ALM Properties, Inc.
Page printed from: Corporate Counsel
Select 'Print' in your browser menu to print this document.
Navigating the Nomination Process for Political Appointees
This is the latest in a series of columns from attorneys at O'Melveny & Myers LLP, examining the intersections of the political and legal worlds in the run-up to Election Day 2012.
1. Nearly all prospective senior appointees must complete a national security questionnaire delving deeply into financial history, mental health, substance abuse, criminal charges, foreign travel, and every residence and job they have had for at least 15 years. The online form [PDF]filed under penalty of perjurychallenges appointees memories and contains several traps for the unwary; completing it without legal guidance is highly risky. Each administration may also overlay its own background questionnaire, sometimes requesting such personal information as the nominees Internet handles and any potentially embarrassing emails, instant messages, or text messages they have sent. While the particular questions may vary with the President-Elect come November, potential nominees will likely encounter some variation on these personal probes.
2. Nominees must catalog all financial interestsassets, income, and loans for themselves, their spouses, and their dependent childrenon a separate form, and usually must provide several years of tax returns. Detailed examination can unearth problems, from errors in reporting to tax evasion. Tax issuesincluding perennial nanny tax problemshave derailed many high-profile nominations, like those of Zoe Baird, Kimba Wood, Bernard Kerik, and Tom Daschle.
3. At least three government units, the Office of the White House Counsel, the Office of Government Ethics, and the ethics office of the appointees prospective department/agency, review the forms to identify potential conflicts of interestmatters that would predictably and materially affect a federal employees financial interests. Depending on official duties, even uncontroversial investments like blue-chip stocks, municipal bonds, and certain mutual funds can create conflicts and have a substantial impact on an appointees portfolio and investment strategy. Resolving these conflicts is neither simple nor uniform: risk levels vary across posts, and a range of tools, including waivers and recusals, can manage conflicts. If necessary, the government can require a fire sale of conflicting assets, although the appointee may be able to defer capital gains taxes under a special and highly technical tax rule.
4. The particular package of financial restrictions to which a nominee consentsas well as other ground rules for ethics complianceis then formalized in a written agreement. While in office, officials must comply with these ethics agreements, update their financial filings annually and, under the STOCK Act, report all securities transactions monthly. The reports are publicly available and, if a recent legal challenge to the STOCK Act fails, will soon be online.
5. Nominees for Senate-confirmed positions must undergo a separate vetting process with the relevant committee and its eager staff. This process is more onerous in some committees than in others, and review in the most demanding ones can be akin to a full-blown tax audit.
The entire process challenges most appointees, who have spent careers preparing for their positions but not for navigating a highly public ethical labyrinth. Questionnaires and disclosures often have tight deadlines, exacerbating the pressure, and even minor discrepancies between filings (which request overlapping information) can cause embarrassment. Serious mistakes can scuttle a nominationor worse. Bernard Kerik, for one, was imprisoned in part for false statements to federal officials related to his U.S. Department of Homeland Security appointment.