacted The Honest Leadership and Open Government Act, which is widely regarded as the most significant reform measure on these issues in a generation.  Its provisions:

  • increase transparency by requiring lawmakers to disclose “earmarks” (e.g., spending measures for favored projects);
  • lengthen the cooling off period from one to two years before former Senators can engage in lobbying (in the House, the cooling off period remains one year);
  • prohibit members of Congress and their staff from influencing hiring decisions by lobby firms on the sole basis of partisan political affiliation;
  • require lawmakers to disclose small campaign contributions from numerous givers that are “bundled” into large packages by lobbyists; and
  • ban most lobbyist-paid gifts and travel to members of Congress and requiring lobbyist to certify that they did not provide or direct prohibited gifts or travel to members or staff.

The lobbyist certifications were part of a package of amendments to the Lobbying Disclosure Act (LDA) that required more frequent (quarterly) filings, additional information (especially on political contributions activity), and timely public access over the Internet (previously only provided by the Senate).

Following passage of the Act in 2008, the House created the first independent office to oversee House ethics.  The new Office of Congressional Ethics (OCE) is comprised of a six-member panel of non-lawmakers and has the power to initiate and conduct ethics investigations and issue reports and recommendations to the House Ethics Committee.  For more information on the OCE, including quarterly reports and referrals to the House Committee on Standards of Official Conduct, see www.oce.house.gov.


Judicial Integrity

On June 8, 2009, the Supreme Court ruled that elected judges must recuse themselves from participating in cases where a party with an interest in the outcome of the case has a “significant and disproportionate influence” in electing the judge to office. Noting the danger of actual or even the appearance of bias, the Court held 5-4 in Caperton v. A.T. Massey Coal, et al. (08-22), that a state court justice who remained involved in a lawsuit filed against a company whose chief executive had been a major contributor to the justice's election campaign deprived the other side of the constitutional right to a fair trial. Writing for the majority, Justice Kennedy wrote: “Just as no man is allowed to be a judge in his own cause, similar fear of bias can arise when – without the consent of the other parties – a man chooses the judge in his own cause.” TI-USA participated in the case through an amicus filing.