The White House has ordered all federal agencies to stop issuing ethics waivers that allow key officials to negotiate jobs with private companies while they are shaping federal policies important to the potential employers.
White House Chief of Staff Andrew H. Card Jr. issued a memo last week saying that, effective immediately, only the White House can approve such waivers. The administration portrayed the directive as part of an overall effort to strengthen government ethics.
But congressional sources and outside advocacy groups said the Jan. 6 memo appeared related to the recent job change of a top presidential adviser involved in last year's overhaul of Medicare. The official, Thomas A. Scully, took jobs last month with a law firm and an investment company that deal with health care. Scully was contacted by several companies while he was negotiating the complicated Medicare legislation approved by Congress in November.
Federal law generally bars presidential appointees such as Scully from discussing possible employment with firms involved in, or hoping to be involved in, matters handled by those officials. Scully, however, obtained a waiver from the Department of Health and Human Services, apparently without the White House's knowledge.
Card's five-paragraph memo did not explain the reason for the change in ethics rules. Asked last night whether the job search of Scully, or those of current senior administrators, concerned President Bush, White House spokeswoman Erin Healy said: "The reasons for the memo are pretty clear." She would not elaborate.
Scully's plans to leave the government, which he freely discussed for months as he negotiated the Medicare bill, prompted criticism from several congressional Democrats and liberal advocacy groups. They said some companies that wanted to hire Scully represent clients, including drug manufacturers, that had a stake in the legislation.
Card's memo suggests that parts of the government are lax in their ethics practices. It says "many agencies over time have delegated the authority to issue waivers far beneath the agency head." Some waivers, the memo says, were granted before Bush took office, leaving Cabinet secretaries vulnerable to the risk that they "would unwittingly rely on advice from an agency official that is tainted by a conflict of interest."
At issue is a law that forbids federal officials to work on matters in which they have a direct financial interest. Negotiating for a private-sector job is considered one kind of financial interest. The law, however, allows officials a waiver if they disclose their financial interest and demonstrate that the potential conflict is not "so substantial" that it would affect the integrity of their work.
Scully got such a waiver last May from HHS's associate general counsel for ethics. A longtime Washington fixture in health policy circles who also worked in the George H.W. Bush administration, Scully had said openly last year that he wanted to leave the administration after the Medicare bill's completion. He said he asked for the waiver after receiving unsolicited calls from law firms offering him jobs. He said he did not begin direct negotiations until Congress passed the legislation.
Scully announced his resignation in early December. He accepted a part-time position to build a health practice in the Washington office of the Atlanta-based law firm Alston & Bird LLP. He also agreed to work two days a week at Welsh, Carson, Anderson & Stowe, a New York investment firm specializing in telecommunications and health care.
In an interview last night, Scully said: "If I'm partly the cause for this, I feel badly. . . . If my noisy exit causes other people not to go into public service, it'll be a shame."
Scully said of Card's memo: "I don't blame them a bit. . . . If I was the chief of staff, I wouldn't want any surprises, too." He added, "I got the ethics ruling because I was doing it by the book."
Public Citizen, which filed an ethics complaint over Scully's departure, issued a statement calling Card's memo "a tacit admission that the Scully waiver had been mishandled." Frank Clemente, director of Public Citizen's Congress Watch, said the White House rules are "basically a half-step," centralizing such ethics decisions but not setting forth specific guidelines for when waivers are appropriate.