Witness Testimony
Mr. Edgar M. Swindell
Associate General Counsel, Ethics Division Department of Health and Human Services 200 Independence Avenue, S.W.
Washington, DC, 20201
NIH Ethics Concerns: Consulting Arrangements and Outside Awards.
Subcommittee on Oversight and Investigations
May 18, 2004
10:00 AM
Thank you for inviting me to speak with you today to discuss the ethics
issues relating to the National Institutes of Health (NIH).
The goal of ensuring public confidence in the integrity of NIH is one that
the Department very much shares with the Committee B and a goal which we can
best accomplish together. The Committee's oversight in this area has been
edifying and helpful in identifying areas of concern. As NIH moves forward, with
the help of the Department, to address those concerns, the Department values the
Committee's informed views and welcomes the Committee's suggestions regarding
steps that can be taken to ensure that the tremendous trust that the Congress
and the public place in NIH is as unquestioned as the vast contributions NIH has
made towards advancing the nation=s health and the promise it holds to continue
doing so. To this end, we believe the recommendations of the Blue Ribbon Panel
provide an important perspective and serve as a helpful starting point.
As Associate General Counsel for Ethics, my principal role is to advise the
Secretary and the General Counsel on government ethics, restrictions on
political activity by federal government employees, and related issues.
Concurrently, under an appointment directly from the Secretary, I serve as the
Designated Agency Ethics Official (DAEO) for the Department. The DAEO is the
point of contact with the Director of the Office of Government Ethics (OGE).
That office sets ethics policy for the entire executive branch under an
Executive Order issued by the first President Bush replacing a system of
individual agency regulation of employee conduct.
I understand that concerns have been raised by the Committee about the role
of the Office of General Counsel, within the Department, in responding to the
Committee=s oversight, with particular attention to information requested by the
Committee regarding payments, expenses, and stock options paid to NIH employees
for consulting arrangements since January 1, 1999. NIH proposed asking employees
for information regarding compensation for outside activities. Accordingly, the
Department, working through OGC, has worked extensively with NIH and the
Committee=s staff, as well as other federal agencies, to identify and resolve
legal issues relevant to obtaining this information.
When the Committee first asked NIH to obtain amounts of compensation for
outside activities, these amounts were unavailable for those individuals who
file the confidential OGE 450 financial disclosure form or who do not file any
financial disclosure form. This is because OGE has historically viewed the form
as serving a conflicts of interest purpose rather than a disclosure purpose. And
the conflicts analysis for reviewing potential outside activities has
historically focused, government wide, on the type and source of compensation
rather than the amount. For the same reason, the HHS 520 form, used for review
of potential outside activities, did not, until my January 27, 2004 memorandum,
request the amount of compensation. Historically, OGE has advised that it did
not view the dollar amount as normally relevant to the outside activity
conflicts analysis.
HHS strove to help NIH find a way to collect the information and was
successful in doing so. This information is critically important and so we have
taken steps, consistent with the Privacy Act, to obtain this data in the future
for all outside activity requests.
HHS advised NIH about the Privacy Act, and its requirement that collection
and maintenance of identifiable information be for purposes authorized by
statutes, regulations, or Executive Order, and that such authority must be cited
in the Privacy Act statement accompanying the request for information. Although
the interest of Congress alone would not be a sufficient legal basis to collect
and maintain the information, an agency interest pursuant to statutes,
regulations, or Executive Order, would be an appropriate basis. At first, we
hoped that the Ethics in Government Act, administered by OGE, could serve such a
basis. The difficulty was that OGE did not historically believe that amounts of
compensation were normally relevant to conflicts analyses.
OGC worked with OGE to devise an interpretation of the authorities provided
in the Ethics in Government Act that would support the collection of
compensation amount information for ongoing activities as well as activities
being reviewed for compliance with the relevant rules. At that time, OGE did not
believe that the authorities in the Ethics in Government Act could support the
collection of compensation amount for completed and closed outside activities.
On January 27, 2004, I issued a directive informing Deputy Ethics Counselors
[DECs] that in the context of any agency evaluation of any previously approved,
ongoing outside activity for continued compliance with existing law and in order
to request prior approval for any new outside activity, employees would be
required to provide both retrospective (if applicable) and prospective
compensation information. Such amounts were to be noted on the HHS 520. This
allowed NIH to collect compensation amounts for all ongoing outside activities.
HHS explained to Committee staff the potential difficulties in collecting
information pertaining to completed and closed outside activities. Referencing
these discussions in its February 25, 2004 letter to the Department, the
Committee said "the Department is attempting in good faith to assist the
Committee."
In addition, HHS continued to work to develop an interpretation of the Ethics
in Government Act that would support the collection of information for completed
outside activities. In so doing, we discussed the legitimate and important need
for NIH to collect the information NIH and OGC felt was important for the agency
to collect. As a result, OGE agreed that, in this case, the Ethics in Government
Act and its implementing regulations providing the DAEO with authority to
evaluate the agency=s supplemental standards to determine their continued
adequacy and effectiveness in relation to current agency responsibilities,
supported the collection of information regarding completed and closed
activities with pharmaceutical and biotechnology companies. OGC further applied
the same reasoning to all for-profit entities.
As a result of these efforts, Dr. Zerhouni was able to write to the Committee
on March 12, 2004, that "We consider this collection [of information] authorized
by the Ethics in Government Act of 1978 and Executive orders mentioned above."
It is my understanding that NIH decided to manage litigation risk from NIH
employees who might not wish to comply with a required collection of information
by first attempting to collect the information on a voluntary basis.
However, because of inadequate response, I believe that Dr. Zerhouni is now
going to instruct all NIH employees who had consulting arrangements since
January 1, 1999 that are now closed to report the compensation amounts received
pursuant to the consulting as a requirement and condition of their employment.
Background. HHS has a workforce of more than 60,000 individuals, of which
approximately 1,000 file public financial disclosure reports and 25,000 file
confidential financial disclosure reports and receive annual ethics training.
These 60,000 employees safeguard the nation's health and provide essential human
services through myriad programs, policies, and initiatives that affect
countless stakeholders and a large part of the American economy. Whether in
allocating grant funds, awarding contracts, entering into public-private
partnerships, approving lifesaving drugs, protecting patient privacy, or
reducing health care costs, our employees must address the concerns of the many
while avoiding the appearance or fact of undue influence by the few. To assist
those who bear that responsibility, the Ethics Division advises on how to ensure
these duties are carried out impartially and unimpeachably. This is largely
accomplished through legal advice to agency decision-makers and ethics
officials, guidance to employees, education of the workforce, development of
guidance documents, and, when necessary, liaison with OGE.
In HHS, as in most large Cabinet Departments, the DAEO oversees and
coordinates a decentralized Departmental ethics program. As DAEO, I appoint
Deputy Ethics Counselors (DECs) chosen by each operating division, such as the
Food and Drug Administration (FDA), the Centers for Disease Control and
Prevention (CDC), and NIH. Each of these DECs, along with agency heads and
management in each component, are responsible for running ethics programs
tailored to the needs of extensive, geographically dispersed workforces composed
of many professionally trained employees with varied responsibilities that range
from insuring the health care needs of the elderly and disadvantaged to ensuring
the safety and efficacy of drugs and medical devices.
The DECs are senior management officials within each component, and they have
staff who assist them in carrying out the ethics functions, either as collateral
duties or as members of an ethics program office. NIH in particular has such an
office under its DEC. As managers closest to day to day operations, they are
equipped and responsible for identifying and evaluating the relevant ethics
issues in their component. Additionally, the DECs and their staff possess the
scientific and technical expertise necessary to identify and resolve ethics
issues in situations involving science, medicine, and other complex fields.
Within their respective operating divisions, the DECs are responsible for
establishing a system for reviewing public and confidential financial disclosure
forms, considering outside activity requests, providing ethics advice to
individual employees, initiating ethics education and training programs, and
ensuring that violations of the conflicts statutes or the conduct standards are
reported to investigatory authorities and where appropriate, seeing that
disciplinary action is taken. Individual employees are, of course, ultimately
responsible for their own actions.
In addition, the Ethics Division has responsibilities similar to those of a
DEC but for the Office of the Secretary and with respect to political
appointees. Staff lawyers within the Ethics Division provide legal advice to the
DECs to assist them in their role in making ethics decisions. Furthermore, we
conduct training such as an all day DEC workshop each year to keep DECs current
on ethics law, and approximately thirty ethics officials from across the
Department attend the annual OGE conference and its various break-out sessions
or classes conducted on a wide variety of ethics topics. OGE's periodic program
reviews or audits provide us with a sense of how well the Department=s
components meet their ethics responsibilities. In these reviews, OGE has
recognized that the Ethics Division provides sound guidance and instruction and
that a clear "road map" is in place.
Ethics Initiative. Based upon a process begun by the General Counsel in
December, the Ethics Division has undertaken a series of efforts to intensify
our ability to scrutinize and oversee the Department=s ethics activities. We are
dedicating additional resources to enhance the Ethics Division. As part of this
initiative, the Department will institute systematic oversight of the ethics
programs within the various operating divisions of the Department through
regularized compliance auditing and program review, as well as dramatically
strengthen our ability to provide guidance to these programs and their
officials. The initiative will increase component accountability for ethics
program implementation, augment financial disclosure review and training
development, and enhance the capabilities of the Ethics Division and the
authority of the DAEO. Our staffing will more than double from 11 to 25. To my
knowledge, this will make us the largest single legal office devoted exclusively
to government ethics, outside of OGE. We will create two units within the Ethics
Division: the Advice and Financial Disclosure Branch and the Education and
Program Review Branch. These branches will be staffed by a mix of attorneys,
paralegals, computer/training developers, legal resource analysts, auditors, and
support staff.
The steps we are undertaking will enhance the Department=s operations and
work on behalf of the public. Specifically, this initiative will strengthen the
Department=s identification and prevention of employee actions that would or
would appear to be motivated by private, pecuniary, or associational interests,
rather than an impartial assessment of the public interest.
Historical Context. To provide further background to the Committee in
connection with its review of these issues, following is an understanding of how
we came to where we are on the issues of financial disclosure, outside
consulting arrangements, and awards at NIH.
a. Financial Disclosure. The degree to which the public may have access to
the personal financial information of employees at NIH is governed by federal
law and OGE regulations. The Ethics in Government Act and implementing
regulations in 5 C.F.R. part 2634 provide for two types of financial reporting:
(1) public disclosure of detailed information about assets, income, liabilities,
and outside affiliations on a report form called the SF 278; and (2) a less
intrusive, confidential version known as the OGE 450. On the SF 278, filers must
disclose income amounts and asset values within broad categories, by checking,
for example, a block indicating a figure between $1,001 and $15,000, and so on.
The OGE 450 does not ask for any disclosure of amounts, only the identity of
holdings and income sources, in other words, the information necessary at a
minimum to assess conflicts.
By statute, the public SF 278 filing requirement is reserved exclusively for
highly paid, senior employees, such as Senate confirmed Presidential appointees,
non-career and career members of the Senior Executive Service, Schedule C
political appointees in the General Schedule, uniformed service officers in the
Public Health Service Commissioned Corps at pay grade O-7 or above,
Administrative Law Judges, and employees in other pay systems if the lowest rate
of basic pay for that pay plan exceeds $104,927 per year. The confidential OGE
450 basically is filed by career employees in the General Schedule, generally at
grade levels 12 or above, and by special Government employees who do not serve
beyond 60 days. Under current law, increased public disclosure can occur only
through a process of demonstrating to OGE that the duties of a particular
position B that would not ordinarily be required to file publicly under the
existing rules B is nevertheless equivalent to the positions that do file. This
process is required because many of the alternative pay systems at NIH do not
have minimum rates of basic pay that exceed the threshold.
In 1997, the Ethics Division wrote to the Director of OGE asking for an
interpretation of the law to require employees hired under the authority of
Title 42, Section 237, establishing the Senior Biomedical Research Service (SBRS),
to file SF 278s if the actual annual salary received by the employee was equal
to or above 120% of the rate of basic pay for GS-15, Step 1. The letter urged
that these employees be required to file public financial disclosure forms and
argued that not doing so would be "inconsistent with what would seem to be the
prevailing rule in the post-employment context [and] appears contrary to the
purpose of the public financial disclosure requirement. Conceivably an ...
employee with a salary equivalent to an Assistant Secretary would not be
required to file a Public Financial Disclosure Report. ... [A]ll SBRS employees
with such salary above 120% of the GS-15, step 1, level should be automatically
required to file a Public Financial Disclosure Report."
On February 11, 1998, the Director of the OGE declined that request and
responded that for purposes of the public financial disclosure requirement, the
term "rate of basic pay" was defined as "the lowest level of pay authorized for
a position=s pay grade." Director Potts opined that the definition of "rate of
basic pay" for SBRS employees is the lowest step or entry level pay authorized
for a particular pay grade or range. Thus, since the entry level minimum pay
authorized for SBRS positions is set by statute as the minimum rate payable for
GS-15, and since that will always be less than the Ethics in Government Act SF
278 threshold of 120% of GS-15, Step 1, the SBRS employees would not be required
by the Ethics in Government Act to file public financial disclosure reports.
Like the SBRS employees hired under the authority of Section 237, the employees
hired under the authority of section 209(f) (who do not have any fixed rate of
basic pay) have a "rate of basic pay" that is less than the statutory SF 278
threshold.
Although, for the reasons stated above, "Title 42" employees are not
statutorily defined as SF 278 public financial disclosure report filers, it is
our understanding that all of the NIH Institute and Center Directors who were
appointed under section 209(f) continued to file public financial disclosure
form SF 278s even during the time they were not required to do so. To ensure
that this continues to be the case, as well as to increase transparency with
respect to the next level of senior employees identified by NIH, we have been
successful in securing an OGE equivalency determination for 93 positions that
requires, as of February 6, 2004, the Directors, Deputy Directors, Scientific
Directors, and Clinical Directors within each NIH Institute and Center to file
publicly available SF 278s. This determination was in response to our letter of
January 12, 2004. Following our request that NIH identify other positions with
equivalent authority and responsibilities that meet the statutory test, we
recently forwarded to OGE a list of another 506 positions for this special
classification.
b. Outside Consulting and Financial Interests. HHS employees currently are
required by an agency supplemental regulation to seek prior approval only for
professional or consultative activities, teaching, speaking, or writing, and
board service. They submit an HHS Form 520 that solicits detailed information
about the proposed activity, and each operating division may specify various
levels of review, which may start with the supervisor and end with the DEC.
The HHS Form 520, which was designed in 1982 and has since remained virtually
unchanged. It does not require the applicant to specify the amount of
compensation to be received in connection with the outside activity. Until
recently, it was not understood that this information would be relevant to the
outside activity approval process because the requisite legal analysis focuses
on the identity of the payor and the nature of the outside activity. This
information is critically important and so I have taken steps, as DAEO,
consistent with the Privacy Act, to obtain this data in the future for all
outside activity requests.
Approval requires an assessment of whether the proposed outside activity
violates any statute or regulation, including the OGE Standards of Ethical
Conduct for Employees of the Executive Branch or the HHS supplemental ethics
regulation. Included in the OGE Standards is the requirement that the proposed
activity cannot create an actual or apparent conflict that would result in
recusals that would materially impair an employee=s ability to do his job.
In evaluating conflicts, the reviewer must address two provisions that form
the core of Federal ethics law. A criminal statute, 18 U.S.C. ' 208, deals with
an "actual conflict" due to the employee=s own or imputed financial interest in
the resolution of a government matter. A regulatory provision in the OGE
Standards, 5 C.F.R. ' 2635.502, principally addresses disqualifications called
for when an "appearance of a conflict" arises from a "covered relationship."
Under section 208 of the criminal code, to avoid a conflict of interest that
results, for example, from stock ownership or outside employment, a federal
employee must not participate personally and substantially in a particular
matter that, to his knowledge, directly and predictably affects his own
financial interest or that of his outside employer. To prevent an "appearance of
a conflict" that results from serving in a role short of employment, for
example, as an advisor, consultant, or other type of independent contractor
compensated with fees and expenses, a different rule applies[6 CFR 2635.502].
Both sections are disqualification provisions in that they do not prohibit
the acquisition of an asset or relationship, rather they bar actual "participation"
in a potentially conflicting matter, either personally or through the direct and
active supervision of the participation of a subordinate. However, neither
section is triggered by mere knowledge of, or official responsibility for, a
particular matter. In short, under 5 C.F.R. ' 5501.106(d)(4), prior approval to
engage in an outside activity "shall be granted," provided there are no other
statutory or regulatory impediments.
In addition, a number of statutes and regulations do preclude certain outside
activities. For example, if an employee sought approval to be a lobbyist, the
anti-representation statutes, 18 U.S.C. '' 203 and 205, would be implicated. If
the activity were clearly one that should be done as an official duty, then
approval would be denied, under 18 U.S.C. ' 209, as an improper salary
supplementation. Another regulation prohibits the use of public office for
private gain 5 CFR 2635.702.
Another regulation, 5 C.F.R. ' 2635.807, precludes compensation, subject to
certain exceptions, if an employee wants to teach a course, deliver a speech, or
write a book that relates to his official duties. (Consulting, technically, is
not covered by this section, but the analysis does provide guidance in
evaluating many outside activities.) For career employees, compensation is
precluded if, among other things, the teaching, speaking, or writing deals in
significant part with any current assignment (or one completed within the last
year) or any ongoing policy, program, or operation of the agency. However, the
provision contains an important explanatory note. A career employee may receive
compensation for "teaching, speaking, or writing on a subject within the
employee=s discipline or inherent area of expertise based on his educational
background or experience even though the [activity] deals generally with a
subject within the agency=s areas of responsibility."
Finally, there are also special ethical restrictions that focus on the
receipt of earned income by political appointees. Under Executive Order 12,731,
issued by the first President Bush and modifying Executive Order 12,674, certain
Presidential appointees may not receive "any earned income for any outside
employment or activity performed during" their Presidential appointment.
Similarly, the Ethics in Government Act limits the annual amount of outside
earned income, including honoraria, that high level political appointees such as
non career members of the Senior Executive Service may receive. This year, that
limit is $23,715.
As noted earlier, outside activities must also comply with applicable
provisions governing the avoidance of actions creating an appearance of
violating the ethical standards, including the prohibition against use of
official position for an employee=s private gain or for the private gain of any
person with whom the employee has employment or business relations or is
otherwise affiliated in a non-governmental capacity.
As can readily be seen, supervisors, ethics program officers, and the DECs,
in particular, have difficult assessments to make when reviewing outside
activity requests. For example, at NIH, review of the requests often
necessitates an ability to analyze the relationship between technically complex
official scientific duties and similarly complex outside activities, both of
which might be in the same general field of expertise. Even when the activities
are approved, individual employees remain personally responsible for abiding by
their recusal obligations and avoiding violations of any other applicable
provisions. These responsibilities are exacerbated by mergers, acquisitions,
joint ventures, partnerships, and even name changes, within industry that, on
any given day, may make it difficult to know whether one has a conflict to
avoid.
As outlined in the Blue Ribbon Panel report, prior to 1995, NIH had stringent
internal policies that barred certain outside activities, limited the amount of
outside compensation, capped the number of hours that could be spent in outside
work, and precluded the receipt of stock or stock options as compensation.
However, during a program review conducted in 1995, OGE notified NIH that its
requirements went beyond the 1993 executive-branch wide Standards of Ethical
Conduct. By Executive Order, OGE was required to ensure uniformity within the
executive branch with respect to the core ethics requirements. OGE did not
permit agencies unilaterally to impose ethics requirements or policies that were
more restrictive than the OGE Standards, absent the submission to OGE for its
approval a supplemental regulation with adequate justification. The then NIH
Director did not pursue that option, and the internal policies at NIH were
changed to conform to the case-by-case evaluation process prescribed in the OGE
regulations.
Therefore, whether NIH employees can hold "drug or biotech" stocks or consult
with companies in these industries is governed by the application of OGE
regulations. Currently, conflicting stock holdings are subject to a de minimis
exception that allows employees to work on specific party matters as long as the
value of the affected stock does not exceed $15,000 and on a general matter if
the value of any one affected holding does not exceed $25,000, subject to a
$50,000 cap when cumulating all affected interests. Also, NIH employees can
consult with various companies involved in scientific research, if the legal
requirements are satisfied.
c. Awards. Another important issue is whether NIH employees should be allowed
to receive bona fide awards from outside entities with interests affected by NIH
programs and operations. Depending upon the resolution of these questions, it is
conceivable that the NIH Director might be barred from receiving the Nobel Prize
in Physiology or Medicine because, as we understand, the awarding entity on
behalf of the Nobel Committee is the Karolinska Institute, which collaborates in
research matters with NIH.
Bona fide awards for meritorious public service or achievement are
conceptualized as gifts. Gifts to executive branch employees are governed by 5
U.S.C. ' 7353, which bars the solicitation or acceptance of anything of value
from persons or entities defined as prohibited sources, subject to such
reasonable exceptions as the supervising ethics office for the executive branch,
by regulation, deems appropriate. OGE implemented this statute in the Standards
of Ethical Conduct for Employees of the Executive Branch at 5 C.F.R. Part 2635,
Subpart B. These rules expressly permit employees to accept bona fide awards and
cash incident thereto from most prohibited sources, e.g., contractors, grantees,
regulated entities, applicants for governmental action, etc., including
organizations a majority of whose members are of the enumerated type, provided
that the award is determined by agency ethics officials to be part of an
established program of recognition, as defined in regulatory criteria.
Specifically, under 5 C.F.R. ' 2635.204(d)(1), the reviewer must ascertain
whether the award is made as part of an established program of recognition for
meritorious public service or achievement:
(1) Under which awards have been made on a regular basis or which is funded,
wholly or in part, to ensure its continuation on a regular basis; and
(2) Under which selection of award recipients is made pursuant to written
standards.
This exception to the prohibited gifts rule is unavailable, however, if the
awarding entity is a special type of prohibited source, i.e., a person or entity
who "has interests that may be substantially affected by the performance or
nonperformance of the [award recipient=s] official duties."
As OGE notes in their testimony today, "one possible reading" of this phrase
could be to bar an agency official from receiving an award from any entity that
has matters pending under that individual=s official responsibility, i.e., from
any entity or person doing business with the recipient=s office, or it could
specify a "situational" approach predicated on the interpretive assumption that
the use of terms such as "performance" and "duties" suggests that some actual
involvement by the official must at least be reasonably foreseeable. Included
with the Committee=s initial inquiry on this subject was an opinion of the
Congressional Research Service that suggests the former interpretation. When NIH
asked for help in preparing a response to the Committee=s inquiry and the
Congressional Research Service analysis, I drafted a White Paper describing the
existing policy and its derivation.
That paper pointed out that, because the above-quoted phrase appears in OGE=s
regulation, the phrase=s meaning is ultimately a matter for OGE deliberation,
that OGE has not formally opined on it, and that OGE may well choose a different
approach than that of the Department. Furthermore, the paper observed an
alternative to OGE clarification: that "Federal departments and agencies were
authorized to issue, jointly with OGE approval, supplemental ethics regulations
to establish prior approval procedures for outside activities, to impose
prohibited financial holdings requirements, and to address ethics issues unique
to the programs and operations of the respective agencies."
Today, the Acting Director of OGE provides in her statement the first
definitive written guidance on the subject. OGE=s analysis articulated in her
testimony today does not adopt a bright line. Moreover, some of the factors
relied upon by HHS are factors she has articulated. We are required to implement
the OGE interpretation, of course, absent a change in law, OGE regulation, or,
one other important possibility. As mentioned in the White Paper provided to NIH
and, in turn, to the Committee last July, agencies are "authorized to issue,
jointly with OGE approval, supplemental ethics regulations to ... address ethics
issues unique to the programs and operations of the respective agencies."
Therefore, if NIH policymakers decided to go so far as to outright prohibit the
receipt by all or certain NIH officials or employees of all or some awards from
outside entities with which NIH interacts, a request for such a provision could
be included in a supplemental regulation submitted for OGE approval.
In addressing the issue of awards, it is necessary to guard against monetary
awards and prizes that may appear to be little more than a payment for
delivering a speech. As noted earlier, federal employees cannot receive
compensation for speaking that relates to their official duties within the
meaning of a very detailed regulation, 5 C.F.R. ' 2635.807. Moreover, a criminal
statute, 18 U.S.C. ' 209, bars federal employees from receiving a
supplementation of salary for performing their official duties, and another, 18
U.S.C. ' 201, proscribes illegal gratuities tied to an official act. But a bona
fide award for meritorious public service or achievement and any money that is
associated with the honor are considered gifts, rather than compensation. As you
can readily see, there is a continuum between the permitted activity on the one
hand B accepting a prestigious award with the prize money and then delivering
the speech that is routinely expected of the honoree at the award presentation B
and the prohibited activity on the other B accepting money to deliver a speech
in the guise of receiving an award.
Unfortunately, the ethics rules do not provide us much guidance in
distinguishing between the two scenarios. Fortunately, the Acting Director of
OGE in her written statement submitted today has endeavored to tackle these
issues and has even sent us in the direction of tax law for help in determining
whether an award is "intended primarily to provide gratuitous honorific
recognition of achievement" or is instead "primarily compensatory in nature." I
am grateful to Director Glynn and her staff for providing this valuable
assistance.
It must be considered that even though particular conduct may be permitted
under the applicable statutes and regulations, and even where employees
sincerely believe there is no appearance of impropriety in the conduct, there
may be instances where employees should exercise common sense and prudence to
abstain from the conduct. However, ethics officials are not empowered to compel
that abstention.
In conclusion, the Blue Ribbon Panel=s recommendations are certainly a
helpful starting point. But we remain open-minded and interested to hear from
NIH regarding its evaluation of the recommendations. As the Department moves
forward with respect to the recommendations and requests from NIH, we will
carefully consider what steps should be taken. At the same time, HHS, and, in
particular, the expanded Ethics Division [of the Office of General Counsel],
will continue accelerating and implementing our plans to independently audit
ethics programs in the Department=s components, ensure extensive education and
training, increase transparency in the form of thorough and accurate disclosure,
and provide advice and ethics counsel to the nation=s premier professionals in
the ever-changing field of biomedical research.
We would also very much welcome hearing from the Committee about what changes
it believes are required to strengthen the ethics rules, policies, and
procedures at NIH. HHS will continue to cooperate with the Committee as the
Committee addresses these important issues. In this manner, working together,
our two branches of government can achieve our collective goal of ensuring
public confidence in agency programs and operations through whatever means will
best accomplish that objective. The objective is especially meaningful and
important because so too is the mission of NIH to generate knowledge which will
advance our ability to care for human ailments and improve the lives of all
Americans.
Thank you for the opportunity to speak with you today. I would be pleased to
answer any questions that you may have.
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