Since the Trump administration, the Revolving Door Project has repeatedly brought attention to the importance of strong government ethics rules, including by ensuring that presidential nominees are free from corporate conflicts of interest and forthcoming about their financial ties. But while rules already exist that require nominees to disclose financial information, including assets and recent major purchases, a recent story by the Washington Post illustrates a lingering loophole in our ethics laws for Cabinet nominees. The story centers on Trump’s then-prospective nominee for Agriculture Secretary, Sonny Perdue, and a particularly fishy real estate deal.
The Ethics in Government Act of 1978 requires that nominees for positions subject to Senate confirmation (officially referred to as “Presidential Appointment with Senate Confirmation,” or PAS, positions) disclose financial information about themselves, their spouse, and any dependent children to the White House Office of Government Ethics (OGE) and to the ethics office of their respective prospective federal agency. (Nominees for positions not subject to Senate confirmation are also subject to financial disclosure requirements, although for most, the requirements vary slightly from those for PAS.) OGE then reviews the financial disclosures and determines whether and how nominees will need to avoid conflicts of interest through an ethics agreement with those nominees. Nominees’ financial disclosures and ethics agreements are then transmitted to the Senate after their nomination.
But these rules aren’t sufficient for the myriad ways that presidential nominees can violate the public trust and take advantage of their political power even before they take office. During the period when he was being interviewed for Agriculture Secretary and three weeks before his nomination was made public, Perdue’s company at the time, AGrowStar, signed a sweetheart deal to buy a plot of land from Archer-Daniels-Midland (ADM). The sale was then carried out within the weeks after Perdue’s nomination, all without the knowledge of the OGE or the Senate Agriculture Committee, which conducted Perdue’s confirmation hearing. The price AGrowStar ultimately ended up paying for the land was 16 times less than ADM’s original asking price and 22 times less than ADM had paid for the land five years prior.
ADM spokespeople have denied that they sold the land to AGrowStar at a massive discount (which is an obvious lie based on the raw math) and that the deal was meant to gain favor with Perdue. But Perdue clearly knew about his likely nomination, and the deal’s unique advantages for Perdue (and Perdue’s history of ethics violations) should at the very least arouse suspicion of influence peddling. Whether the deal actually was a bribe should have been for the Office of Government Ethics and congressional ethics committees, along with the public, to determine.
Shortly after the publication of the Post story, Sen. Debbie Stabenow, Chair of the Senate Agriculture Committee, called for the OGE, the Department of Justice, and the Department of Agriculture to review the Perdue land purchase. To prevent future instances of dealings like Perdue’s from slipping under the federal ethics radar, we will need new, broader rules for nominees regarding financial disclosure.
One such rule could require nominees to disclose not only current financial interests and purchases/sales by themselves and their companies from the time that they are confirmed but also for a period prior to that. For nominations made towards the start of a presidential term, the retroactive period could stretch back to the date of the election, as prospective nominees who, like Perdue, have knowledge of their impending nomination could start taking advantage of that position as early as the electoral results are certified.
For termed positions like the Federal Reserve Chair, the financial disclosure period should also stretch prior to the nominee’s official nomination. Current Fed Chair Jerome Powell’s term ends in February next year, but discussions are already underway at the White House regarding whether Powell may be replaced and by whom. Those in consideration for termed positions are generally aware of that fact and may use it to their monetary advantage well before the president publicly announces their choice of nominee.
Lastly, Perdue managed to avoid disclosing the ownership of the land later because it was placed in a trust not controlled by him. But by creating a new trust, the trustees of the original trust were able to transfer the land and other assets back to Perdue. Disclosure requirements must be broadened sufficiently to account for assets recently held by the nominee or their businesses before being placed in trusts not controlled by the nominee.
Perdue did not even need to wait for Trump to officially nominate him for Agriculture Secretary to take advantage of his future position. Congress and President Biden must take the lessons of the Perdue story seriously and strengthen ethics laws to ensure against corruption in our future public officials.