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Frequently Asked Questions - Conflict of Interest




A.  Conflicting Financial Interests - Section 2635.402

Question:  What is a conflict of interest?

Answer:  Simply put, it's working on a matter in which you have a personal interest, and therefore about which you may be less than objective.

Question:  What is the basic conflict of interest rule?

Answer:  Executive branch employees are prohibited by a Federal criminal statute from working on matters that could benefit their personal interests.  For the rule to apply, you or someone close to you must have a personal interest in the matter in question.  For purposes of this rule, an employee is responsible for the financial interests of --

  • the employee
  • the employee's spouse or minor child
  • the employee's general partner
  • an organization in which the employee serves as an officer, director, trustee, general partner, employee, regardless of whether the position is salaried, and
  • a person with whom the employee is negotiating for or has an arrangement concerning prospective employment.

Question:  How does a conflict of interest get resolved?

Answer:  There are a number of ways in which an employee may deal with a potential conflict of interest.  The employee may simply not participate in the matter that would pose the conflict.  This is called "recusal" or "disqualification."  If the financial interest is a modest one, the statute may be waived after consultation with the Office of Government Ethics (OGE).  A personal financial interest may be sold, or "divested."  Which remedy is appropriate will depend upon the particular circumstances.

Recusals

One remedy that is often appropriate for avoiding a potential conflict of interest is recusal or disqualification.  This simply means that the employee does not participate in a matter that could affect the employee's financial interest.

Waivers

Another remedy for dealing with conflicts of interest is the use of waivers.  An individual waiver of the statutory bar may be granted by an authorized official when the conflicting financial interest is not substantial.  For example, an official might grant a waiver where the employee owned only a few shares of a particular stock.  Waivers may also be granted to special Government employees serving on advisory committees.  OGE has issued regulatory waivers for certain classes of financial interests at 5 CFR Part 2640.

Certificates of Divestiture

Section 1043 of the Internal Revenue Code provides for the deferral of capital gains taxes on assets that must be sold to comply with ethics program requirements.  Proceeds from divested assets must be reinvested in certain specified categories of investments (basically mutual funds or Government securities).  In order to take advantage of the tax deferral mechanism, a Certificate of Divestiture must be obtained from OGE before the sale occurs.  Your Counsel's office will assist you this process if divestiture is appropriate.

B.  Prohibited Financial Interest Section 2635.403

Question:  Are there financial interests that the Department prohibits all employees from having?

Answer:  No Each employee's financial interests are evaluated in terms of his or her duties.  Below are a list of offices and bureaus that have restrictions on holding specified property:

  • The Secretary and employees of the Office of the Secretary;
  • Other Departmental offices reporting directly to a Secretarial officer who are in positions classified at GS-15 and above;
  • Minerals Management Services employees;
  • Bureau of Land Management; and
  • U.S. Geological Survey.  5 CFR 3501.103 and 43 CFR §20.401/31(a)