Given a gift? Look out for Uncle Sam

Like so many other things in Washington, "friendship" is not easily defined.
Rules prohibit government employees from accepting gifts, but an exception exists for
gifts that are based on personal hospitality or friendship.

Unfortunately, application of the exception presents complicated issues. Generally
speaking, eligibility for the "personal friendship" exception has been
progressively and significantly narrowed over the years.

The basic rule lets an employee accept a gift when "circumstances ... make it
clear that the gift is motivated by a family relationship or personal friendship rather
than the position of the employee."

In the case of a college roommate or a carpool colleague, a relationship independent of
the business context may be demonstrable. However, where the relationship postdates
arrival in Washington or appointment to a government position, the circumstances may make
it difficult to establish that the gift is motivated by personal friendship.

The regulation goes on to explain that in making a determination of personal
friendship, "relevant factors ... include the history of the relationship and whether
the family member or friend personally pays for the gift."

The Ethics in Government Act similarly defines personal hospitality as
"hospitality extended for a nonbusiness purpose by an individual, not a corporation
or organization, at the personal residence of that individual or his family or on property
or facilities owned by that individual or his family."

This means that if the giver of a lunch or dinner with a government "friend"
charges the gift on a corporate charge account or credit card or seeks a business
deduction for the expense, it fails one of the determinant factors for establishing it was
given out of friendship.

It often is argued that the government recipient is unlikely to be aware of the details
of payment, and therefore that acceptance of a lunch, dinner or theater ticket run through
a business by the donor should not subject the unknowing recipient to sanction. Yet those
interpreting ethical standards are likely to put the employee on notice if the hospitality
occurs outside the home and is put on a credit card.

Another element not specifically enumerated in the regulation, but one that can be
asserted to substantiate friendship, is reciprocal gift-giving. Indeed, recent amendments
to the congressional gift rules, which have an almost identically worded exception for
personal friendship, have been informally interpreted by ethics committee counsel to
recognize reciprocal gift-giving as an index of eligibility for the personal friendship
exception.

Of course, that means true reciprocity-payment by the government employee for gifts of
a similar nature or comparable magnitude over time. Although such reciprocity is not the
final test by itself, it may provide a basis for arguing entitlement to the exception.

Lack of corruptive intent is not a defense. As one court explained, the purpose
of these laws is to head off any situation in which the judgment of a government agent
might be clouded because of payments or gifts made to him by reason of his position. Even
if corruption is not intended, the court said, there still is a tendency to provide
conscious or unconscious preferential treatment to a donor.

A recent court case emphasizes the heavy burden taken on by a government official
seeking the personal friendship exception. It signals the need for even more caution in
accepting gifts, even from persons with whom the official may have enjoyed a prior
longstanding and reciprocal relationship.

In United States vs. Sun-Diamond Growers, the court-appointed independent counsel in
the investigation of former Agriculture Secretary Espy brought an indictment based on what
he charged was the offer of gratuities to then-Secretary Espy by an agriculture
cooperative with interests pending before the department. The gratuities included a trip
to the U.S. Open tennis tournament, luggage and restaurant meals said to have been
provided by the cooperative's Washington representative.

The defense was, in part, that the lobbyist and the government official had a personal
relationship predating the official's arrival in Washington and had reciprocally exchanged
gifts during that period. The donor and official had attended college together and said
they had been friends since then.

A jury was not persuaded by the evidence of the pre-existing personal relationship.
Some commentators have said the jury rejected the personal friendship defense because the
donor did not personally pay for the gifts but submitted them for reimbursement to the
corporation.

The result in this case brings us one step closer to virtual strict liability for
gratuities to government officials and further limits the ability to rely on the so-called
personal friendship exemption.

Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell &
Ryan. He has long experience in federal information technology issues.