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Ethical Leadership in the Department of Defense

March 2014

Presented byEric Rishel

Senior Attorney, DoD Standards of Conduct Office703-695-3422

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“Nearly all men can stand adversity, but if you want to test a man’s character — give him power.”

Abraham Lincoln

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ENCYCLOPEDIA

OF

ETHICAL FAILURE

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SECNAV: Bribery Scandal Put US Navy on OffensiveDec. 20, 2013 - 03:45AM By CHRISTOPHER P. CAVAS

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Glen Defense Marine Bribery Scandal

• Center of the scandal: Glenn Defense Marine Asia, contractor that provided support services to Navy ships docked at ports throughout Asia for decades. Federal prosecutors allege that GDMA and its president, Malaysian national Leonard Glenn Francis -- known as “Fat Leonard” -- overbilled the Navy by $20 million in recent years.

• Court documents allege that Francis bribed multiple Navy officers in exchange for information on ship schedules and cooperation in steering ships to ports where GDMA could reap higher fees.

• More indictments expected. "According to the allegations in this case, a number of officials were willing to sacrifice their integrity and millions of taxpayer dollars for personal gratification," said U.S. Attorney Laura Duffy.

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Glen Defense Marine Bribery Scandal

• On December 17, 2013, NCIS supervisory SA John Beliveau pled guilty to sharing with Glen Defense Marine confidential information about ongoing criminal probes into the contractor’s billing practices in exchange for prostitutes, cash and luxury travel.

• Beliveau regularly searched confidential NCIS databases over the course of years to help the GDMA CEO avoid multiple criminal investigations by providing copies of these reports plus advice and counsel on how to respond to, stall and thwart the NCIS probes.

• Beliveau deliberately leaked the names of cooperating witnesses,

reports of witness interviews, and plans for future investigative steps, which cost the Navy millions of dollars.

• Beliveau was named NCIS Agent of the Year in 2010.

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U.S. Army General Improperly Accepted Gifts in South Korea, Report SaysBy Craig Whitlock,August 07, 2013 Washington Post

Gen. Joseph Fil Jr. visits soldiers at their combat outpost in the Amariyah. (Petr David Josek/AP )

A three-star Army general improperly accepted gold-plated Montblanc pens, a $2,000 leather briefcase and other gifts from a South Korean citizen while commanding U.S. troops in that country, newly released documents show.

Joseph F. Fil Jr., the former commander of the U.S. Eighth Army in South Korea, also failed to report a $3,000 cash gift to a member of his family from the unnamed South Korean benefactor, according to a confidential investigative report by the Pentagon’s Office of Inspector General.

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Encyclopedia of Ethical Failure cont’d

• Oct 2013: The No. 2 officer (VADM) at U.S. Strategic Command was relieved of command because of a criminal investigation looking into his suspected use of counterfeit gambling chips in a poker game at an Iowa casino. NCIS still investigating this matter.

• Jan 2013: IG found that LTG Patrick O’Reilly, former head of the Missile Defense Agency “demeaned and belittled” his staffers and “failed to treat subordinates with dignity and respect,” causing senior officials to hesitate to “speak up” and leave. Received SecDef Letter of Reprimand.

• Oct 2013: IG found that LTG David Huntoon, Jr., former Superintendent of West Point improperly directed enlisted aides to perform personal tasks (work at private charity dinners, provide free driving lessons and feed a friend’s cats). For misuse of his official position, he received a written memorandum of concern.

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Darleen Druyun

http://www.cbsnews.com/stories/2005/01/04/60II/main664652.shtml

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Timeline of Conflict of Interest Violation

• 13 August 2002: Druyun, senior ranking career acquisition official in the Air Force meets with Boeing CFO Sears and discusses in general terms the possibility of her future employment with Boeing. (She now has a conflict of interest)

• 29 August 2002: Air Force General Counsel prepares disqualification memo covering Lockheed-Martin and Raytheon, but is not asked to include Boeing

• 26 September 2002: Druyun and Boeing CFO Sears negotiate the final price for the NATO AWACS Mid-Term Modernization Program contract for $1.32B.

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Timeline of Druyun 18 USC 208 Violation

• 17 October 2002: Druyun and Sears meet privately in Orlando airport and discuss terms of employment and reach handshake deal

• The next day Sears sends email to senior Boeing managers describing “non-meeting” he had with Druyun regarding her Boeing employment

• 5 November 2002: Druyun submits disqualification letter for Boeing and meets with Sears in the Pentagon to discuss details of employment offer

• 13 November 2002: Boeing sends formal offer of employment to Druyun

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Results of the Druyun Case

• Druyun pled guilty to violating 18 USC 208--taking official actions regarding a potential employer. Sentenced to 9 months in jail, 3 years probation, 150 hours of community service, and a $5000 fine.

• Sears pled guilty to aiding and abetting acts affecting a personal financial interest. He was sentenced to four months in prison, a $250,000 fine, and 200 hours of community service.

• The Boeing Company admitted to corruption charges involving conflicts of interest.

Boeing settled with the Justice Department for $615 million. $20 billion tanker lease cancelled.

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So why should we care?

June 13, 2013

Americans' Confidence in Congress Falls to Lowest on Record

Congress ranks last on list of 16 institutions; military earns top spot again

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Personal Ethics Requirements

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Criminal Conflict of Interest Statutes

• 18 U.S.C. 201: Bribery — Prohibits public officials from seeking, receiving or agreeing to accept anything of value for themselves or others in return for being influenced in an official act;

• 18 U.S.C. 203 & 205: Forbids employees from prosecuting or assisting in the prosecution of claims against the U.S. or representing another before a Federal department, agency or court in matters where the U.S. is a party or has a substantial interest.

• 18 U.S.C. 207: Post-Government Employment Restrictions — e.g., One year cooling- off for Senior officials and Lifetime Ban on Representing Back on Matters worked on Personally and Substantially

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Criminal Conflict of Interest Statutes

• 18 U.S.C. 208: Financial Conflict of Interest — Bars an employee from participating personally and substantially in an official capacity in any particular Government matter that would have a direct and predictable effect on his own or his family’s financial interests, or the interests of any organization in which he serves as officer, director, general partner, employee.

** Importantly: Applies to entities with whom he is negotiating employment

• 18 U.S.C. 209: Dual Compensation — Prohibits employees from receiving any salary or contribution to or supplementation of salary from any source other than the United States as compensation for services as a Government Employee.

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Financial DisclosureFinancial Disclosure

• Financial Disclosure is required to help ensure that employees do not hold financial interests that conflict with the impartial performance of duty

• All members of the SES must: file a public financial disclosure report (OGE

278), including STOCK Act’s requirement to file periodic transactions reports; don’t forget to sign post-Govt employment certification

complete one-hour of ethics training annually

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Ethics “training”

And the following is a quick reminder about some of the most pertinent Federal Standards of Conduct . . .

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Federal Standards of Conduct

• Do Not Use Your Public Office for Private Gain

--Steering DoD business towards your Academy roommate

--Using official title to promote a book you wrote

--Marketing your spouse’s real estate co. in the workplace

--Loaning your office’s conference room to your outside organization for officer’s meeting (AUSA, AFCEA, AFA, NCMA, NDIA, Society of Military Comptrollers, ABA)

• Do Not Show Favoritism to Any Company/Private Organization

Generally OK to meet with outside entities. But if you meet with one, you must be willing to meet with its competitors, if asked

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Federal Standards of Conduct

• Do Not Participate Actively and Visibly in Fundraising by a Non-Federal Entity in Your Official Capacity

You may not be used as “the draw” for a fundraising event—the only exception is that you may give an official speech

• Do not misuse Govt resources--IG focus of investigation

Includes time of subordinates to run your personal errands, use of computer and phone to manage your outside business or Fantasy Football league, use of DoD VTC for outside board meeting; de minimis use is fine, but be careful!

•Do Not Officially Endorse Private Entities

(even charitable ones like Wounded Warrior nonprofits); it is OK to express gratitude for their contributions, however.

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Gift Rules

Gifts from Outside Sources – general prohibition on acceptance of gifts given because of your DoD position or from a prohibited source.

• Prohibited Source is an entity seeking official action or business with the agency

• Almost anything of value is a gift, although there are many exceptions to the rule (e.g., gifts of $20 or less may generally be accepted)

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Gift Rules

• Gifts Between Employees – General prohibition on acceptance of gifts from subordinates or people who make less than you.

--exception: gift valued at $10 or less on an occasional basis to mark e.g., significant

birthday or promotion

(There’s no prohibition on the boss giving gifts to subordinates provided no favoritism shown)

• Obama Ethics Pledge – Prohibits political appointees from accepting gifts from registered lobbyists

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• Set ethical expectations using fundamental ethical values (e.g., Integrity, Personal Courage, Stewardship of Taxpayers’ Money, Respect) as the foundation.

• Lead by example (tone set at the top) and hold yourself and others accountable.

• Reward integrity, courage, and protecting fisc• Remove fear of retaliation from organization climate/promote

candor to the leadership. • Beware of subordinates’ “good intentions” for you• Foster an environment where subordinates go beyond asking “is

this legal?” to “is this prudent?”

How leaders maintain a strong ethical climate

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The character that takes command in moments of crucial choices has already been determined. It has been determined by a thousand other choices made earlier in seemingly unimportant moments. It has been determined by all the little choices of years past — by all those times when the voice of conscience was at war with the voice of temptation — whispering the lie that it really doesn't matter. It has been determined by all the day-to-day decisions made when life seemed easy and crises seemed far away — the decisions that, piece by piece, bit by bit, developed habits of discipline - or of laziness, habits of self-sacrifice — or of self-indulgence, habits of duty and honor and integrity — or dishonor and shame.“

— Ronald Reagan, The Citadel, May 15, 1993

“The Character that Takes Command . . .