As President-elect Ronald Reagan's aides assemble the next cabinet, they have been frustrated in their efforts by a new version of an old Biblical lesson: It may be easier for a camel to pass through the eye of a needle than for a rich man to accept a job in the Reagan administration.
Some of the cabinet candidates have been forced to hole up with teams of lawyers and accountants to make sure they comply with detailed federal ethics statutes. And they have had to face the fact that a presidential nominee's financial statements become public property during the Senate confirmation process.
"Broadly speaking, I don't think anyone could be against ethics," said Reagan press spokesman James Brady. But there is a widespread feeling that the ethics requirements go too far, he and other Reagan aides say.
"I think there is much that is required that is unnecessary and I would hope that the whole subject would be reviewed in due course," says William French Smith, the prominent California attorney chosen by Reagan as the next attorney general.
The ethics rules affecting the Reagan cabinet arises principally from two federal laws. One is the longstanding conflict-of-interest statute, Section 208, Title 18 of the U.S. Code, which makes it a crime for a federal official to take part in a decision that affects his or her personal financial interests.
The second is the Ethics in Government Act of 1978, passed in the wake of the Bert Lance controversy. This act requires the public disclosure of a nominee's sources of wealth, and also spells out exact rules that nominees must follow if they want to hold on to stocks, property or other assets without violating the conflict-of-interest statute.
Both the disclosure rules and the conflict-of-interest law have caused problems for would-be office holders.
One wealthy attorney offered an important federal job in the Carter administration didn't want his college-age children to know how rich he was, recalls Michael Cardozo, deputy White House counsel specializing in ethics questions. The lawyer feared the knowledge might weaken his children's drive to succeed. Rather than disclose the extent of his wealth, he turned down the job.
Fred F. Fielding, who is handling conflict-of-interest questions for the Reagan transition staff, says the incoming Reagan team members have been unhappy about disclosing their income sources to the public. Why not limit the information to the Senate committees that will consider their nominations, the incoming members have argued.
"Disclosure is a shock of cold water," says J. Jackson Walter, head of the Office of Government Ethics. "It's not the way of the private sector." t
The displeased Reagan team can blame President Carter, who required his cabinet nominees to disclose their wealth publicly, setting a standard that was adopted later when the 1978 law was passed.
A compromise in both Carter's policy and the law permits officials to disclose only the approximate size of each asset, not the exact amount. Assets are broken down into ranges, such as $101 to $1,000 or "more than $100,000," and this last category frees very rich office holders from documenting their fortunes -- some of Carter's cabinet members feared such information might attract kidnappers.
In addition to disclosure, some officials are obliged to sell assets to qualify for federal posts. Moon Landrieu, former mayor of New Orleans, faced a potential conflict of interest when President Carter named him to be secretary of Housing and Urban Development in 1979.
As Housing secretary, he could not keep his interest in several real estate properties that conceivably could be affected by his official actions at HUD. But selling them entailed a loss of about $5 million, he told the Senate Banking Committee.He sold them.
Although the loss was painful, he said he shrugged it off, telling his wife and nine children, "You never had it, so you ain't going to miss it when you don't collect it."
It is possible for office holders to keep stock or other assets, although the rules are strict.
A classic problem arose with the nomination of David Packard as deputy Defense secretary in 1969. He owned $300 million worth of stock in Hewlett-Packard Co., the defense electronics firm he founded, and he couldn't sell it all at once -- that would deflate the stock price, hurting him and his company.
So he created a unique "blind trust," putting his stock in the hands of independent trustees and instructing them to sell off enough of it to keep the value of his holdings from exceeding the $300 million limit so he wouldn't profit from his company's success while he was at DOD.
In theory, the blind trust removes the temptation for officials to misuse their authority, since they don't know what assets their trustees are buying or selling. The rules in the 1978 ethics law are intended to prevent abuse of blind trusts.
A trustee may not be a relative, former employe or business partner -- a friend or former law partner is acceptable. The law also restricts would-be officials from puting large blocks of one stock or a large property into a blind trust. An acceptable blind trust must be diversified according to a specific formula in the law, Walter says.
Assets that are included in an approved blind trust don't have to be disclosed publicly, however, and an official is immune from conflict-of-interest charges involving these assets.
None of this helps a corporate executive who owns a large block of stock, however, and that describes several of Reagan's cabinet choices and some who were reportedly considered for the cabinet.
Sol M. Linowitz, Carter's Middle East peace negotiator, owns a wealth of Xerox Corp. stock from his years as the company's treasurer. The rules require him to disclose his Xerox holdings and take no official actions that could affect them.
That's not a difficult commandment for Linowitz to observe, in his particular post, Walter says. But it wouldn't have been so easy for Walter B. Wriston, chairman of Citicorp, who reportedly was under consideration to be Reagan's Treasury secretary.
The latest Citicorp proxy statement shows Wriston with 104,499 shares of his company's stock, which is worth about $2.2 million at the current market price.
Wriston could sell the Citicorp stock, but that would have saddled him with a heavy, unanticipated tax bill. If he kept it, he would have had to disqualify himself from any actions as Treasury secretary that could affect the interests of Citicorp, the nations's second-largest bank and a world-wide financial power.
Could Wriston have disqualified himself from questions involving the Chrysler loans, federal aid to New York City, the impounded Iranian assets and policy toward South Africa -- all areas where Citicorp has an interest -- and still have earned his pay at Treasury?
The question was asked frequently in the days before Reagan announced his first cabinet selections. Whether Wriston was a serious contender isn't clear to outsiders, since he says he was never contracted by Reagan aides about the post.
In any case, the job went to Donald T. Regan, chairman of Merrill Lynch & Co., the brokerage firm. If his large Merrill Lynch holdings are a major part of his overall wealth, he will either have to sell them or declare them and promise to take no actions that could affect Merrill Lynch. That's not a simple task, some ethics law experts say.
The ethics rules and other laws can confront prospective office holders with heavy financial losses. Some top Reagan aides hoped to persuade George Shultz, who was Treasury secretary under former President Richard Nixon, to become secretary of State now. But Shultz says he's happy as president of the Bechtel Group construction conglomerate.