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A conflict of interest is a personal interest or relationship that conflicts with the faithful performance of official duty. Under 18 U.S.C. § 208, a Federal employee is prohibited from participating personally and substantially in an official capacity in any particular matter in which, to his knowledge, he or any person whose interests are imputed to him under this statute has a financial interest, if the particular matter will have a direct and predictable effect on that interest.
- Participate: decision, approval, recommendation, investigation, or giving advice.
- Personally: directly, includes the participation of subordinates when actually directed by the employee.
- Substantially: of significance to the matter.
- Particular Matter: a matter that is focused upon the interests of specific persons, or a discrete and identifiable class of persons, does not include broad policy options or considerations directed toward the interest of a large and diverse group.
- Direct: a causal link between any decision or action in the matter and any expected effect of the matter on the financial interest.
- Predictable: a real, as opposed to speculative possibility, that the matter will affect the financial interest (the magnitude of the gain or loss is immaterial).
- Financial Interest: any current or contingent ownership, equity, or security interest in real or personal property, or a business, such as:
- Ownership of financial instruments or investments such as stocks, bonds, mutual funds, or real estate.
- Salary, indebtedness, or a job offer.
- Imputed Interests: the financial interests of the employee's:
- Minor children
- General partner
- Organization in which the employee serves as an employee, officer, etc.
Organization with which the employee is negotiating for or has and arrangement concerning prospective employment.
Under 5 C.F.R. § 2635.502, Federal employees are required to consider whether their impartiality would be questioned whenever their involvement in a particular matter involving specific parties might affect certain personal or business relationships. If a particular matter involving specific parties is likely to have a direct and predictable effect on the financial interests of a member of the employee's household, or if a person with whom the employee has a "covered relationship" is or represents a party to such matter, the employee must consider whether a reasonable person would question the employee's impartiality in the matter. An employee has a covered relationship with:
- a person with whom the employee has or seeks a business, contractual, or other financial relationship
- a person who is a member of the employee's household or is a relative with whom the employee has a close personal relationship
- a person for whom the employee's spouse, parent, or dependent child serves or seeks to serve as an officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee
- any person for whom the employee has within the last year served as an officer, director, trustee, general partner, agent, attorney, consultant, contractor, or employee
- any organization (other than a political party) in which the employee is an active participant
Executive Order 13490 requires every full-time political appointee, appointed on or after January 20, 2009, to sign an Ethics Pledge. Under the Ethics Pledge, if an appointee served as a registered lobbyist at any time during the two years prior to appointment, the appointee cannot serve in an executive agency for a period of two years after he lobbied that particular agency. Even if not barred from serving in an agency (e.g., because the appointee lobbied the legislative branch only), the Ethics Pledge requires a two-year disqualification from the particular matters and specific issue areas on which the appointee lobbied. In addition, all appointees must be disqualified for two years from particular matters involving specific parties in which a former employer or former client is or represents a party. Also, the Ethics Pledge generally prohibits an employee from having a meeting or communication with a former employer or former client concerning any matter unless the meeting involves multiple parties. The appointee's Designated Agency Ethics Official may waive one or more of these restrictions.
Depending on the situation, additional restrictions may apply; and Federal employees, whether currently in, entering, or leaving the Government, may be required to take actions to resolve or mitigate actual or the appearance of conflicts of interest. Therefore, it is imperative that employees consult with their agency ethics counselors on these issues.