A 1996 Department of Justice (DOJ) memorandum concluded that criminal conflict of interest laws (18 USC Section 208) prohibit federal government employees from serving in their official capacities on the board of directors of a non-federal nonprofit organization unless 1) such service is mandated by statute; or 2) the board member is relieved of fiduciary responsibility for the nonprofit; or 3) a waiver of Section 208(a) is granted pursuant to 208(b).

Because the statute authorizing the VA nonprofit research corporations mandates that the affiliated medical center director, chief of staff and associate chiefs of staff for research and education serve on the board of any nonprofit established under this authority, these personnel are not at risk of violating conflict of interest laws contained in Section 208.

However, several corporations have asked whether other VA personnel - such as physicians and PhD investigators - serving on the board of a research and education corporation are at risk. The Office of General Counsel has determined that service by VA employees in their personal capacities on non-federal boards is acceptable and does not invoke the criminal conflict of interest statute. However, such personal business must be conducted during personal time.

Board Meetings

To clearly delineate between official and personal capacities for VA personnel serving on the board, NAVREF recommends that board meetings and other board business involving non-statutory VA personnel should be conducted outside normal VA duty hours; that is, before 8:30 a.m., after 4:30 p.m. or during a normal lunch break (30-60 minutes consistent with local medical center policy). 

Alternatively, non-statutory VA board members may take annual leave the day of a board meeting or may obtain an approved irregular tour of duty that extends their work day by the same number of hours as the board meeting.  Holding NPC board meetings outside of normal working hours and obtaining an approved irregular tour of duty are the most commonly exercised solutions for these situations.

• 1996 DOJ Memorandum
• VA General Counsel Guidance

November 19, 1996

MEMORANDUM FOR HOWARD M. SHAPIRO
GENERAL COUNSEL
FEDERAL BUREAU OF INVESTIGATION

From:		Beth Nolan
		Deputy Assistant Attorney General
Re:		Service on the Board of Directors of Non-Federal Entities by Bureau Personnel in Their Official Capacities

You have requested our advice as to whether Federal Bureau of Investigation (“FBI”) personnel may serve on the boards of directors of non-federal nonprofit entities in their official capacities. Specifically, you have raised the question whether 18 USC § 208 would prohibit such service. Section 208 prohibits any officer or employee of the executive branch from participating as a government official in any “particular matter” in which an “organization in which he is serving as officer, director, trustee, general partner or employee…has a financial interest.” 18 USC § 208(a). We conclude that this broad prohibition against conflicts of interest within the federal government would prevent a government employee from serving on the board of directors of an outside organization in his or her official capacity, in the absence of (1) statutory authority or a release of fiduciary obligations by the organization that might eliminate conflict of interest, or (2) a waiver of the requirements of § 208(a), pursuant to 18 USC § 208(b).

Our conclusion follows inevitably from earlier opinions of this Office on the scope of § 208. Specifically, we recently found that § 208 would prevent an executive officer or employee who was also serving as the director of an outside organization (in a state that imposed fiduciary obligations upon such directors) from participating in any particular matter in his or her government employment in which the outside organizations had a financial interest. See Memorandum for Kenneth R. Schmalzbach, Assistant General Counsel, Department of the Treasury, from Walter Dollinger, Assistant Attorney General, Office of Legal Counsel (June 22, 1994) (“Connie Lee opinion”). In the Connie Lee opinion, we made clear that the inherent conflict of interest between the government employees’ loyalty to the federal government and his or fiduciary duty to the outside organization under state law could be overcome only if such service were expressly authorized by statute, or if the outside organization waived applicable fiduciary obligations. [Footnote: This would require that applicable state law permit a waiver of fiduciary obligations.] Neither of those exceptions applied to the situation in the Connie Lee opinion, nor are we aware that they apply to the question you have raised.

Although our focus in the Connie Lee opinion was with how this conflict of interest might influence the government employee’s official duties in his or her government job, that conflict is no less troublesome in its effect upon the employee’s official actions as a director of the outside organization. The prohibition in § 208 extends to any official action by a government employee that affects the employee’s financial interests or those of other specified persons or entities, such as an organization for which the employee is a director. In the instance you have asked us to address, the employee performs official duties for the FBI in serving on the board of the outside organization. Thus, § 208 would apply to any action the employee takes as a director that affects the financial interest of the outside organization.

If you have any questions, please do not hesitate to contact us. We have attached for your reference both the Connie Lee opinion and a memorandum from the Office of the General Counsel of the Department of Defense, which you may find helpful in further clarifying this issue.

Subject:

Directors of Non-Federal Entities

The Office of Government Ethics has notified agencies of a Department of Justice (DOJ) memorandum concluding that the criminal conflict of interest law would prohibit Federal government employees from serving in their official capacities on the boards of directors of non-Federal nonprofit entities. That law prohibits any officer or employee of the executive branch from participating as a government official in any “particular matter” in which an “organization in which he is serving as an office, director, trustee, general partner or employee…has a financial interest.” 18 USC § 208(a).

DOJ found that the prohibition in section 208 “extends to any official action by a government employee that affects the employee’s financial interests or those of other specified persons or entities, such as an organization for which the employee is a director.” Thus, an employee who, as part of his or her organization is subject to section 208 with respect to any action the employee takes in his or her role as a director of the outside organization. DOJ concluded that the broad prohibition of section 208 against conflicts of interest within the Federal government would prevent a government employee from serving on the board of directors of an outside organization in his or her official capacity, in the absence of: (1) a statute authorizing the employee to serve, or a release of fiduciary obligations by the organization that might eliminate the conflict of interest; or (2) a waiver of the requirements of § 208(a), pursuant to 18 USC § 208(b). memorandum for Howard M. Shapiro, General Counsel, FBI, from Beth Nolan, Deputy Assistant General Counsel, Office of Legal Counsel (November 5, 1996).