[Code of Federal Regulations]
[Title 45, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 45CFR73.735-801]

[Page 171-172]
 
                        TITLE 45--PUBLIC WELFARE
 
                           AND HUMAN SERVICES
 
PART 73--STANDARDS OF CONDUCT--Table of Contents
 
                      Subpart H--Financial Interest
 
Sec. 73.735-801  Participation in matters affecting a personal financial interest.


    (a) An employee shall not participate personally and substantially 
as a Government employee in a matter in which any of the following 
individuals or organizations has a financial interest:
    (1) The employee;
    (2) The employee's spouse;
    (3) The employee's minor child;
    (4) An organization in which the employee serves as an officer, 
director, trustee, partner, or employee; or
    (5) A person or organization with which the employee is negotiating 
for prospective employment or has an arrangement for prospective 
employment. Criminal penalties may be imposed under 18 U.S.C. 208 for 
violations of the prohibition.
    (b) Applying the provision of 18 U.S.C. 208:
    (1) A ``financial interest'' is any interest of monetary value which 
may be directly and predictably affected by the official action of an 
employee. There is no minimum amount of value or control that 
constitutes a financial interest.

    Example 1: An employee owns a single share of stock in a widely-held 
corporation. If the corporation is likely to be affected by a matter in 
which the employee participates as a Government official, the employee 
may violate 18 U.S.C. 208.
    Example 2: An employee has a paid part-time position with a non-
federal organization. If the organization is likely to be affected by a 
matter in which the employee participates as a Government official, the 
employee would violate 18 U.S.C. 208.

    (2) The prohibition of 18 U.S.C. 208 applies to personal and 
substantial involvement by an employee in a matter, exercised through 
decision, approval, disapproval, recommendation, investigation, giving 
advice, or other significant effort regarding the matter.

    Example 1: An employee is a member of a panel that evaluates 
proposals for contracts and makes recommendations as to their award. If 
the employee's spouse owns stock in a company which submits a proposal 
that

[[Page 172]]

is reviewed by the panel, the employee would violate 18 U.S.C. 208 even 
though the panel recommendation may be rejected by the contracting 
officer.
    Example 2: An employee is on a leave of absence from a university. 
He or she would violate 18 U.S.C. 208 by participating in the drafting 
of regulations which would have a ``direct and predictable effect'' upon 
universities in general and, therefore, upon the employee's university.

    (3) An employee must know that the financial interest exists in 
order to violate 18 U.S.C. 208.

    Example: An employee inherited a beneficial interest in a trust. He 
or she does not, however, have actual knowledge of the specific property 
held by the trustee. If the trust contains stock in a corporation which 
may be affected by the employee's official actions, he or she would not 
violate 18 U.S.C. 208 in taking official action affecting the 
corporation.

    (4) Negotiation for prospective employment includes both an 
indication of interest on the part of the employee in working for an 
organization and an affirmative action on the part of the organization 
to show consideration of the employee.

    Example 1: An employee of the Department sends resumes and cover 
letters to fifty prospective employers, all of whom regularly have 
dealings with HHS. Forty employers do not respond; however, ten respond 
with cordial form letters stating that the employee's resume will be 
retained for future reference. For purposes of the 18 U.S.C. 208 
prohibition, the employee is negotiating for prospective employment at 
the time he or she sends resumes.
    Example 2: At a site visit to a grantee institution, an employee who 
is officially responsible for a grant to that institution informs an 
officer of the institution that he or she is seeking a new position 
outside HHS. The grantee subsequently makes a conditional offer of 
employment to the employee who promptly responds by asking for an 
opportunity to discuss salary and related matters. Under these 
circumstances, a negotiation for prospective employment is underway.

    (c) An employee may obtain approval to participate in his or her 
official capacity in a matter in which he or she has a direct or 
indirect financial interest, if the interest is not so substantial as to 
affect the integrity of his or her official duties. An employee who 
believes that such participation is warranted should follow the 
procedures in Sec. 73.735-804.
    (d) An employee convicted of violating 18 U.S.C. 208 may be fined up 
to $10,000, or imprisoned up to two years, or both.