By Anita Kumar
Washington Post Staff Writer
Wednesday, January 6, 2010; B03
RICHMOND -- Virginia's incoming governor, Robert F. McDonnell, said Tuesday that he will allow all his Cabinet secretaries to serve on corporate boards, an unusual practice that is banned by the federal government and some states.
McDonnell's comments came as he continued to defend his decision to allow his newly appointed secretary of commerce and trade, Robert Sledd, to sit on three corporate boards after the two men take office next week.
Sledd, a former businessman from Richmond, said in an interview late Tuesday that he will continue to donate the $200,000 salary he receives from the boards to charities.
"I think I can make a difference," he said. "I don't want to give up what I am already doing. It's important for me to give to those organizations."
The employment arrangement violates no Virginia law, but some ethics experts say the dual roles could create a conflict of interest for Sledd and give the corporations that pay him an unfair edge in the state.
"If he wants to come in as commerce secretary, he should come in with a clean slate," said Bob Edgar, president of Common Cause, a nonprofit group in Washington that monitors government ethics issues. "He should divest himself of these relationships even before any conflict comes up."
Meredith McGehee, policy director at the Campaign Legal Center, said federal law prohibits U.S. Cabinet secretaries and other federal officials from serving on corporate boards. Each state has different laws, but Virginia does not ban such service.
McDonnell (R) said he does not foresee any conflicts, but that if any arose, Sledd would recuse himself.
"If there were any conflict from the boards he's going to stay on, then he would obviously not be able to participate in any decision making," McDonnell said. "But we've looked at those boards, and we don't think there's going to be any conflict."
McDonnell said that if Sledd recuses himself from an issue, the administration would make the arrangement public. "Sure, we'll do that, absolutely," he said.
If confirmed by the General Assembly, Sledd will oversee 13 agencies that regulate business policy and recruitment.
Senate Majority Leader Richard L. Saslaw (D-Fairfax), who serves as chairman of his chamber's Labor and Commerce Committee, said he has concerns about Sledd's board service.
"If you're serving on the board, you can't serve two masters. What if we formulate a policy that's good for the commonwealth but not good for his company?" Sledd said. "He probably needs to decide which one he wants more."
But Hugh Keogh, president and chief executive of the Virginia Chamber of Commerce, said he doesn't have a problem with the arrangement because the commerce secretary's job is largely marketing. "It's not a regulatory institution" he said.
Sledd serves on the board of two Richmond-based companies: tobacco giant Universal, since last year, and medical supplies distributor Owens & Minor, for two years. He has served on the board of Louisiana-based SCP Pool (now Pool Corp.) since 1996. He spends 10 to 15 days a year on the jobs.
He said he receives about $200,000 a year in compensation altogether, along with stock options.
Sledd said he donates hundreds of thousands of dollars to about 60 charities each year, including Homeward and the Healing Place, which both help the homeless, the Better Housing Coalition, Virginia Supportive Housing and Center Stage. He said his board services enable him to give to charity.
Sledd said he also offered last week to forgo his state salary, after he saw how small his budget will be, as a way to hire more people. McDonnell and Sledd said they have not agreed on whether he will be paid or how much.
McDonnell said Tuesday that he will cut the salaries of all of his Cabinet secretaries by about 5 percent for about six months to save the state money. Secretaries make about $150,000.
Sledd is a former chief executive of Performance Food Group, a food distribution company with revenue of more than $9 billion.
Sledd said he told McDonnell before he accepted the job that he would only take it if he could continue serving on the boards and donating to charities. He said McDonnell checked with the attorney general's office before he agreed to let him.
"If I felt there was any conflict, I wouldn't do it," Sledd said.
McDonnell said Sledd's board service ensures he will keep up to date on problems facing businesses.
"Everybody comes into public service . . . having other interests outside public service," McDonnell said. "We all have other personal interests outside our government jobs."
Staff writer Rosalind S. Helderman and staff researcher Meg Smith contributed to this report.