Mr. MARTIN. I was going to say that. I was going to complete the question and answer for you. No, it does not. Senator LEVIN. So later, a year later in a disclosure form, now the 1985 calendar year disclosure form, he listed Financial Management International, Inc. He listed that. Mr. MARTIN. On Schedule A as an asset. Yes, he did. Senator LEVIN. That is correct, on Schedule A as an asset. Again, he did not list Meese Partners. Mr. MARTIN. No, he did not. Senator LEVIN. But that is a different issue. We have gone over that. But a year earlier on his recusal form, recusal agreement, which by law he was required to file within 90 days, did within 90 days, and on May 24, 1985, filed this appendix which purported by his own statement in this letter to be the entities-and I am quoting precisely-"the entities in which Mrs. Meese or I have a financial interest." And what you are telling us is that that Appendix A did not contain any reference to the partnership interest. Mr. MARTIN. That is correct. Senator LEVIN. Now, based on the assumption that he owned the partnership interest at that time, which according to his own disclosure he did-in fact, he bought it the day before, or signed the agreement the day before-should that not have appeared on that appendix? Mr. MARTIN. If, in fact, it was an asset and something that he was going to be investing in and it was a vested entity at that time, it should have been on there. Senator LEVIN. Have you read the partnership agreement? Senator LEVIN. You have now read that partnership agreement. Mr. MARTIN. I have, but the amount of money that is going into it is blank. It could have been cash for all I know. Senator LEVIN. Cash? Mr. MARTIN. In the partnership agreement. I mean, it is blank as to the amount of money, on what I read. Senator LEVIN. I see. Mr. MARTIN. I do not know. Certainly, I can only answer you in this context. If it were an asset, identifiable- Senator LEVIN. If he owned the partnership interest on May 23, 1985, that should have been disclosed on Exhibit A. Mr. MARTIN. If it were an identifiable partnership interest and asset, it should have been, yes. Senator LEVIN. Is that any different from what I am saying? Senator LEVIN. So now I will phrase it my way and see if we can just get a real clear yes on this. If he owned the partnership interest on May 23, 1985, it should have been disclosed in his list of assets on May 24, 1985. Mr. MARTIN. That is correct. Senator LEVIN. Did he ever modify this recusal agreement, do you know? Mr. MARTIN. You mean Attachment A? Senator LEVIN. Yes. Mr. MARTIN. To my knowledge, he did not but let me explain to you. This recusal that he has issued is a specific recusal as well as a general recusal that it is an obligation to recuse yourself from anything in which you have a financial interest. So the fact that he did not put it on that Schedule A or amend it does not mean he did not have an obligation to recuse himself from that entity as well as any other. Senator LEVIN. I understand. That is clear. It was only the items that he owned as of that date, though, that should have been on Exhibit A. Mr. MARTIN. That is correct. So it does not bother me as an ethics officer that he did not put it on there, but Senator LEVIN. But he did not put it on later. Mr. MARTIN. Well, he has a general obligation to recuse himself anyway. From the Office of Government Ethics perspective, we are interested in the process, to make sure there is a process to monitor recusal. And there is such a process in the Department of Justice, and we ensured ourselves of that. Senator LEVIN. My question is also, though, does it bother you under the assumption that he owned the partnership interest on May 23 that it was not listed on May 24? Mr. MARTIN. It should have been listed if he owned it. Senator LEVIN. And you used the term what does not bother you as an ethics officer relative to something else. Does it bother you as an ethics officer if he owned that partnership interest on May 23 that it was not listed on May 24? Mr. MARTIN. Yes, I have to say it does. Senator LEVIN. All right. Senator Roth. Senator ROTH. Thank you, Mr. Chairman. Mr. Martin, does current law need clarification as to how much detail one must provide in reporting assets? For example, if a public official owns a mutual fund, must he report all the stocks the mutual fund has purchased during the course of that year? Mr. MARTIN. No. Senator ROTH. Does the law or the regulations need clarification on this point? Mr. MARTIN. Well, we have clarified it in our instructions and in our training materials. A publicly traded and publicly reported entity like a mutual fund is easy for a reviewer to determine what is in that mutual fund. So if you just name the mutual fund, we can deal with that in terms of a conflicts analysis. Senator ROTH. Now, let me ask you on the question of instructions. Do these have the force of regulations, or are they merely guidelines? Mr. MARTIN. Well, the instructions are largely taken from the regulations and are an analysis, if you will, of the law and the regulations. But I cannot say they carry the force of law. They are an aid and we try to assist the reviewer. Senator ROTH. The point I am trying to get at right now is whether or not there needs to be a clarification in the law itself. Mr. MARTIN. As to what should be filed? Senator ROTH. Well, whether the law and the regulations that are issued pursuant thereto are adequate. Mr. MARTIN. No, I think they are adequate, and I do not think they are unclear. My personal opinion is that the categories that you have to report and some of the hoops you jump through in filing your form ought to be simplified. Senator ROTH. Let me ask you this. Under current law, if an individual reports certain assets but does not do so in enough detail, what is the practice of the Office of Government Ethics in those situations? Mr. MARTIN. Senator, it is to bring a person into compliance by making an inquiry about the asset principally through the agency ethics official, and we try to bring people into compliance to prevent conflicts of interest. Senator ROTH. Was that done in the case of Meese? Mr. MARTIN. An inquiry was not made until April of this year. Senator ROTH. Why was that? Mr. MARTIN. Well, we are talking specifically about the limited blind partnership until April of this year. Senator ROTH. Yes. Mr. MARTIN. There were a number of other items on Mr. Meese's financial disclosure that my staff made inquiries about and consulted with the Department of Justice about to clarify matters. So it was done on a continuing basis up through the early part of this year, but I have to say that we did not catch the limited blind partnership and raise inquiries about it until it became notorious, or I was informed about it by someone over the phone. And that is a fault of my office in not detecting it and raising inquiries sooner. Senator ROTH. I think that is an important point. In other words, notice was given of that partnership, but it was inadequate in what it contained; is that correct? Mr. MARTIN. That is correct. Senator ROTH. So there was apparently no effort to hide it. Mr. MARTIN. No, not at all. In my opinion, Mr. Meese made a good-faith effort to report it. Senator ROTH. Now, let me ask you this question. There is a difference between a limited blind partnership and a trust; is that correct? Mr. MARTIN. Well, yes, Senator. Maybe I could define the terms. There are two kinds of trusts that the Ethics in Government Act recognizes. One is a qualified blind trust, and one is a qualified diversified blind trust. They are separate in what they can do, but they afford you protections from the conflict of interest laws if you qualify and go through all of the forms that are required by our office. A limited blind partnership, if it had not been approved by our office-and it would not be just by that label-would not afford the filer any of the protections that a blind trust did, nor would it be free from disclosure requirements that a blind trust would be. I hope that answers your question. I am not sure it does. Senator ROTH. Well, let me make sure that I understand what you are saying. Are you saying that even if a limited blind partnership is cleared-and it does not necessarily have to be cleared, does it? Mr. MARTIN. Cleared? Senator ROTH. With your office. Mr. MARTIN. You mean approved by my office? Mr. MARTIN. No, it does not have to be pre-cleared by my office, but if it is not, it is subject to the two problems I just mentioned: one, eventual possible disclosure; and, two, no protection from the potential problems of conflicts of interest that might arise. Senator ROTH. If it is pre-cleared, what is the situation? Mr. MARTIN. Well, under the law there are certain requirements to obtain a blind trust. In the one instance, a blind trust, you get instant blindness from all the assets in a trust if it is a broad, welldiversified portfolio of marketable assets. That provides on the filer and the person who creates the trust instant blindness so he or she can go about their duties without regard to what is in that trust and without regard to the conflict of interest laws. The other is a more limited protection in that you can put almost any asset in it, but you do not get blindness and protection from the conflict of interest laws until that asset is rolled over and the filer does not know what is in that trust. And, Senator, I might add that one of the features of a trust approved by us is a requirement that the trustee be independent and that there be no arrangement between the settlor and the trustee, or exchange of information about the trust. That keeps it truly blind. Senator ROTH. That is all the questions I have, Mr. Chairman. Senator LEVIN. Thank you very much. I thank both of you for coming, and we will keep the record open for additional questions. We will now recess until 2:00. [Whereupon, at 11:12 a.m., the Subcommittee recessed, to reconvene at 2:00 p.m., the same day.] [AFTERNOON SESSION] Senator LEVIN. The Subcommittee will come to order. In January of 1985, the Attorney General appeared before the Senate Judiciary Committee to complete the second set of hearings on his nomination. Based on allegations circulating at that time, which became the subject of an independent counsel investigation, the Judiciary Committee was concerned about the Attorney General's future sensitivity to issues of ethical conduct and any appearance of a conflict of interest. During questioning by Senator Biden, Mr. Meese was asked if there was anything that he would do differently from what he had done earlier. The Attorney General replied, Senator, I think that in the course of four years, I have learned a great deal about how people view things or how people might view things. And I can assure you that I have a much higher level of sensitivity to these matters now than I did when I arrived in Washington. And I can assure you that I would take great pains to avoid any kind of a situation or circumstance that might give rise to a misunderstanding or a misinterpretation of my acts or what I intended. Later on, pursuant to questioning by Senator Metzenbaum, Mr. Meese stated, I've learned a great deal from this experience, and if in the future a similar situation occurred, I would go overboard to avoid any appearance that might be construed, misconstrued or misinterpreted, or even distorted. We welcome the Attorney General here today. He has voluntarily agreed to be a witness, to answer questions that have risen about his recusal agreement of May 24, 1984; his financial disclosure forms for 1985 and 1986; and about Meese Partners, a limited partnership. We and the public can then judge as to whether he has lived up to the requirements of the ethics laws and standards that he himself said that he would meet. Before I turn to you for your opening statement, Mr. Meese, let me call on Senator Roth and the others to see if they might have opening statements. OPENING STATEMENT OF SENATOR ROTH Senator ROTH. Thank you, Mr. Chairman. The Ethics and Government Act was enacted in 1978 to promote public confidence in Government. One of the major aspects of the Act was the establishment of a uniform system of financial disclosure for high-level Federal officials and employees. Congress believed that when the private interests of public servants are made matters of record, conflict of interest may be detected and eliminated. In achieving this, Congress, of course, hoped to restore confidence in Government. Of course, Government performance should not be measured against conflicts of interest alone. The pure servant is not necessarily the qualified servant. And while it's extraordinarily important to eradicate corruption and the appearance of corruption, we must be vigilant not to do it with a blunderbuss that will deter the most qualified men and women in America from seeking to serve in Government. If those of us charged with monitoring our disclosure laws appear overly zealous in criticizing every public servant who makes a technical slip in filling out a financial disclosure form, the result will be chilling effect on the aspirations of the best and the brightest, Democrat and Republican alike. Mr. Chairman, I do not mean to apply any defense of those who are appearing here today through my suggestion that we take a balanced view in carrying out our responsibility. I'm here to learn the facts, not to prejudge them. That may mean there was a serious violation. That may mean there was just an oversight of little real consequence. If the latter, I caution that we not, through our comments on the matter before us, send the wrong signal to future public servants. Senator LEVIN. Thank you, Senator Roth. OPENING STATEMENT OF SENATOR CHILES Senator CHILES. Mr. Chairman, I want to compliment you on holding the hearing. I think it's important for the purpose of reviewing the effectiveness of the Ethics in Government Act accorded that legislation because I believe, as you do, that full financial dis |