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Self-Dealing in Government: No. 1 Impediment to Reform

The public hears about the deluge of corrupting money in the system, but they need individual examples to understand.

Part of the Series

Truthout started this column with me last year to offer solutions for realistic reform in the federal government, one slice at a time. We tackled problems in various agencies – the Federal Emergency Management Agency, the Securities and Exchange Commission and especially the Department of Defense (DoD). We published a Kindle book with 39 columns on reforming the DoD called “Pentagon Solutions: How to Actually Get Control of Defense Spending.”

However, during the course of writing weekly columns on fixing government, it has become more and more clear that any legislative and executive branch attempts to reform the system can be easily thwarted by the large influence of money in the system. Like water finding its way through any slight crack in a foundation, money used for political influence will topple any well-meaning or even cynical attempts at reform until the foundation of our political system crumbles away and collapses. Even though the Solutions column offered realistic solutions for reform, it has become obvious, more now than in the past, that the burgeoning problem of influence peddling with money will doom real reform. As many Truthout readers know, the stream of influence money into our political and governing system has turned into a deluge over the past six months.

Now, we are entering what Washington calls “the silly season,” a presidential election year where serious governance falls by the wayside. Any credible column on reforming a part of the federal government would fade away as the news media discusses the latest in verbal gaffes and who is up and who is down in political process stories. Therefore, the Solutions column will spend the rest of this year, until the election, following the money that keeps realistic reform from succeeding and concentrate on exposing and explaining how self-dealing is the No. 1 problem that is preventing our government from working. In the past, using your government position for self gain has been described as influence peddling, conflict of interest or going through the revolving door. However, the rash of new money in the system has led to an unprecedented era of self-dealing with most restrictions washed away with the Supreme Court’s Citizens United decision and other efforts to disable any checks and balances in the system.

Self-dealing is a term usually used in business when a fiduciary makes decisions that are in his own self-interest instead of the company’s. Examples include insider trading or hiring unqualified friends or cronies. A legal dictionary describes self-dealing as:

The conduct of a trustee, an attorney, or other fiduciary that consists of taking advantage of his or her position in a transaction and acting for his or her own interests rather than for the interests of the beneficiaries of the trust or the interests of his or her clients.

Wikipedia has a more detailed explanation of how self-dealing corrupts a fiduciary:

Self-dealing is wrongful conduct by a fiduciary. A fiduciary is a person who has duties of Good Faith, trust, special confidence and candor toward another person. Examples of fiduciary relationships include attorneys and their clients, doctors and their patients, investment bankers and their clients, trustees and trust beneficiaries and corporate directors and stockholders. Fiduciaries have expert knowledge and skill and they are paid to apply that knowledge and skill for the benefit of another party. Under the law, a fiduciary relationship imposes certain duties on fiduciaries because a fiduciary is in a special position of control over an important aspect of another person’s life.

One important duty of a fiduciary is to act in the best interests of the benefited party. When a fiduciary engages in self-dealing, she breaches this duty by acting in her own interests instead of the interests of the represented party. For example, self-dealing occurs when a trustee uses money from the trust account to make a loan to a business in which he has a substantial personal interest. A fiduciary may make such a transaction with the prior permission of the trust beneficiary, but if the trustee does not obtain permission, the beneficiary can void the transaction and sue the fiduciary for any monetary losses that result.

These definitions can describe each and every federal worker, from members of Congress and cabinet secretaries to the lowest government purchasing agent. Each is also a fiduciary for the government with their clients being the American public. When any of these fiduciary agents makes decisions that benefit them instead of the goals of the government, they are self-dealing. In a book called “The Responsible Public Servant,” the authors describe self-dealing in government as “a situation where one takes an action in an official capacity which involves dealing with oneself in a private capacity and which confers a benefit on oneself.”

So, for the next 40 or so columns between now and the elections, we will look at our federal “fiduciary agents” and follow where the money is going, who it is buying and how the government is affected by the self-dealing corruption. There are many journalistic efforts this year to expose campaign contributions to see where they are from and where they are going through databases and aggregate numbers. The Solutions column will, instead, follow specific examples of individuals who are self-dealing for money for campaigns or jobs outside the federal government and follow the self-dealing trail to see how various parts of the government have been corrupted or injured. Weekly, individual stories will show the pattern and practices of self-dealing in various areas of the federal government. Once the elections are over, hopefully some modicum of governance will begin again. The overall self-dealing problem can hopefully begin to be reformed based on the knowledge gained from the accumulation of many examples of self-dealing in the system. The American public senses that the problem is there and hears about the deluge of corrupting money in the system, but they need individual examples to understand just how destructive this self-dealing is to our democracy.

One of the largest self-dealing government scandals revolved around one man, Jack Abramoff. Abramoff got his start running Republican Party college chapters where he met the likes of Ralph Reed and Grover Norquist. They became life-long friends and used their lobbying contacts to not only change the government to extreme conservative values, but did an enormous amount of self-dealing, influence peddling and self-enrichment. They became masters at manipulating the system and lobbying for their clients for political and self-gain.

The Abramoff scandals included self-dealing and influence peddling in areas such as Indian casinos, labor laws, and any other favor to their corporate clients to stymie government regulation or to cynically use government money to benefit their myriad of corporate clients. They made their lobbying foothold right when the Congress turned Republican in the election of 1994, and suddenly, the lobby shops in Washington needed lobbyists with very conservative credentials to talk to the new conservative powerhouses in the Congress. While Reed and Norquist managed to slip out of legal prosecution, Abramoff greatly overreached even the Washington tolerance for this type of self-dealing and ended up serving three years and six months for his crimes. Several Bush administration officials, other government employees and a member of Congress also went to jail.

I usually don’t read books of convicted felons because you expect the book to be mainly about why they didn’t do it and how they were wronged. Abramoff’s book, “Capitol Punishment,” has many pages dedicated to that, but he also lays out how they did the self-dealing and how cavalier the system was to quid pro quo situations such as campaign money for government favors.

When people complain about the revolving door in the federal government, where federal workers retire and go to work for the companies that they were overseeing in government, I have always told reformers that these companies are not hiring these people as much to go back to influence their colleagues, but instead, what these former federal workers did for the company’s cause while still in government – job payment for services rendered. Abramoff strikingly illustrates this in his successful attempts to buy members of Congress’ chiefs of staff while they were still in public employment. From his book:

Lavishing gifts on members and staff might attract public wrath, but if a lobbyist wants to control a Congressional office almost completely, it can be done without anyone ever knowing about it – through the hiring process.

Once I found a congressional office that was vital to our clients – usually because they were incredibly helpful and supportive – I would often become close to the chief of staff of the office. In almost every congressional office, the chief of staff is the center of power. Nothing gets done without the direct or indirect action on his or her part. After a number of meetings with them, possibly including meals or rounds of golf, I would say a few magic words: “When you are done working for the Congressman, you should come work for me at my firm.”

With that, assuming the staffer had any interest in leaving Capitol Hill for K Street – and almost 90 percent of them do, I would own him and, consequently, that entire office. No rules had been broken, at least not yet. No one even knew what was happening, but suddenly, every move that staffer made, he made with his future at my firm in mind. His paycheck may have been signed by Congress, but he was already working for me, influencing his office for my clients’ best interest. It was a perfect – and perfectly corrupt – arrangement. I hired as many of these staffers as I could and in return gained increasing influence on the Hill. But I was not alone in this method and it continues today, unabated by reform campaigns or public ire at the Congress.

This is a clear example of self-dealing on the part of the Congressional staffer and a breach of his or her fiduciary duty. Abramoff’s book has many examples, and while he was still in his early workings for the Republican advocacy group, he was stunned when the Reagan administration happily, after just one phone call, gave a naval base to a Democratic member of Congress, who said that he would deliver 13 crucial votes on the MX missile in exchange for the base. Abramoff could not believe that it was legal, but figured it must be all right for the president’s office to make the deal so easily. The more Abramoff did the dirty deals, the more unconcerned he became by the impact of what he was doing. “I left his office feeling dirtier than I had ever felt in politics before. Unfortunately, I would soon become used to it.”

Having worked with whistleblowers for years, I have always been fascinated with the moment when most of these whistleblowers are asked to do wrongdoing and have that “aha” moment where they decide to do the right thing. Abramoff had just the opposite reaction – none of his ghastly influence peddling seemed to touch his moral code, though as a self- described Orthodox Jew, he claimed to be a deeply religious man. It took a stint of prison time for the type of self-reflection that is often washed away in Washington’s self-dealing culture:

While the impact of campaign funds on legislation is often overplayed by organizations vying to limit those funds, there is no question that contributions have a significant impact on the process – and that impact is not positive. What I did not consider then and never considered until I was sitting in prison, was that contributions from parties with an interest in legislation are really nothing but bribes. Sure, it’s legal for the most part. Sure, everyone in Washington does it. Sure it’s the way the system works. It’s one of Washington’s dirty little secrets – but it’s bribery just the same….

None of this seemed in any way wrong to me, or to any of us. Even the ethics officers at the law firms I served didn’t see this issue as I do now. We spent our days looking for loopholes and when we couldn’t find one, we just did what we had to do anyway. The rules were not being enforced, certainly not against the lobbyists. Only the representatives and staff really had to pay attention, or so I reasoned. I was never so wrong in my life.

What is the most shameful for me, in retrospect, was that I was in the middle of it. Every night and most mornings, I took time to study the Torah and our other holy books. My studies started when I was a boy and have continued to this day. I spend a good deal of time studying the laws of bribery as laid down clearly in Scripture and explicated in the Talmud. I knew that one is not permitted to provide any gratuity to a judge and that the cases brought in Talmudic tracts are incredibly strict. If a litigant even helps a judge from stumbling in the street, he is not permitted to bring his case in that judge’s court. But I didn’t make the connection. I didn’t see that legislators are, in effect, judges. Maybe I didn’t want to see it.

I have always been disturbed with the ability of self-described religious people in Washington to make this rationalization on a daily basis while attending Bible studies in the evening. This suspension of belief in Washington is one of the major hurtles in offering reform. As Abramoff illustrates, loopholes in reform legislation can be found, but this is a change in culture and attitude. Maybe more of these lobbyists and the government people that they buy need some similar cleansing moments in prison to come to the same conclusions as Abramoff. Maybe in-depth exposure of their wrong deeds in the media and especially through this column will raise the outrage and help more of them have an “aha” moment of consciousness, or maybe because they face potential jail terms.

Truthout readers are encouraged to send in suggestions of self-dealing to Dina Rasor at [email protected] to investigate. These examples may already be exposed in the media with a cursory look at the problem, but the Solutions column will concentrate on finding the backstory of the longer-term corruption, detailing the effects of the self-dealing and exploring the corrupting effects of each story on the affected part of the federal government. We will examine who won and who lost with each example of our federal “fiduciary agent” who has engaged in self-dealing at the expense of the shareholders of the American federal government – the American citizens.

Realistically, we know that this is a huge problem with no instant fixes, but let’s get started in exploring just what this pernicious money problem is doing to our democracy, one self deal at a time.

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