Ethics Office: Anonymous Gifts to Legal Defense Funds Are Not Allowed

By Megan R. Wilson, The Hill

28 September 17

he Office of Government Ethics (OGE), the federal government’s ethics watchdog, clarified its policy on legal defense funds on Thursday, stating that anonymous contributions should not be accepted.

The announcement comes after a report that suggested the OGE was departing from internal policy regarding the donations, paving the way for federal officials to accept anonymous donations from otherwise prohibited groups — such as lobbyists — to offset their legal bills.

In 1993, the OGE issued an informal advisory opinion that allowed for such donations because the federal employee “does not know who the paymasters are.” 

Immediately after, the office acknowledged the problems associated with allowing prohibited individuals to give to legal defense funds anonymously and instead advised lawyers not to accept those contributions.

Then-OGE Director Stephen Potts told a congressional panel in 1994 that the agency “recognized that donor anonymity may be difficult to enforce in practice because there is nothing to prevent a donor disclosing to the employee that he or she contributed to the employee’s legal defense fund,” the advisory published Thursday notes.

That guidance “makes clear that the discussion in OGE Informal Advisory Opinion 93x21 [from 1993] concerning the acceptance of donations from anonymous sources does not, and has not, reflected OGE’s views since shortly after the issuance of that opinion,” the document says.

“Although there is no statutory or regulatory framework providing for the manner in which a legal defense fund may be established for an employee, such a fund must be operated consistent with the ethics rules,” it continues.

Federal officials are already banned under gift rules from soliciting or accepting money from lobbyists and other prohibited sources, like non-lobbyists with business before the government. That policy eliminates "many of the concerns raised in” the 1993 advisory “about donors currying favors with employees benefiting from the donations," the memo released on Thursday says, though notes that some exemptions may apply.

The 1993 guidance had not been officially updated, former OGE officials told Politico, because of lack of relevant scandals — and therefore the lack of a need for an update — during the administrations of George W. Bush and Barack Obama.

This summer, an all-caps, red-font disclaimer was placed atop the OGE memo, noting that the policy regarding contributions to legal defense funds, including whether they counted as additional income and violated gift rules, had not changed.

“HOWEVER, BECAUSE EACH ANALYSIS IS VERY FACT-SPECIFIC, AGENCY ETHICS OFFICIALS SHOULD CONSULT WITH THEIR OGE DESK OFFICER BEFORE ADVISING

EMPLOYEES ON THIS TOPIC,” the red font read, prompting concerns from ethics watchdogs from outside government.

The White House last week told The Hill that it would not allow an employee to receive anonymous donations should someone set up a legal defense funds.

No one inside the administration has set up one of the fundraising vehicles, and the White House said it is not currently helping to set up any legal defense funds for any employees. It is “definitely NOT trying to set one up that permits employees to accept funds from anonymous donors, said a White House official.

“Outside groups are looking to set up one or more defense funds, and we are simply involved in seeking to ensure that any arrangement ultimately set up does not create any ethics violations for our staff,” the official said.

The White House is “interested in identifying ways to have donors disclosed and to ensure no ‘prohibited sources’ are contributing funds for the benefit of White House employees,” the person continued.