in House rules, a general enforcement mechanism for violations of traditional or unwritten standards, if the need arose.

Prior to the adoption of this rule, offenses against the institution had been dealt with customarily by ad hoc or special committees. This merely institutionalized an enforcement means which the House could use if it chose to.

A Member, officer, or employee of the House of Representatives shall adhere to the spirit and the letter of the rules of the House of Representatives and to the rules of the duly constituted committees thereof.

This rule was similar to paragraph 1, in that there had not been,. prior to that time, a specific rule that required one to adhere to duly constituted committee rules.

Paragraph 3 merely says that:

A Member, officer, or employee of the House of Representatives shall receiveno compensation nor shall he permit any compensation to accrue to his beneficial interest from any source, the receipt of which would occur by virtue of influence improperly exerted from his position in the Congress.

That is that very subjective conflict of interest rule that I mentioned earlier. It takes its form or implementation in the form of ruleXLIV, which is the financial disclosure rule.

Paragraph 4 says:

A Member, officer, or employee of the House of Representatives shall accept no gift of substantial value, directly or indirectly, from any person, organization, or corporation having a direct interest in legislation before the Congress.

This, perhaps you gentlemen have already found out, is an extremely difficult situation with which to deal.

The choice in writing a provision of this sort seems to be whether one will attempt to go, with great specificity, into defining what you are talking about and, thereby, very often create a gaggle of regulations, or whether one will attempt to define it subjectively and depend on the wisdom of the individual situation or the case-by-case basis as it is dealt with under the enforcement mechanism.

I have had, quite recently in my personal experience, a gift defined to me as only that thing which meets the Internal Revenue definition of a gift; that is, one which arises out of donative intent and with a free and disinterested generosity. There are arguments to the contrary that gifts, say, to office accounts, do not necessarily meet those criteria.

I have had the argument raised that a gift is only that which accrues to one's net worh. If one is not the richer after he has received the gift, then it was not a gift. When asked, what was it, then? the answer was, nothing, because it does not meet that situation.

Gifts are difficult to deal with. For instance, how do you treat a gift to a person who might share some of the equities of the person who would be the Government official reporting under financial disclosure and subject to this rule? This is also a very difficult question. My own opinion would be, if the Commission is to deal with the subject of gifts, that it should be very, very clear what the Commission has in mind and just what would be covered within the meaning of the gift.

I have been surprised upon many occasions at the total number of interpretations that could be placed on such situations as this.

In paragraph 5, one deals with much the same problem as gifts in talking on an honorarium. The dictionary definition of an honorarium is completely unique, as far as I can find out. It is neither a gift in any literal sense of the word, nor is it specifically something rendered or something given for services rendered. It is somewhere in between those two situations. However, an honorarium has been and continues to be a time-honored custom among people of note and civility, and it is my impression that the committee in 1968, when this was drawn, was not disposed to do away with honorariums.

It is conceivable that an honorarium can be a disguised form of payment of another nature. So the committee drew the rule that you could not accept an honorarium in excess of the usual and customary. The advice or the amplification on that point from the committee staff, through inquiries about it, was that the term that we used, usual and customary, was to be applied to both the donor and the recipient.

If an organization normally paid $1,000 as an honorarium, it would be beyond the usual and customary if it paid $5,000 upon a particular occasion. But if the person who received it normally received $1,000 for making a speech, and a particular situation arose where somebody offered him $10,000, that would not meet the usual and customary, unless the person who gave it usually and customarily gave $10.000. The test had to be met from both ends.

.

The objective of the rule was to not permit the practice of giving honorariums to be abused.

Paragraph 6 states that a Member should keep his campaign funds separate from his personal funds.

As Members and those of us who have been around here for some time know, we have much more precision in our accounting methods now than was the case in the past. There were specific abuses that had, some time prior to this, been a matter of great public concern. This rule was merely to require that you keep your campaign funds separate and that you expend no funds from your campaign account that were not attributable to campaign purposes. It also held that you could not convert campaign funds to personal use except for legitimate and verifiable prior campaign expenditures. That rule was changed slightly at the beginning of the 94th Congress.

Just before the commencement of the 94th Congress, when this rule was still in effect, the rule said that you may make no expenditures from your campaign funds not attributable to bona fide campaign purposes.

Subsequent to the rule, the Congress, both the House and the Senate, had expressed its will to change this by having written in Public Law 93-443, to which Mr. Potter alluded so eloquently before, that those funds may be used for any other lawful purpose.

Therefore, at the commencement of the 94th Congress the rule was amended slightly so that it would conform to the statutory situation, and it says, unless it is specifically provided by law they can not be converted.

Paragraph 7 said that a Member of the House shall treat the proceeds from a testimonial dinner as campaign funds unless there was specific notification to all of the parties involved that they were for some other purpose. This was a troublesome item to deal with in that we were not at all sure-when I say "we" I am speaking of the staff

we were not at all sure whether we could legally bar a Member of Congress from receiving a gift. It had been quite customary in the past for constituents and supporters in certain areas to often give automobiles to Members of Congress, or some other nice gift.

Even if everybody knew precisely what they were doing and knew precisely what the contribution was for so the Internal Revenue Service could also know what it was for, at least in my own mind there would still be some question of whether or not it could be barred.

We felt that the House could impose upon its Members the requirement that when general fundraising events on their behalf took place, there should be a clear statement as to the application of the proceeds. Paragraph 8 started out as a so-called nepotism provision. It went through many, many changes, and it was just about the time this code was being developed that the post office and civil service law, containing an antinepotism provision, was passed. So this provision was backed off so as not to have any conflict with the statute, and it merely says that a Member of the House shall retain no one from his clerk hire allowance who does not perform duties commensurate with the compensation he receives.

Other than the two paragraphs that I mentioned before-paragraphs 9 and 10-that summarizes House rule XLIII.

The second part of your question, Mr. Chairman, dealt with how a complaint comes before the committee. If I might just offer this gratuitously, complaints come to the committee almost every day in the form of some dissatisfaction with the manner in which Congress operates its business. These complaints range from the fact that a Member may not go to church regularly on Sunday to many other situations. I have seen one complaint that was 55 pages, typed single spaced. I was never quite able to find out precisely what their complaint was, but the complaints we receive cover a wide scope of dissatisfaction.

For a complaint to properly come before the committee, according to the rules, it must be in writing and under oath. It must allege a specific violation of a law, rule, regulation, or standard of conduct. It must be submitted by a Member of the House to the committee, or if three Members of the House refuse to transmit that complaint to the House the committee will accept it directly.

The committee then makes a determination as to the substantiality of the complaint, a procedure which we call the preliminary inquiry. At this stage of the process we do not use any subpena power, nor any other extreme measures. We simply attempt to bring together as much information as we can about the complaint, because when a complaint against a Member of Congress is being submitted to 12 of his colleagues, 6 on either side of the political median strip, we feel they should have as much information as possible upon which to base a reasonable decision.

If the complaint, with the information we have been able to develop in the preliminary inquiry, meets the test of perhaps what would be analogous in a grand jury action to probable cause, or if it is a credible sort of complaint, the committee then votes to go into a formal investigation. It takes seven votes regardless of how many members are present. I believe the rule presently says it takes a majority of the members of the committee.

I might insert here parenthetically that the committee has the power to move on its own initiative to go to the same stage without benefit of a formal complaint, but generally the procedures are the

same.

The committee then commences investigation generally by interviews. We attempt to locate those persons who are able to bring the best information to bear on the matter under investigation. We hold hearings and we hold as many of those hearings as we can in public session. If the committee believes the information that will be educed in the hearing will tend to defame, degrade, or incriminate, that information must be taken in executive session. Then on the sum of that information, the committee takes action, writes a report, and makes recommendations to the House. The committee has no authority beyond making recommendations to the House.

Forgive me for being so long-winded.

Mr. MEEDS. You are very well prepared for someone without a prepared statement.

Chairman OBEY. Let me ask a couple of questions of a number of

you.

First of all, Mr. Henshaw-as you know, it is very difficult for any one to really get a handle on this question of unofficial office accounts because there is not necessarily disclosure, so all we know is what is voluntarily disclosed.

Could you tell us from what you do know about the unofficial accounts which are filed with you, what is their nature, for what are they used, how much do you find on the average in them, what is the range of size-anything that you think would be of value to us on that point.

Mr. HENSHAW. Mr. Chairman, I have the Chief of Records and Registration Section here with me today and, if it would be all right with you and the Commission, perhaps we could have him respond to that.

Generally, we get them in on a voluntary basis. They come in and we put them with their file in Records and Registration with a letter back to the Member that it will be open for public disclosure. I have not gone into the nature of them in detail. However, I think one of your staff people has been over and talked to them. Mr. Russell Welsh is here.

STATEMENT OF RUSSELL WELSH, CHIEF, OFFICE OF RECORDS AND REGISTRATION

Mr. WELSH. My name, Mr. Chairman, is Russell Welsh. I am head of the Office of Records and Registration, which is the office that accepts campaign reports by Members of the House of Representatives and also accepts the lobbying reports. In addition, we accept voluntary filings by the Members of Congress. These voluntary filings include financial disclosures that some Members have chosen to file and also include voluntary filings of the unofficial office accounts.

Since 1974 we have had 33 current or former Members voluntarily disclose their unofficial office accounts. These office accounts include both the newsletter account and what we consider an office account,

those expenses necessary to defray the costs of a holder of Federal office.

We have no really solid figures on the amounts used in these office accounts, but we do have some types of expenditures for which these office accounts are used.

There are really three classifications. These are our own classifications because there is no uniform method of reporting.

Classification 1: Actual office operations, both in the District of Columbia and in the home district. These would include expenditures for office supplies, phone lines, additional staff, and additional office rental.

Particularly under additional office rental, I might note that several Members use these office accounts for mobile offices within their home districts.

Office supplies are bought many times from the unofficial office account either from the stationery store or directly through a private

concern.

Classification 2: The second type of expenditure we find in the unofficial office accounts is that for communications expenses, for example, the traditional franking newsletters and the cost of media and television tapes, either through the House studio or private concerns. Classification 3: The third type of expenditure we find deals with constituent meetings, either in Washington or in the home district. These include some travel, rental, refreshments, and sometimes speakers' fees, either for a farm meeting or other types of business meetings.

Classification 4: One other additional expense that doesn't fit into the above three categories and which we do find in these unofficial office accounts, is for certain amenities such as flowers, which might be sent to a constituent.

As I said, we have no rough figures on the amounts used in these office accounts because they vary so. It is very difficult to tell how many of these 33 Members have office accounts now because they don't have to notify us when they terminate. It is really difficult to tell whether this is just the tip of the iceberg or whether it in fact represents a substantial number.

Mr. HENSHAW. These are only the ones that are volunteered. These are 33 Members, in a 3-year period, who have voluntarily given us disclosures. It is suspected there may be many others who do not disclose. We have no way of knowing whether it is double this figure or triple this figure. We have to go by supposition and what the various Members tell us, that they have accounts, but we receive no report. Chairman OBEY. Mr. Potter, may I ask you a question?

One of the questions that arises is whether we should or should not abolish unofficial office accounts. There are other options available as well on that point, but let me ask you this: Given the fact that some of the costs, probably most of them, are related to expansion of official expenses, but some of them are also related to campaign expenses, at least in some people's minds, if we were to abolish office accounts, unofficial office accounts, and if we were to make some appropriate adjustment in official office accounts to compensate for that fact, do you see any problems we would face in terms of using campaign funds directly to finance some of the costs which are political but which do