Vanderbilt Law Review

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Three events of recent months have concurred to focus public attention on conflict of interests in the federal service. The most significant of these events is the appointment by President Kennedy of a committee to inquire into the problems of ethics in government. It is to be hoped that the projected inquiry will amount to more than a footnote in a law review article, which seems to have been the fate of its predecessors.' The most spectacular event was the decision in the Dixon-Yates case, in which the Supreme Court held unenforceable a government contract because of the dual interests of a government agent. The least publicized event, yet the one which best indicates the confusion and uncertainty in this area, arose in the Senate consideration of the President's cabinet, notably Secretary of Defense Robert S. McNamara. As a condition of committee approval, Mr. McNamara was forced to sell all his interests in the Ford Motor Company so as to avoid violating any conflict of interest statute. The proposal to place the receipts of the sale in a trust for investment purposes was unacceptable. Eventually, the appointee agreed to make any disposition of his interests which the committee deemed suitable.

Popular awareness of the conflict of interest problem is significant and interesting. Conflict of interest has been said to be a "luxury issue,"' a matter that only a secure and stable society can afford to be concerned about. Certainly the present-day citizen has little to worry about in comparison with his earlier counterpart. Larcenies in government are no longer so blatantly gross as they were in earlier periods of our history. Most commentators agree that the basic integrity of federal government employees and officials today is relatively high and that the standards are rising. One writer argues, however, that the trend is downward. While noting that few can make a fortune nowadays, he feels that thousands can and do wrest some-thing less than that from the government and deplores the present day "democratization of corruption." Assuming the trend to be up-ward, it should be realized nonetheless that we are living in the 1960's, not a hundred years past, and that the need for high standards of integrity has grown faster than any coordinate rise in ethical standards generally.

This note will relate and compare common law fiduciary principles to conflict of interest situations. Of necessity such a project must be general in nature. Therefore no attempt will be made to correlate the many aspects of the conflicts question to the various theories of trusts,agency, and so forth. Three situations will be considered: (1) acceptance of compensation from private sources for government related services; (2) post-employment activities; and (3) the transaction of business with entities in which a personal interest is held. These situations will be examined first in relation to the pertinent federal statutes, then each will be considered in relation to applicable fiduciary principles. The basic policies underlying this area and how well they have been fulfilled will thus be brought to light.