Federal Communications Commission member James H. Quello told Congress yesterday he would dispose of $23,500 in stock which the agency's employees are prohibited to won under its conflict of interest rules.
Altough the staff of the House Commerce Subcommittee on Oversight and Investigations charged that the holdings represented conflict of interest, Quello told the subcommittee he had reported ownership of the stock each year since coming to the FCC and never had been told that the stock had been added to the agency's "prohibited" list.
"It is my understanding that the Civil Service Commission's annual review of my complete financial statement is for the express purpose of ensuring that I have no prohibited interests," Quello told the subcommittee.
"I had no knowledge of or reason to know that these stocks had been added to the prohibited list."
The holdings involved are 600 shares of Martin Marietta Corp., valued at about $20,000 as of last month; 100 shares of Pennzoil Corp., valued as approximately $3,200, and 100 shares of Gladding Corp., valued at about $300.
In the last three years, all three stocks have been deemed to come under a provision of the Communications Act of 1934 which bars agency members and employees from having any financial interest in any company subject to the provisions of the act.
The companies were added to the prohibited list for the following reason: Pennzoil because it owns shares of Aeronautical Radio, Inc., a firm which provides communications services for airlines: Gladding because it makes home stereo sets and Citizens Band two-way radios, and Martin Marietta because it has a division which produces communications systems.
"I'm anxious to avoid ll possibilities for appearances of future conflict and will promptly dispose of the stocks in question," Quello promised.
Ronald J. Cormier, a General Accounting Office auditor who worked with the subcommittee's investigators, said that agency employees who owned stock in the three companies were ordered to divest themselves of it.
"We fail to understand why the commissioner has not divested and why the Civil Service Commission has failed to question these holdings."
Quello was the only commissioner of seven independent regulatory agencies surveyed by the subcommittee staff who possessed stock holdings that were questionable.
Besides the FCC, those included in the study were the Consumer Product Safety Commission, Federal Power Commission. Interest Commerce Commission, Nuclear Regulatory Commissio nand Securities and Exchange Commission.
The subcommittee staff reported that "a substantial number" - 245 of 630 - high-level and temporary employees in the agencies had financial holdings and other interests in firms regulated by the agency which raised conflict of interest problems.
"These conflicts have resulted in part from a failure of the agencies to use appropriate standards in enforcing their regulations," the report concluded.
Waivers are freely granted and employees are rarely asked either to divest themselves of the stock or certify that they will not participate in matters affecting the company, the report said.