Conflict of interest no conflict for US lawmakers

It could be said that, when left unchecked, corruption and duplicity are endemic to the human condition, particularly in the political domain. While the Communist Party of China has in recent years made strenuous efforts to curb the insidious practice of corruption, elsewhere the situation is vastly different.

Recently, The New York Times ran an expose, Stock Trades Reported by Nearly a Fifth of Congress Show Possible Conflict' on September 13, 2022, revealing that increasing numbers of US senators and members of Congress are using their insider knowledge to profit in their stock tradings.

The analysis, carried out by the paper, found that "97 lawmakers or their family members brought or sold financial assets over a three year period in industries that could be affected by their legislative committee work". Of the 183 current senators or representatives reporting a stock or other trade by themselves or an immediate family member, more than half sat on committees giving them advantage in information they possessed due to their political role.

Furthermore, some committees have broad oversight on matters such as tax policy which can affect every company.

Over this period there were more than 3,700 trades from members of both parties posing a potential conflict of interest between their public roles and private financial decision making. This amounted to over 10 percent of member's trades.

The Times was able to complete the investigation using a comprehensive data base, Capitol Trades held by a German financial firm 2iQ Research. This was then matched against member's committee assignments, hearings and investigations, to see where conflicts could exist.

Numerous senators and members of Congress were highlighted in the Times' expose, some being particularly egregious.

While a member of the agriculture committee, Alabama Republican, Senator Tommy Tuberville regularly reported buying and selling contracts tied to cattle prices, admitting he "had been talking about the cattle markets".

Representative Bob Gibbs, an Ohio Republican on the House Oversight Committee, bought shares in the pharmaceutical company AbbVic while that company was being investigated by the committee for its high drug prices. The husband of West Virginia Republican, Carol Miller, bought shares in the same company while his wife was on the same committee. The Khanna family was also dealing in another seven companies being investigated by committees on which the Congressman sat.

One day before a House Committee release of damaging findings on Boeing's 737 Max jet, which had been involved in two fatal crashes, the wife of Representative Alan Lowenthal, a Californian Democrat, sold her shares in the company, whose shares went into a nosedive due to the findings.

Each of these members defended their actions as being proper.

The findings indicate that 13 members of the House oversight panel reported that they or immediate family members brought or sold shares in companies that were under investigation by committees on which they sat during the 3 year period. "44 of the 50 members of Congress who were most active in the market brought or sold securities in companies over which their committee assignments could give them some degree of knowledge or influence".

Of particular note is the position of House Leader Nancy Pelosi. While her disclosure findings are not included in the Times' analysis as she does not sit on any legislative committees, her husband, Paul Pelosi bought and sold between 25 and 81 million US dollars worth of stocks, options and other assets during the period examined. Ms Pelosi has immense influence over which legislation makes it to the floor of the House. This includes the various proposals to tighten the rules for trading by her House colleagues and their families, including, of course, her husband.

Despite these, and other egregious cases occurring, Congress has long refused to impose stricter restrictions on its members. The Times noted that while some of the transactions listed by the Times fall short of legally defined insider trading, there is a clear ethical dilemma for members.

Investigations of law-makers are rare. Senator Richard M Burr, a North Carolina Republican, along with three others, was investigated by the Justice Department in 2020 following their selling of stocks after a private briefing was given concerning COVID-19. Charges were never laid and the investigation closed. A rare insider trading prosecution was found against New York Republican, Chris Collins, who after pleading guilty to charges related to a failed drug trial at an Australian biotech company on whose board he served, resigned in 2020. He served time in prison before receiving a presidential pardon from Donald Trump.

Attempts are being made to frame legislation to tighten the rules around member's actions. Favored is one requiring members to put stocks, bonds and other holdings in a blind trust, managed by an outside financial advisor.

Clearly, when so much power is mixed with vast sums to be made, an ideal climate exists for self interest and dubious actions. A tighter regulatory framework is urgently needed, though for that to occur there is need for a far greater political will, in an increasingly fractured nation and legislature that may be a long way off.

John Queripel is a Newcastle, Australia based historian, author and political commentator.

The opinions expressed here are those of the writer and do not necessarily represent the views of China Daily and China Daily website.

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