Fixing the Revolving Door

by Chandu Krishnan

On February 1, 2014, the New York Times published a depressing article claiming that the law to regulate the “revolving door” on Capitol Hill is not working. It alleges that several congressional aides have started lobbying their former congressional bosses and colleagues on behalf of new corporate employers within the proscribed one year period by exploiting a loophole in the law.

The law does not apply if an aide’s salary is below a certain cap. In 2013, the cap was $130,000. So aides are alleged to have ensured that their salaries were below this limit in order to circumvent the ban.1

Such behavior is an example of the sort of institutional corruption in the nation’s capital that undermines public trust and confidence in government. In Transparency International’s 2013 Global Corruption Barometer, 64% of US respondents felt that the U.S. government was run by a few big interests looking out for themselves (this figure was higher in only 5 of 28 OECD countries).2

The congressional aides playing this game are not breaking the law. But their behavior is damaging because positions of trust are being abused and the industries/companies that employ these persons have an unfair advantage in influencing government policy in their favor. Furthermore, the promise of employment with a company after leaving Capitol Hill may induce aides to behave in ways that undermine Congress’s ability to make laws that reflect the will of the American people rather than that of industry lobbies.

Of course, the U.S. is not alone in confronting the revolving door problem. In the U.K., for example, it was revealed in May 2011 that a former Defense Secretary, Geoff Hoon, included helicopter manufacturer Agusta Westland among his consultancy clients. Interestingly, in 2005, when he held the defense portfolio, he approved a £1 billion contract with this company, which was controversially declared a preferred bidder, despite claims that other companies could have provided better value-for-money.3 In fact, compared to the U.S., the U.K. has a bigger problem because it does not actually have an enforceable law on the revolving door. Instead, it has an astonishingly lax regime where an Advisory Committee on Business Appointments (known as ACoBA) provides advice to ministers and senior civil servants seeking private sector jobs after demitting public office. Since ACoBA is a purely advisory body, it has no monitoring or enforcement powers. There is nothing to stop individuals from ignoring the advice they are given. Even worse, the remit of ACoBA does not extend to members of parliament and their aides!

So how can we fix the problem? Shutting down the revolving door completely is neither feasible nor desirable. In the U.S. and in other countries, the interchange of skills and experience between the public and private sectors can be mutually beneficial and provide significant benefits to society as a whole. Companies are enriched by persons with government experience, and government benefits when it draws on the expertise of those who know how the private sector works. The trick is to manage or regulate the revolving door more effectively so as to maximize benefits to society while minimising corruption risks, which are greater when government officials and legislators can be unduly influenced in their policy or procurement decisions by the interests of past or prospective corporate employers.

There is no magic bullet to solve the problem and we need more research to identify good (and bad!) practice from around the world. That said, the following general principles may be helpful (even if some are rather controversial):

First, scrap income-based criteria and increase the length of the “cooling off” period before a person takes up post-public employment. One year is probably too short. Two, or, ideally, three years, is better because the kind of insider knowledge and contacts that tend to be exploited in corrupt ways have a limited shelf life and tend to lose their value over time.

Second, sensitive posts (in the executive branch or legislature) should be audited to assess the level of corruption risk. In some cases (e.g. involving public procurement or regulation in key sectors such as defense, energy and health), the “cooling off” could be increased. In exceptional circumstances, a person involved in procurement decisions that have benefited a company, should be barred from taking up employment in that company.

Third, rules and regulations should be statutory, and the body or agency that enforces them should have adequate resources to monitor and enforce them.

Finally, we should impose strong sanctions (fines and imprisonment) on individuals and employers who violate the law, in order to deter bad behaviour.

 

1. Eric Lipton and Ben Protess, “Law Doesn’t End Revolving Door on Capitol Hill,” New York Times, February 1, 2014.
2. Transparency International, “Global Corruption Barometer,” 2013, 15. OECD is the Organization for Economic Co-operation and Development.
3. Transparency International UK, “Fixing the Revolving Door between Government and Business,” August 2012, 4.