‘Ethics nightmare’: Temporary Biden staffers raise financial disclosure concerns

As the Biden administration readies for a staffing shake-up following the midterm elections, the White House has tapped a trusted adviser to scout out appointees for President Joe Biden’s senior-most ranks.

Leading the mission is Jeffrey Zients, Biden’s former COVID-19 czar and a powerhouse executive known for his turnaround of the foundering Obamacare online exchange.

But Zients’s new role, which is uncompensated, according to reports, has revived questions about the use of a government designation that allows temporary staff to perform important White House functions. Under federal ethics law, staff appointed to substantial roles must generally publicly disclose their current and past financial ties. That’s not the case for temporary employees making just below the $132,552 salary threshold for disclosure.

As a “special government employee,” Zients can hold on to his private sector employment and is exempt from filing the public financial disclosures required by full-time presidential hires. Similar to a consultant, a so-called SGE generally holds the post for 130 days or less.

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The positions have generated controversy over perceived or real conflicts of interest across presidential administrations. Former President Donald Trump’s acting controller of the currency was an industry lawyer who served as a special government employee. Huma Abedin held outside posts while advising Hillary Clinton at the State Department.

After leading Biden’s presidential transition, Zients was tapped to oversee his administration’s coronavirus response, drawing major plaudits, with Politico’s West Wing Playbook reporting before his departure this spring that he was well positioned for a future role as the president’s chief of staff. A subsequent report from the outlet noted that Zients was interested in becoming Biden’s next chief of staff or treasury secretary.

In his new role, Zients will report to Presidential Personnel Office Director Gautam Raghavan and work closely with Biden’s current chief of staff, Ron Klain, with most positions requiring Senate approval, according to Axios. Joining Zients is Natalie Quillian, his former COVID-19 response deputy, a deputy campaign manager for Biden in 2020, a partner at the Boston Consulting Group, and a top Obama White House official before that.

While the practice follows the letter of the law, government ethics attorneys say temporary employees should not be granted such influence over essential government functions.

Tasking temporary employees with drawing up shortlists of Cabinet or deputy Cabinet contenders is “highly unusual,” said Richard Painter, the chief ethics lawyer for President George W. Bush from 2005 to 2007. “To hire and to remove people … is a core power of the president under Article 2 of the Constitution. You really shouldn’t have the recommendations to the president being farmed out to SGEs.”

“You want people there all the time who are listening to what the policy concerns are,” he said, suggesting that full-time White House Office of Personnel employees would be most attentive to the administration’s priorities and thus better suited to identifying the right candidates.

Scott Amey, general counsel at the Project on Government Oversight, defended the practice. “Nothing prohibits contractors for evaluation work,” he said. “Contracts have done background investigations since the 1990s.”

Still, said Painter, now a University of Minnesota law professor, as high-level temps exempt from disclosing their financial interests publicly, SGE roles create “a lack of transparency.” He said even officials whose roles require public disclosure of their financial ties tend to put up a fight. “There’s always an argument over which clients you have to list and which not,” he added.

Painter predicted that if Republicans take control of either chamber of Congress, the White House is likely to face an onslaught of requests for information relating to SGE financial disclosures amid concerns over conflicts of interest. “It’s going to get ugly,” he said.

Zients’s corporate work has already proven politically sensitive. Before joining the administration, a Democratic consulting firm took a scalpel to his Wikipedia page in the months before Biden took office, axing a quote about Zients’s “love” for the culture at Bain & Co, among other details, according to Politico. He has continued to attract left-wing scrutiny.

“Zients working ‘pro bono’ permits him to evade ethics restrictions that would apply if he was conducting government work while on the government payroll,” said Jeff Hauser at the liberal Revolving Door Project. “We believe government work, including talent identification, should be conducted by full-time government employees operating under the full suite of ethics restrictions that apply to government staff.”

When Zients joined the White House in 2021, his public financial disclosure showed him among the wealthiest Biden administration employees, reporting assets valued between $89.3 million and $442.8 million, according to ABC News. He divested from his private equity firm, Cranemere Group, and $1 million worth of Facebook stock.

Zients made between $10.4 million and $28 million in income in the year before Biden took office and doubled his total wealth since serving as the deputy director of former President Barack Obama’s Office of Management and Budget, ABC News reported.

SGEs are an “ethics nightmare,” said Painter, the former associate counsel to the president in the White House counsel’s office.

“I would be lying awake at night worrying about them,” he said. “They’re working two days a week for the White House, and three days a week, they’re out there making enormous amounts of money, stuffing their pockets.”

A White House official did not respond when asked about the White House’s thinking in bringing Zients in as an SGE.

The White House’s effort to shield other top presidential advisers from scrutiny has drawn rebuke. Not until May did Biden senior adviser Anita Dunn assume a position that required filing a public disclosure despite spending months offering guidance to the president in roles punctuated by a return to SKDK, her corporate consulting firm, and a major political vendor.

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For a White House quick to tout its ethical bona fides, Walter Shaub, director of the Office of Government Ethics under Obama and briefly under Trump, told the Washington Examiner in August that “it just seems really disingenuous to give someone that much authority but set their pay below a level that would require financial disclosure.”

The White House has said Dunn will divest her holdings and recuse herself from all matters involving her former firm and past clients. In line with the administration’s ethics pledge, Dunn also won’t be able to join any meetings with those clients for two years, White House spokesman Chris Meagher told CNBC.

By September, Dunn had still not divested from a multimillion-dollar financial portfolio, a pace Shaub called “outrageously slow.”