Feb. 14, 2016 SIGN IN | REGISTER

Davidson: May Members and Staff Accept 'VIP' Discounts?

Q. I am a House staffer with a question about members participating in special “VIP” discount programs that some businesses offer. The member I work for is preparing to buy a new boat, and the company he is buying from has placed him in a special VIP discount program. I’m concerned that this is the type of special treatment that might violate ethics laws. Do the ethics rules permit members to participate in a business’s VIP program?

A. It depends. In some circumstances, House ethics rules do allow members and staffers to participate in VIP discount programs offered by businesses. While members and staffers must always be careful not to receive special treatment because of their position, they need not miss out on offers available to other members of the public.

However, there are circumstances in which the rules might prohibit participation in a business’s VIP program or something similar. Moreover, even where the rules permit participation, a number of potential pitfalls warrant close attention. Participation in “VIP” programs has drawn a great deal of scrutiny in the past, so any member or staffer considering participating in such a program should proceed with caution.

The rule at issue is the House gift rule. Broadly, the gift rule prohibits a member from accepting a “gift” from anyone unless an exception applies.

As you may recall, VIP programs caused quite a stir years ago when several senators faced ethics complaints for receiving loans through a VIP mortgage program at Countrywide bank. Ultimately, the Senate Ethics Committee dismissed the complaints, stating that the conditions of the senators’ loans were available to members of the general public with similar loan profiles.

Last year, the House Ethics Committee concluded its own review of House members’ and staffers’ participation in Countrywide’s VIP program. The committee reached largely the same conclusion. Mere participation in the VIP program is not, by itself, an ethics violation. Nonetheless, the committee warned, participation in such programs is not always free of problems. The committee used the opportunity to issue a memorandum on how to avoid such problems.

First, the memo makes clear that members and staffers need not disqualify themselves altogether from businesses’ discount programs. Nor must they refuse to participate in normal negotiations. The memorandum does suggest, however, that members and staffers proceed with caution when they have “specific reason to believe they may be treated differently based on their position.”

Under such circumstances, there are several steps the committee says members and staffers may take. For one, they make seek “reasonable assurances or certifications” that the offer they are receiving is in fact “commercially reasonable” and would be available to others based entirely on reasons unrelated to their position in the House. In addition, they may seek the advice of the committee itself in assessing the offer and negotiations.

These steps are not necessary unless there is specific reason to suspect special treatment. In the case of the Countrywide VIP loans, for example, the memorandum notes that, in almost all cases, there was no evidence that the members and staffers had any knowledge that the bank had included them in something labeled a “VIP” program.

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