COMMERCE DEPT. IG: VICTORY'S PARTY VIOLATED ETHICAL RULES

News reports of the party earlier this year provoked criticism of Victory, who said at the time that the lobbyists who hosted the party at her Great Falls, Va., home were personal friends (CD Jan 22 p1). She announced she was leaving the top post at NTIA July 10 for personal reasons. The hosts of the party included a partner at Wiley, Rein & Fielding and lobbyists from SBC, Motorola, CTIA, Intelsat and Cingular. Victory had said she vetted the event in advance with the Commerce Dept.’s Ethics Office, which confirmed that it was in line with ethics rules.

The IG report concluded that Victory’s acceptance of the catered party, attended by 60 guests, violated parts of govt. ethical standards that: (1) Barred employees from accepting gifts from a person “whose interests may be substantially affected by the performance or nonperformance of the employee’s duties.” (2) Prohibited employees from accepting a gift from a “prohibited source.” Such sources included people who had interests that might be affected by the employee’s “official duties.” Because Victory headed NTIA, the telecom industry ties of the 6 hosts “clearly were individuals who might be substantially affected by Victory’s performance of her official responsibilities.” (3) Required employees to avoid actions that would “create the appearance that they are violating the law or the ethical standards contained in the Standards of Ethical Conduct for Employees of the Executive Branch.” The IG report said the party didn’t appear to fall under an exception that allowed gifts to be received as a result of a personal relationship. “Even though all 6 hosts of the party indicated that they were personal friends of Victory, they each had their employer pay their share of the party expenses,” the IG said.

Some press reports had tied the party to an Oct. 24 letter that Victory wrote to the FCC on behalf of the Bush Administration in which she urged the rollback of wireless spectrum caps. “We did not find evidence to support the charge that the position Victory espoused was affected by the party given in her honor,” the report said. The report noted that Victory presented policy notes that indicated her spectrum cap position was formulated prior to the party. “While the July 2001 notes recommended periodic review of the spectrum cap policy to assess potential removal or modification, the October 2001 letter supported removal,” the report said.

The IG report said the Justice Dept.’s Public Integrity Section was reviewing the matter for “prosecutorial merit.” When asked whether the DoJ had plans to prosecute, a spokesman told us Mon. “the matter has been resolved without criminal charges.”

A govt. official had told us in Jan. that Victory had been advised orally before the party by the Commerce Dept.’s asst. gen. counsel for administration that she could accept the gift as personal and it need not be reported. On revised guidance from the Dept., Victory later submitted an updated financial disclosure form for 2001 to the Office of Govt. Ethics, reporting as a gift the lobbyists’ contributions to the party.

Waxman earlier this year had asked Commerce Dept. IG Johnnie Frazier to open an investigation into lobbyists’ contributions to the party. He had noted that Victory initially said 3 lobbyists had hosted the party out of their own pockets out of friendship for her but that later press accounts indicated some had been reimbursed by their companies. Waxman also said 10 days after the party, Victory wrote to the FCC urging the repeal of a then-45 MHz wireless spectrum cap.

The IG said that while Victory sought advice on the propriety of the party from Commerce Dept. ethics officials, “it does not appear that Victory made the necessary full disclosure of all relevant circumstances.” Citing an official whose name was blanked out of the released version of the IG report, it said the ethics official was under the impression the party would consist of Victory’s husband and 2 other couples and “that she informed Victory that such a party would be permissible as long as the other couples paid for it with their own funds.” Later press accounts indicated the party was larger than that. “Without an adequate disclosure of the size and nature of the party, Victory cannot rely on the safe harbor afforded individuals who engage in conduct that violates the standards of conduct in good-faith reliance on the advice of an agency ethics official,” the IG report said.