Sen. Joe Manchin (D-W.V.) speaks with Rep. Sheila Jackson Lee (D-Tex.) on the steps of the Capitol, Sept. 13, 2021. (AP Photo/J. Scott Applewhite)

Manchin Removes Ethics Provisions From Democratic Reform Bill

in Sludge
on September 20, 2021

The For the People Act passed by the U.S. House in March, filibustered in the Senate in June, contains over a hundred pages of ethics legislation, along with changes to campaign finance laws and election access.

All of the government ethics provisions have now been stripped out of the Senate Democrats’ compromise version, the Freedom to Vote Act, which is set to receive a procedural vote “very soon,” perhaps this week, according to Majority Leader Chuck Schumer.

The ostensible rationale for cutting the ethics provisions, for conservative Democratic Sen. Joe Manchin, who led the demands to remove the ethics provisions in June and says he is lobbying his Republican colleagues on the measure, is to earn 10 GOP votes to overcome the inevitable filibuster. No Capitol Hill observers expect there to be 10 votes for the Freedom to Vote Act. For the Senate to pass election protections this year, the Democrats would likely have to create what’s being called a “carve-out” in Senate rules to be able to consider voting rights legislation with a simple majority in favor of bringing it to a vote. Meanwhile, last month, state governments began the decennial redistricting process, where Republicans are expected to gerrymander a net gain of about 20 House seats, more than enough to retake control of the chamber. 

Many of the excised ethics rules would have covered the executive branch and were designed to protect against the Trump administration’s corruption: for example, ending the ability for presidents to spend federal funds at businesses they own. They also would have cracked down on outsized corporate and special interest donations to inaugural committees, slowed the revolving door between government and lobbying, and required presidents and vice presidents to divest from investments posing conflicts of interests, among other things.

Other ethics reforms that Manchin snuffed out would have targeted Congress: banning U.S. representatives from serving on private company boards, and barring representatives and senators from working on legislation with the primary purpose of furthering their own financial interests.

While it might seem an obvious conflict of interest for members of Congress to simultaneously hold top positions at corporations while writing federal laws, current ethics rules allow senators and representatives to serve on the boards of for-profit companies. According to Senate rules, senators are barred from being “officers or members of the board of any publicly held or publicly regulated corporation,” but privately-held or nonprofit corporations are still allowed, as long as they do not receive compensation. House members are allowed to serve on any corporate board, including those with publicly-traded stock, as long as they don’t receive salary compensation—and nearly 100 reps hold positions at private companies, with many taking annual income from their ownership stakes.

The For the People Act contains legislation to strengthen conflict of interest rules for lawmakers. Sludge found that over a dozen House members are board members at for-profit companies, ranging from real estate firms to banks, by scouring thousands of pages of disclosure reports. Congress refuses to release data on its members’ outside positions or financial investments, only releasing information as scanned paper forms or PDFs without searchable data, often disorganized and illegible.

Last year, reporter Justin Glawe and Sludge uncovered a number of cases in which reps introduced legislation that benefited their private companies and either was passed into law or became policy—for example, Rep. Mike Conaway (R-Tex.), president of three oil and gas exploration firms, succeeded in eliminating royalties for oil companies working on federal land in 2019.

Joe Manchin lists four outside positions on his financial disclosure report for 2020, in addition to income he claims from investments in a pair of family companies: coal brokerage Enersystems, where his non-public stock is reported as worth up to $5 million; and material provider Farmington Resources, worth up to $500,000. Manchin is a partner in MPM Properties, which owns real estate, and in Manchin Enterprises, which reportedly owns a commercial rental property and has a history of family financial dispute going back to the late 1980s. 

Manchin also discloses being a member in the company AA Property since Jan. 2010, which legal filings in a bankruptcy dispute showed to be under his 50 percent control, and, with his wife Gayle, is a member of Country Roads Marine, an LLC that is the owner of the couple’s famous D.C. houseboat. Manchin has not reported any income from AA Property in recent years; the outlet TYT investigates reported earlier this year that the company is an investor in a realty concern that owns a La Quinta hotel that pays wages under the $15-an-hour minimum wage proposal.

Preserving the ability for U.S. reps to serve on corporate boards could reduce some of the pressure on Manchin’s colleagues in the Senate to step down from their positions at private companies. Louisiana Republican John Kennedy is a president or member of a number of companies, according to Senate records, including APK Minerals LLC and Allied Builders Supply Inc. Idaho Republican Mike Crapo is a member of Colorado-based drug discovery consulting company Pharma Partners, and retiring Ohio Republican Rob Portman is a member of several Ohio companies. 

Manchin’s pared-back bill drops the restructuring of the Federal Election Commission, such as shifting the number of commissioners from six, with three appointed by each party, to five, with two appointed by each party and one independent. In discarding reforms that would break the gridlock that has resulted in the agency closing a record low number of enforcement cases, Manchin is also helping to ensure that outside spending in elections will receive less scrutiny. In his 2018 reelection race for the Senate, Manchin benefited from over $18.6 million in outside spending, according to OpenSecrets, including nearly $2.5 million from the “dark money” group Majority Forward that is affiliated with the Senate Majority PAC operated by Senate Democratic leadership. Manchin is a former West Virignia state chair of the American Legislative Exchange Council (ALEC), the right-wing network of state lawmakers and corporate interests that works to preserve dark money spending and crafts industry-favored legislation frequently passed by Republican lawmakers.

Manchin’s whittled-down bill limits the public campaign financing option for congressional elections, making it available just for U.S. House campaigns, with states required to opt-in. Manchin is casting off a reform that has proven popular in states, counties, and cities that have adopted programs to curb the influence of Big Money in elections and strengthen the diversity of candidates. Versions of public financing in place in over two dozen jurisdictions include a matching-funds system, grants to qualifying candidates, or “democracy vouchers” issued to voters that can be redeemed by participating campaigns, a pilot of which would have been tested in two states under the For the People Act. In Connecticut, where a public grant system has been available since 2005 to candidates for governor, statewide office, and legislative seats, 85% of candidates for the General Assembly in the 2018 election cycle opted-in to the program. 

A July poll found that 62% of likely voters supported the For the People Act, and an April poll found that popularity includes 61% of independents.

The access of members of Congress to material nonpublic information, while reps have the ability to serve on boards of publicly-traded companies and dozens of members routinely conduct stock transactions in individual companies, has proven to be an invitation to insider trading. One recent high-profile scandal was the case of former Rep. Chris Collins (R-N.Y.), a top shareholder and board member of the Australian drug startup Innate Immunotherapeutics Limited, who was indicted on insider trading charges and later pardoned by his ally President Trump. Collins’ 2018 indictment was brought under SEC securities law against insider trading; the 2012 STOCK Act that prohibits congressional insider trading has never been used in federal prosecution of a member of Congress. While there have been investigations into insider trading, such as last year’s into the timing of stock trades of three Republican senators by the bipartisan Senate Ethics Committee and the DOJ, the oversight bodies ended up dropping their probes. The STOCK Act’s transparency provisions were quietly undermined by bipartisan leaders in Congress, signed by President Obama, just a year after it was passed.

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