LAWRENCE H. CRANDON, ET AL., PETITIONERS V. UNITED STATES OF AMERICA THE BOEING COMPANY, INC., PETITIONER V. UNITED STATES OF AMERICA No. 88-931 and No. 88-938 In the Supreme Court of the United States October Term, 1989 On Writs Of Certiorari To The United States Court Of Appeals For The Fourth Circuit Brief For The United States PARTIES TO THE PROCEEDINGS The United States was the plaintiff in the district court and the appellant in the court of appeals. The defendants in the district court and appellees in the court of appeals were petitioners Boeing Company, Lawrence H. Crandon, Thomas K. Jones, Harold Kitson, Jr., Melvyn R. Paisley, and Herbert A. Reynolds. TABLE OF CONTENTS Opinions below Jurisdiction Statutory provisions involved Statement Summary of argument Argument: The court of appeals correctly held that Boeing's payments to the individual employees violated 18 U.S.C. 209(a) and that the United States is entitled to recover the amount of the payments I. The payments at issue violated 18 U.S.C. 209(a) A. Section 209(a) broadly prohibits outside compensation in order to assure the independence and undivided loyalty of government officials B. Boeing's payments supplemented the individual petitioners' federal salaries and constituted compensation for their federal services 1. The payments were "supplementations of salary" within the meaning of Section 209(a) 2. Section 209(a) does not exempt supplementations of salary made prior to the commencement of federal service 3. The payments constituted "compensation for" the recipients' federal service within the meaning of Section 209(a) II. The United States is entitled to recover the amount of the payments in this action Conclusion OPINIONS BELOW The opinion of the court of appeals (Pet. App. 1a-15a) /1/ is reported at 845 F.2d 476. The opinion of the district court (Pet. App. 16a-29a) is reported at 653 F. Supp. 1381. JURISDICTION The court of appeals' judgment was entered on May 5, 1988, and petitions for rehearing were denied on September 7, 1988 (Pet. App. 30a-31a). The certiorari petitions in No. 88-931 (Individ. Pet.) and No. 88-938 (Boeing Pet.) were filed on December 5 and 6, 1988, and were granted on April 3, 1989. The jurisdiction of this Court rests on 28 U.S.C. 1254(1). STATUTORY PROVISIONS INVOLVED 18 U.S.C. 209(a) and 18 U.S.C. 1914 (1958) are reproduced at App., infra, 1a-2a. QUESTIONS PRESENTED 1. Whether payments made by petitioner Boeing Company to five employees -- which were made solely because the employees planned to accept positions with the Department of Defense, and which were calculated to make up the difference between the recipients' salaries and benefits with the federal government and their higher salaries and benefits with Boeing -- violated the prohibition in 18 U.S.C. 209(a) against the private supplementation of the salaries of federal officials. 2. Whether the United States is entitled to recover the amount of the illegal payments either from the recipients or from petitioner Boeing, to the extent recovery against Boeing is not time-barred. STATEMENT In 1981 and 1982, petitioner Boeing Company, a large defense contractor, paid a total of $485,000 to five of its employees, petitioners Melvyn Paisley, T.K. Jones, Herbert Reynolds, Harold Kitson, and Lawrence Crandon. The payments were made solely because the recipients planned to accept responsible positions in the Department of Defense, and they were calculated to make up the difference between the federal salary and benefits the recipient would earn while in government and the higher salary and benefits he would have earned if he had remained with Boeing, as well as to defray other expenses incurred in accepting the positions. The court of appeals held that the payments violated 18 U.S.C. 209(a), which bars private supplementation of the salaries paid by the United States for its employees' services, and that the United States is entitled to recover the amount of the payments in this civil action. 1. The record establishes that the payments at issue were made by Boeing to the five individual petitioners only because they had been selected for high-level positions in the Department of Defense, and in each case the payment was made immediately before or after the recipient began federal service. /2/ The payments were designed to induce or facilitate the recipient's acceptance of the federal position. J.A. 288-289, 290-291, 304, 317-318, 329; see also GX 122, at 21-22 (C.A. App. 602); GX 121, at 108 (C.A. App. 724); J.A. 116. /3/ During the preceding 20-year period the only persons to whom Boeing offered such payments were those -- 16 in all -- who left the Company to accept positions of responsibility with the United States Government, typically in the Department of Defense or the National Aeronautices and Space Administration (NASA). /4/ The circumstances of the payments also demonstrate that they were calculated to make up the difference between the recipient's federal salary and his higher Boeing salary and to defray other costs associated with accepting the government position. Each of the individual petitioners submitted to Boeing a written calculation of the projected reduction in his income over the expected period of his government employment. In monetary terms, the vast majority (and in some cases all) of the submissions consisted of (1) the difference between the salary and benefits he expected to realize for the duration of his federal position (identified in each case as the time remaining in the first Administration of President Reagan) and the higher salary and benefits he would have realized if he had stayed with Boeing, and (2) additional expenses he would incur in moving to and living in the Washington, D.C., area, such as moving expenses, house-hunting or rental costs, and higher state taxes and cost of living as compared with Seattle. Some of the petitioners also included in their submissions an estimate of the cash value of unused accrued leave, the accrued but unvested Company contributions to a corporate savings plan, and stock options that had been granted but were not yet exercisable. No other departing employee was entitled to the value of these benefits. J.A. 369-371. Moreover, in each case, the amounts requested for these accrued but unvested items represented a relatively small portion of the overall payment the individual sought. See generally J.A. Lodging Nos. 10 (Jones), 11 (Paisley), /5/ 12 (Reynolds), 13 (Kitson); J.A. 526-529 (Crandon). Boeing relied on similar considerations in its calculation of the severance payments. Charles P. Hagberg, Boeing's Assistant Director for Corporate Compensation, testified that the Company calculated the "severance" pay for each of the five individual petitioners as the sum of four factors: (1) the difference between his Boeing and federal salaries over the projected term of his federal employment, (2) the amount the Company would have contributed to two investment plans during the expected period of government employment if petitioners had remained at Boeing, (3) the cost of moving to Washington, D.C., and (4) the difference in the cost of living between Seattle and Washington. J.A. 366-375. See also J.A. 280-283 (June 17, 1982, description of Boeing policy for payments "to employees who would suffer substantial loss in salary and/or benefits by accepting Government employment and who are approved for participation by the Chief Executive Officer."). The initial application of the four-factor test to each petitioner was made by the Industrial Relations Department in the Boeing Aerospace Company, the division of petitioner Boeing that employed each of them. See J.A. Lodging Nos. 5 (Paisley), 6 (Jones), 7 (Reynolds), 8 (Kitson), 9 (Crandon). Mr. Hagberg thereafter verified the calculations. J.A. 413-414. The President of Boeing Aerospace, Henry K. Hebeler, also reviewed the calculations. J.A. 326-327. Relying on the judgment of the Industrial Relations Department, Mr. Hebeler made written recommendations to petitioner Boeing's Senior Vice President, Clyde Skeen, and its Vice President for Industrial and Public Relations, Stanley M. Little, that the amounts be paid as proposed. J.A. 274-279, 284; J.A. Lodging Nos. 2, 15, 17, 18. /6/ Mr. Little, who knew how the payments were calculated (GX 121 (J.A. 310-313, 316-318; C.A. App. 689-690, 706, 728-729); J.A. 188), reviewed the recommendations of Mr. Hebeler and the Industrial Relations Department with T.A. Wilson, petitioner Boeing's chief executive officer. J.A. 308-309. Mr. Wilson knew that the calculations included the difference between each employee's Boeing salary and prospective government salary, as well as moving expenses. J.A. 288-290. Mr. Wilson was not acquainted with several of the individuals (J.A. 287-288) -- or, therefore, with their past services to Boeing -- and he had no information presented to him other than the Industrial Relations Department's calculations and recommendations. Mr. Wilson made no change in the amounts recommended for Jones, Reynolds, Kitson or Crandon. He did conclude that the proposed payment of $220,536 to Paisley was too high, and the Industrial Relations Department reduced the figure to the present value in 1981 of receiving $220,536 over four years, using a discount rate of 12%. The resulting figure of $180,064 was rounded to $180,000 and then approved. J.A. 382-385; J.A. Lodging No. 5. /7/ Each individual petitioner also received a separate check for the amount of his vested benefits, to which any departing Boeing employee was entitled (Pet. App. 4a). 2. The United States brought this civil action, alleging that the payments violated 18 U.S.C. 209(a) and seeking disgorgement of the payments by the individual petitioners and damages from Boeing in an equivalent amount. The district court granted judgment in favor of petitioners (Pet. App. 16a-29a). The court first held that Section 209(a) does not prohibit any supplementation of a federal salary that is paid prior to the formal onset of the recipient's government employment (id. at 25a, 26a). The court further held that the payments were not unlawful under Section 209(a) because, as the court saw it, they were intended to "sever the relationship" between Boeing and its employees, not to supplement their government salaries or compensate them for their government service (id. at 20a, 26a). The court accepted the government's proof that the challenged payments were made by Boeing to induce the recipients to accept federal employment and to bridge the disparity between private and public salaries and benefits; that Boeing made such payments solely to persons leaving the Company for federal employment; and that the payments were intended by Boeing as the equivalent of the "paid leave" it granted to employees who work for a state or local government (id. at 17a-18a, 26a). But the court concluded that "the formula for calculation of severance pay cannot make the payment something other than severance pay" (id. at 26a). The district court also ruled that the United States could not in any event recover damages in the amount of payments made in violation of Section 209(a) without showing actual corruption on the part of Boeing or the individual petitioners, which it had not proven (Pet. App. 28a). Finally, in the court's view, such payments could not be recovered unless they were "secret," and it believed that the individual petitioners had made sufficient disclosure of the payments to certain employees of the Department of Defense (id. at 27a). /8/ 3. The court of appeals reversed (Pet. App. 1a-15a). It first held, contrary to the district court's view, that payments made prior to the onset of federal service are within the reach of Section 209(a) (Pet. App. 6a-7a). The court noted that prior to 1962, the predecessor statute applied to "(w)hoever, being a Government official or employee," received a supplementation of salary (18 U.S.C. 1914 (1958)), but that Congress deleted the phrase "being a Government official or employee" when it enacted the present 18 U.S.C. 209 in 1962. The court also found this interpretation supported by the policies underlying Section 209 and the conflict-of-interest laws generally, which establish "rigid rules of conduct" to prevent activities that "'arouse suspicions of malfeasance and corruption'" (Pet. App. 6a-7a). The court explained that "(l)arge severance payments by defense contractors to those going to work at high levels in the Defense Department certainly 'arouse suspicions,' and those suspicions are not reduced by making the payments just before government service begins" (id. at 7a). The court of appeals rejected the view that Section 209(a) states an objective standard of conduct and requires no showing of intent, since Section 209(a) prohibits payments made "as compensation for" the recipient's federal services (Pet. App. 7a). However, the court found that the record established "compensatory intent," and that the district court's contrary finding was clearly erroneous (id. at 8a). The court relied on four factors. First, the recipients and Boeing personnel officials "calculated salary, benefits and cost-of-living differences over the expected term of government employment," and the Chairman of Boeing, who approved the payments, "received a recommendation and was aware of the factors used to reach that figure" (ibid.). Second, "Boeing's stated purpose in making the payments was to encourage public service by lessening the financial penalties involved in accepting government employment" (ibid.). Third, Boeing's parallel policy of providing paid leave for its employees who work for a state or local government "suggests that payments to federal employees were designed to do the same thing without technically violating Section 209" (ibid.). Fourth, the fact that only 21 such payments were made over the preceding 25 years, and only to persons entering high-level government positions, "suggests an intent to supplement the federal salaries of a limited number of employees" (ibid.). The court of appeals rejected petitioners' contention that the government was not injured, and that the individual petitioners therefore were entitled to retain the payments, because they did not result in an actual conflict of interest. The court explained that this argument "ignores the preventive nature of the conflict of interest laws," under which "the appearance of conflicts rather than actual conflicts or corruption is all that is necessary" (Pet. App. 8a-9a). In this case, the court concluded, "(t)he appearance of large payments by a defense contractor to key Defense Department employees is enough; there is no need to show an actual conflict, much less actual corruption" (id. at 9a). Finally, the court rejected petitioners' argument, based on common-law principles, that only "secret" profits give rise to a conflict of interest. The court reasoned that this suit is based on the statutory rule prescribed by Section 209, which is not limited to secret payments (Pet. App. 9a). Moreover, the court noted that even under the common law, effective disclosure must be "formal, complete, and directed to the proper parties" (ibid.). Here, because the individual petitioners' financial-reporting forms revealed only their total income from Boeing, without separately identifying severance payments, the court concluded that any disclosures were "not sufficiently complete to insulate the payments from the conflict of interest laws" (ibid.). /9/ SUMMARY OF ARGUMENT I.A. The prohibition in 18 U.S.C. 209 against private supplementation of federal salaries was first enacted in 1917 (see 18 U.S.C. 1914 (1958)) and was revised and reenacted as part of the comprehensive revision of the conflict-of-interest laws in 1962. It is "directed at the crime of bribery in its open or subtle form" (Muschany v. United States, 324 U.S. 49, 68 (1945)) and embodies the principle that "no Government official or employee should serve two masters to the prejudice of his unbiased devotion to the interests of the United States" (33 Op. A.G. 273, 275 (1922)). Accordingly, Section 209 is framed as an absolute prohibition against double compensation. B.1. Section 209(a) bars a person from receiving any privately paid salary or "supplementation of salary, as compensation for his services as an officer or employee of the executive branch * * *." The "severance" payments at issue in this case constituted "supplementations of salary" within the meaning of this provision. The principal component of each payment was an amount specifically designed to compensate the recipient for the difference between his federal salary and benefits during the anticipated period of his government service and the higher salary and benefits he would have received if he had remained with Boeing. Unquestionably a payment calculated on that basis is a "supplementation" of the federal salary for purposes of Section 209. The statute is not limited to supplementations in the nature of "salary," however. The provision has consistently been construed, both before 1962 and after, to bar payment of such items as travel and moving expenses and cost-of-living allowances for federal employees. Congress declined to disturb those administrative rulings when it enacted specific exceptions to several of them in 1958 and 1979, and Congress reenacted the basic prohibition in 1962 after it had been given a broad interpretation. Against this background, the other principal components of the payments here -- moving expenses and a cost-of-living allowance -- also constituted illegal salary supplementations for purposes of Section 209. 2. Contrary to petitioners' contention, the absolute prohibition against double compensation cannot be circumvented simply by arranging for a lump-sum payment to be made before the recipient begins work. The prohibition applies to "(w)hoever" receives "any" supplementation of salary for services rendered as a federal official; that all-encompassing language does not require that the recipient actually be in office at the time of payment or exclude certain supplementations based on their timing. The former Section 1914 applied to "(w)hoever, being a Government official or employee, "but even with that limiting language it was understood by the Department of Justice and commentators to apply to severance payments made prior to the commencement of federal service. Significantly, moreover, that phrase was deleted from the statute in 1962, when Congress also deleted a virtually identical phrase in a related conflict-of-interest statute for the specific purpose of reaching payments made prior to the commencement of federal service. The policies of the prohibition likewise support his interpretation, because, as in the case of a bribe, an advance payment can be presumed to have a lingering effect on the recipient when he performs his official duties. Nor can an interpretation permitting private lump-sum payments for the recipient's federal services be justified by the need to attract qualified personnel to government, because Congress has enacted express exceptions when it concluded they were necessary. 3. The payments at issue here also constituted "compensation for" the recipients' federal services within the meaning of Section 209. The background and legislative history of that phrase show that it is intended to describe the requisite nexus between the payment and the services. In particular, Section 209 and its predecessor have been consistently construed to bar payments that were avowedly designed as supplementations of federal salary or that singled out federal employees for special treatment. The undisputed evidence and factual findings by the district court establish that the payments at issue here had both of those characteristics, since Boeing offered "severance" payments only to persons entering federal service and based them on the financial losses the recipients would experience as a result. For these reasons, and because the payments were intended to induce the recipients to accept positions in a Department in which Boeing is substantially interested, the payments, by definition, constituted "compensation for" the recipients' federal service. This conclusion conforms to the consistent views of the Department of Justice, the Office of Government Ethics, and the leading commentators. Section 209 does not require a showing of specific intent to supplement federal salaries as compensation for federal services; it is sufficient to show that the defendant knowingly made or received a payment having characteristics that rendered it unlawful under this settled construction of the statute. In any event, the district court's finding that petitioners did not act with "compensatory intent" was clearly erroneous. II. The United States has a civil cause of action to require the recipients to disgorge the illegal payments or to recover damages from Boeing. Petitioners are not excused from liability in such an action on a waiver theory based on alleged disclosures of the payments to government officials on the recipients' financial-reporting forms. Section 209 does not authorize an administrative waiver, and the regulations governing the financial-disclosure program expressly provide that the filing of a report does not serve to exempt an employee from any substantive restrictions. There is no factual basis for petitioners' waiver argument in any event, because the recipients did not list their "severance payments" as such on their disclosure forms. ARGUMENT THE COURT OF APPEALS CORRECTLY HELD THAT BOEING'S PAYMENTS TO THE INDIVIDUAL EMPLOYEES VIOLATED 18 U.S.C. 209(a) AND THAT THE UNITED STATES IS ENTITLED TO RECOVER THE AMOUNT OF THE PAYMENTS Section 209(a) of Title 18 establishes a broad prohibition against private supplementation of the salary a federal employee is paid for his services to the United States. The payments at issue in this case were classic violations of that prohibition: they were made solely because the recipients planned to assume positions in the Department of Defense; they were calculated to make up the difference between the recipients' government salaries and their higher Boeing salaries, as well as to defray other expenses incurred in accepting government employment; and they were intended to encourage the recipients to accept that employment by mitigating the resulting financial sacrifices. The court of appeals' holding that such payments violate Section 209(a) is supported by the text and legislative history of the statute and the views of the commentators who were intimately involved in its enactment. That holding also is consistent with the advice given by the Department of Justice to other agencies and prospective appointees for many years. The court below therefore correctly held that the individual petitioners must disgorge the illegal payments and that, in the alternative, the United States may recover the amount of the payments from Boeing, to the extent recovery is not time-barred. We do not contend that all "severance" payments made by a private employer to an individual entering federal service are prohibited by Section 209(a). The typical severance payment, which is made in consideration of past services to the employer and which does not take account of the anticipated future employment of the recipient, is not barred by Section 209(a) -- especially if made pursuant to a pre-existing policy applicable to departing employees generally. Although such a payment may have the effect of "supplementing" the recipient's federal salary in the sense that it will be available during the period of his federal service, the payment is not made in consideration of -- "as compensation for" -- that federal service. But where, as here, the "severance" payment is made only because the recipient plans to accept a position with the federal government and the payment is calculated to compensate for the lower federal salary and other financial sacrifices associated with federal employment, Section 209(a) squarely applies. Such a payment is made, not as compensation for the recipient's past services to the private employer, but as compensation for his future services to the United States. I. THE PAYMENTS AT ISSUE VIOLATED 18 U.S.C. 209(a) A. Section 209(a) Broadly Prohibits Outside Compensation In Order To Assure The Independence and Undivided Loyalty Of Government Officials The long history of the prohibition against private supplementation of salaries paid to federal employees for the performance of their official duties demonstrates a firm congressional purpose to assure the independence and undivided loyalty of government employees. 1. Section 209(a) was enacted in 1962 as part of the comprehensive revision of the conflict-of-interest laws made by Pub. L. No. 87-849, 76 Stat. 1119, 1125. It carries forward the basic prohibition against outside compensation contained in 18 U.S.C. 1914 (1958), which was enacted by Section 1 of the Act of March 3, 1917, ch. 163, 39 Stat. 1106. The 1917 provision was enacted in response to the practice of substantial payments by private foundations to supplement the federal salaries of individuals employed by the Bureau of Education at the rate of $1 per year. Congress was concerned that the recipients might be induced to adhere to the views of the foundations who furnished their financial support, and that the government would, as a result, be deprived of their independent judgment in matters affecting the Nation's youth. /10/ Congress further concluded that the threat to the independence of government officials exemplified by the practice in the Bureau of Education was a government-wide concern, and it accordingly gave the 1917 Act a government-wide sweep. Nor was the 1917 Act limited to payments by persons who had business before the agency in which the recipient was employed. These broad features of the basic prohibition were carried forward in the present Section 209(a), which applies to the receipt and payment of "any" salary and "any" supplementation of or contribution to salary, "(w)hoever" may be the payor. /11/ Soon after the 1917 Act was passed, the Attorney General explained that the prohibition embodies the principle that "no Government official or employee should serve two masters to the prejudice of his unbiased devotion to the interests of the United States." 33 Op. A.G. 273, 275 (1922). This Court similarly observed that Section 1914 was "directed at the crime of bribery in its open or subtle form." Muschany v. United States, 324 U.S. at 68. The background of the 1962 revision of the conflict-of-interest laws demonstrates that these same purposes animated Congress's decision to retain the prohibition against outside compensation in the present 18 U.S.C. 209(a), albeit with certain modifications discussed below. 2. Congress enacted the present 18 U.S.C. 209(a) and related conflict-of-interest laws in 1962 based upon in-depth studies of the then-existing laws by the House Judiciary Committee, the Association of the Bar of the City of New York, the Executive Branch, and various commentators. /12/ In 1957, Chairman Celler instructed the House Judiciary Committee staff "to prepare a detailed study and analysis of existing Federal conflict-of-interest laws to the end that they might be revised, simplified, and coordinated" (H.R. Rep. No. 748, 87th Cong., 1st Sess. 7 (1961) (House Report)). The resulting report recommended that Congress retain the prohibition against supplementation of federal salaries, with certain revisions. Staff of Subcomm. No. 5 of the House Comm. on the Judiciary, 85th Cong., 2d Sess., Federal Conflict of Interest Legislation 44-46, 61-63 (Comm. Print 1958) (Staff Report). Based on a review of the background of 18 U.S.C. 1914 (1958) and the precedents construing it, the Staff Report explained (at 44) that the prohibition rests on the premise that when a government employee receives outside compensation for his government work, "his impartiality may become impaired, not only in direct transactions with that employer on behalf of the Government, but also with respect to general policies espoused by the private employer." For this reason, the report stressed, the provision "is framed as an absolute prohibition against double compensation" (ibid., citing McElwain & Vorenberg, The Federal Conflict of Interest Statutes, 65 Harv. L. Rev. 955, 966-967 (1952)). Echoing that view, the Judiciary Committee's Report on the bill enacted in 1962 explained that the provision "seeks to avoid divided loyalty of Government officials by prohibiting private compensation of Government services" (House Report 6). Congress's revision of the governing laws in 1962 also was based on its consideration of what the House Report described as "(a) penetrating 2-year study of the operation of the Federal conflict-of-interest statutes undertaken by a special committee on conflict of interest laws of the Association of the Bar of the City of New York." House Report 8; see also S. Rep. No. 2213, 87th Cong., 2d Sess. 4 (1962) (Senate Report). The Bar Association's report elaborated upon the purposes of the prohibition against outside compensation (N.Y. Bar Report 211-212): The rule is really a special case of the general injunction against serving two masters. Three basic concerns underlie this rule prohibiting two payrolls and two paymasters for the same employee on the same job. First, the outside payor has a hold on the employee deriving from his ability to cut off one of the employee's economic lifelines. Second, the employee may tend to favor his outside payor even though no direct pressure is put on him to do so. And, third, because of these real risks, the arrangement has a generally unwholesome appearance that breeds suspicion and bitterness among fellow employees and other observers. The public interpretation is apt to be that if an outside party is paying a government employee and is not paying him for past services, he must be paying him for some current services to the payor during a time when his services are supposed to be devoted to the government. In part the fear is that the government employee will not keep his nose to the grindstone; in part the fear is close to the fear of bribery; in part the fear is that outside forces will subvert the operation of regular policy-making procedures in the government (the historical source of Section 1914); and in part the rule is grounded in consideration of personnel administration. In light of these broad prophylactic purposes, the Bar Association likewise described the prohibition in absolute terms: "In the strictest sense, Section 1914 is a conflict of interest statute. The employee does not have to do anything improper in his office to violate the statute. His receipt of the outside salary for his government work, coupled with his status as a government employee, is all that is required" (N.Y. Bar Report 55). The responsible congressional committees conducted extensive hearings in 1960, 1961 and 1962 on bills that incorporated the recommendations of the Judiciary Committee staff and the New York City Bar Association. See 1960 Hearings; Federal Conflict of Interest Legislation: Hearings on H.R. 302, H.R. 3050, H.R. 3411, H.R. 3412 and H.R. 7139 Before the Antitrust Subcomm. (Subcomm. No. 5) of the House Comm. on the Judiciary, 87th Cong., 1st Sess. (1961) (1961 Hearings); Conflicts of Interest: Hearing on H.R. 8140 Before the Senate Comm. on the Judiciary, 87th Cong., 2d Sess. (1962) (1962 Hearing). /13/ The 1962 revision of the conflict-of-interest laws, including 18 U.S.C. 209, largely incorporated those recommendations, taking into account as well the views of the Executive Branch and commentators (see note 13, supra). /14/ Thus, in enacting 18 U.S.C. 209, Congress reaffirmed the fundamental importance of what the court of appeals termed the "rigid rules" against private supplementation of the salaries paid to government officials for their services to the United States. Those rules serve to preserve both the actual independence and undivided loyalty of government officials and the public's faith in those virtues, which are essential to "'the very fabric of a democratic society'" (Pet. App. 6a-7a, quoting United States v. Mississippi Valley Generating Co., 364 U.S. 520, 562 (1961)). /15/ These concerns are directly implicated in this case, because, as the court of appeals observed, "(l)arge severance payments by defense contractors to those going to work at high levels in the Defense Department certainly 'arouse suspicions'" (Pet. App. 7a) -- just as private supplementation of salaries in the Bureau of Education aroused suspicion in 1917 and led to enactment of the prohibition now contained in Section 209(a). As we now show, the text and legislative history of Section 209 demonstrate that petitioners violated that statute. B. Boeing's Payments Supplemented The Individual Petitioners' Federal Salaries And Constituted Compensation For Their Federal Services 1. The Payments Were "Supplementations Of Salary" Within The Meaning Of Section 209(a) Section 209(a) bars the receipt of "any salary, or any contribution to or supplementation of salary, as compensation for (the recipient's) services as an officer or employee of the executive branch * * * from any source other than the Government of the United States * * *." /16/ The payments at issue in this case violated the explicit terms of this provision. a. The principal purpose and effect of the severance payments in this case was to make up some or all of the difference between the recipient's federal salary and benefits and the higher salary and benefits he would have earned if he had remained with Boeing. This much is evident from the fact that a salary and benefit differential was the principal component of the calculations prepared by both the individual petitioners and Boeing. See pages 4-7, supra. There can be no doubt that a payment resting on that rationale constitutes a "supplementation" of the recipient's federal salary for purposes of 18 U.S.C. 209(a). The New York City Bar Association, for example, stated in its 1960 report with respect to the prior Section 1914: "Clearly the appointee's former employer cannot under this section make up the difference between his former salary and his government salary." N.Y. Bar Report 65. There is no indication that Congress departed from that central principle when it enacted Section 209 in 1962. To the contrary, Roswell Perkins, Chairman of the Bar Association's special committee and the leading contemporary commentator on the conflict-of-interest laws, /17/ explained immediately thereafter that "(t)he most important application of the outside compensation prohibition is the typical case where a corporate executive is asked to go to Washington, and his corporation offers to pay all or part of the difference between his present salary and his future government salary." Perkins, 76 Harv. L. Rev. at 1137-1138; Petrowitz, Conflict of Interest in Federal Procurement, 29 Law & Contemp. Probs. 196, 209 n.48 (1964) (same). b. The other components of the payments at issue here also are "supplementation(s) of salary" within the meaning of Section 209(a). The quoted phrase has not been construed to limit the prohibition to payments in the nature of "salary," narrowly defined -- i.e., a "fixed annual or periodical payment for services" (Benedict v. United States, 176 U.S. 357, 360 (1900)). It has been applied to virtually all transfers of economic value that are made because of the recipient's federal service. This construction was firmly established prior to the enactment of Section 209(a) and was carried forward in that provision. The language of 18 U.S.C. 1914 (1958) was somewhat unclear with respect to the type of payments that a federal employee could not receive. This ambiguity resulted from the fact that although the second paragraph of Section 1914, which stated the payor's offense, applied to any person who "makes any contribution to, or in any way supplements the salary of," a government official, the first paragraph, which stated the payee's offense, applied to any government official who "receives any salary in connection with his services." Because the first paragraph applied only to the receipt of "salary," it might have been argued that a federal employee would not violate the law if he received items of monetary value that were not in the form of "salary" in the narrow sense. See Davis, 54 Colum. L. Rev. at 904 n.56. Nonetheless, in 1956, the Comptroller General had construed the first paragraph of Section 1914 to bar a federal employee from accepting tuition, travel, and living expenses for a training program he attended in his official capacity. 36 Comp. Gen. 156 (1956). The Comptroller General also had construed the second paragraph of Section 1914 to bar a broad range of payments to a federal employee, such as travel and living expenses and special allowances to compensate for the higher cost of living in his place of employment. /18/ See N.Y. Bar Report 64 ("salary" in Section 1914 "has been, and probably will be, construed to include almost any kind of a transfer of value to the employee that smacks of compensation"). In response to the Comptroller General's opinions construing Section 209(a) to bar outside payment of expenses incident to a federal employee's participation in a training program, Congress enacted an exception in the Government Employees Training Act of 1958 permitting such expenses to be paid by private parties, but only in carefully limited circumstances -- namely, where the payor is a non-profit organization exempt from taxation under 26 U.S.C. 501(c)(3). See Section 19, 72 Stat. 336; H.R. Rep. No. 1951, 85th Cong., 2d Sess. 6, 12-13 (1958). Congress did not disturb the general prohibition in 18 U.S.C. 1914 (1958), as construed by the Comptroller General, against the private payment of such expenses in all other circumstances. Compare Public Employees Retirement System v. Betts, 109 S. Ct. 2854, 2861 (1989). An identical exception was included in Section 209 itself when Congress revised the conflict-of-interest laws in 1962, thereby reaffirming that any payment of expenses incurred by a federal employee incident to his employment is barred, even if it does not take the form of a periodic "salary." 18 U.S.C. 209(d); 5 U.S.C. 4111(a). Moreover, when Congress enacted Section 209(a) in 1962, it revised the language of both paragraphs of the former Section 1914 in order expressly to prohibit the receipt as well as the payment not only of "salary," but also any "supplementation of" or "contribution to" salary. This change was based on a recommendation in the Staff Report (at 62), which explained that it would make "clear that the receipt of lump-sum payments, which supplement salary although they may not themselves constitute salary, are also forbidden." Id. at 61; see also House Report 13, 24; 1960 Hearings 182, 207. Thus, Section 209(a) carried forward the broad scope of the prior Section 1914 with respect to the types of cash payments and other transfers of value that are barred. Manning, at 162-163; /19/ Perkins, 76 Harv. L. Rev. at 1138-1139, 1141 & n.93. Compare Merrill Lynch, Pierce, Fenner & Smith v. Curran, 456 U.S. 353, 379-382 (1982); Lorillard v. Pons, 434 U.S. 575, 580-581 (1978). c. The foregoing interpretation is confirmed by subsequent events with respect to one of the components of the severance payments at issue in this case -- moving expenses. In 1979, Congress amended Section 209 to permit a private employer to pay relocation expenses in only one narrow situation: where the recipient is a participant in a special interchange or fellowship program established by statute or Executive Order that offers appointments for a period of not to exceed one year. See 18 U.S.C. 209(e), as amended by Pub. L. No. 96-174, 93 Stat. 1288. The legislative history shows that this amendment was enacted in response to an opinion of the Office of Legal Counsel that payment of an individual's moving expenses because he is entering federal service violates Section 209(a). H.R. Rep. No. 674, 96th Cong., 1st Sess. 2, 5, 6, 8 (1979); see 2 Op. O.L.C. 267 (1978) (App. , infra, 3a-8a). /20/ In carving out the special exception in 18 U.S.C. 209(e), Congress left undisturbed the general prohibition in Section 209(a), as construed by OLC, against reimbursement of the moving expenses of a person entering government service. See 5 Op. O.L.C. 150, 150-151 (1981) (App., infra, 9a-11a) (payment of moving expenses violates Section 209(a) if made because of recipient's federal service, rather than past service to payor). Compare Betts, 109 S. Ct. at 2861. It therefore is especially clear that the portion of each payment here that is attributable to the recipient's expenses in moving to Washington, D.C., violated Section 209(a). Furthermore, the legislative history of the 1979 amendment makes clear that, even in the special context of a short-term Presidential interchange program, the exception permitting payment of relocation expenses does not overcome the general prohibition Congress perceived in Section 209(a) against private payment of a federal employee's "personal living expenses" (H.R. Rep. No. 674, at 2-3). This legislative history confirms that the payments here also violated Section 209(a) to the extent they were designed to reimburse the recipients for a portion of their personal living expenses -- specifically, the portion that compensated for the higher cost of living in Washington, D.C. In sum, all of the principal components of the severance payments at issue in this case were illegal "supplementations" of the recipients' federal salaries. /21/ 2. Section 209(a) Does Not Exempt Supplementations Of Salary Made Prior To The Commencement Of Federal Service In light of the text and legislative history of Section 209(a), petitioners do not seriously dispute that the various types of payments just discussed are prohibited as a general matter. The individual petitioners do argue (Br. 18-32), however, that Section 209(a) can be avoided simply by combining those payments, characterizing the total as a "severance payment," and arranging for it to be made before the recipient begins his federal employment. See also Boeing Br. 19 n.9. The text, legislative history, and purposes of Section 209(a) foreclose this effort to circumvent the absolute statutory bar against the private supplementation of federal salaries. a. Section 209(a) provides: Whoever receives any salary, or any contribution to or supplementation of salary, as compensation for his services as an officer or employee of the executive branch of the United States Government * * * from any source other than the Government of the United States * * *; or Whoever, whether an individual, partnership, association, corporation, or other organization pays, or makes any contribution to, or in any way supplements the salary of, any such officer or employee under circumstances which would make its receipt a violation of this subsection -- Shall be fined not more than $5,000 or imprisoned not more than one year, or both. This statutory language is written in all-embracing terms. The first paragraph broadly applies to "(w)hoever" receives such payments; it is not limited to persons who happen to be federal officials at the time the payments are made. Accordingly, payments received by an individual before or after his federal service are within the statutory ban. Moreover, the first paragraph applies to the receipt of "any" supplementation of salary from "any" source other than the United States. The term "any" underscores the comprehensive thrust of the prohibition (United States v. Monsanto, 109 S. Ct. 2657, 2663 (1989)), for "Congress could not have chosen broader words to define (its) scope" (id. at 2662). See also Betts, 109 S. Ct. at 2864. The language of the first paragraph of Section 209(a) therefore clearly covers lump-sum payments (including those characterized as "severance payments"), as long as they are "compensation for" the employee's federal service. See pages 34-45, infra. The individual petitioners argue, however, that the second paragraph of Section 209(a) does not bar payment of a salary supplementation prior to the time the recipient assumes his federal position. Petitioners rest this argument on the premise that the second paragraph is limited to payments made "to . . . any such officer or employee." See Br. 19, 20, 23. This assertion is refuted by the operative language of the second paragraph taken as a whole, which petitioners "regrettably submerge() in ellipsis" (Bowen v. Georgetown Univ. Hosp., 109 S. Ct. 468, 476 (1988) (Scalia, J., concurring)). The second paragraph of Section 209(a) imposes liability on any person who "pays, or makes any contribution to, or in any way supplements the salary of, any such officer or employee." The use of the disjunctive "or" in two places, and the location of the commas, demonstrates that the quoted language states three separate prohibitions. The third prohibition, which applies here, imposes liability on a person who "in any way supplements the salary of" "any such officer of employee." This language is not limited to supplementations paid "to" the recipient at the time he is an officer or employee; all the statutory text requires is that the payment "supplement() the salary of" a federal officer or employee -- a consequence that can result from a payment made prior to the formal onset of federal service as well as after. It also is significant that the relevant language broadly refers to all payments that "in any way" supplement the salary of a federal employee, thereby manifesting a congressional purpose to preclude the sort of circumvention that would be encouraged by petitioners' proposed loophole for all pre-appointment payments. b. The background and legislative history of the 1962 Act confirm this straightforward reading of the statute in several ways. First, as we have explained (see pages 21, 22, supra), Congress revised the first paragraph of the prohibition to make clear that it (like the second paragraph) would apply to "lump sum" payments that supplement the recipient's federal salary (Staff Report 61) -- the most obvious of which would be lump-sum severance payments made in consideration of the recipient's federal service. Second, one of Congress's purposes in thus revising the first paragraph was to "conform" the prohibitions applicable to the payor and payee. House Report 24; Staff Report 45, 61. This purpose strongly suggests that the second paragraph bars the making of all payments the receipt of which is barred by the first paragraph; since the first paragraph clearly applies to payments made prior to formal commencement of federal service, the second paragraph therefore does as well. Third, and of particular significance here, the first paragraph of the prohibition against outside compensation, as set forth in 18 U.S.C. 1914 (1958), provided: "Whoever, being a Government official or employee, receives any salary in connection with his services as such an official or employee" (emphasis added). The individual petitioners argue (Br. 20-21) that the emphasized language limited the application of Section 1914 to payments made to incumbent federal officials. Even if that proposition is correct, however, petitioners' effort to use it to exempt the "severance" payments at issue here from the coverage of Section 209(a) is doomed by the fact that Congress deleted that phrase when it revised the prohibition in 1962. Petitioners argue (Br. 20-22) that the Court should not give effect to Congress's deletion of the phrase on which they rely because the legislative history does not expressly refer to payments made prior to the commencement of federal service and does not state that the coverage of the prohibition was changed in this respect. As this Court recently held, however, there is no requirement that Congress recite in legislative history its intention to depart from what may have been the previous rule in order for the courts to give effect to its new enactment. United States v. Ron Pair Enterprises, Inc., 109 S. Ct. 1026 (1989); see also Monsanto, 109 S. Ct. at 2662-2663; Jefferson County Pharmaceutical Ass'n v. Abbott Laboratories, 460 U.S. 150, 159 n.18 (1983). Indeed, the premise of petitioners' argument -- that former Section 1914 would not have barred the payments here -- is of dubious validity. Roswell Perkins observed that prior to enactment of Section 209(a), "(t)he Justice Department's attitude toward severance payments ha(d) been stern." 76 Harv. L. Rev. at 1138-1139. He relied on a Justice Department memorandum stating with respect to Section 1914 that "'a special severance payment of more than nominal amount made to an employee in anticipation of his working for the Government, and whether paid at once or spread, would in all likelihood be objectionable.'" /22/ Several commentators cited in the legislative history of the 1962 Act also understood Section 1914 to bar severance payments made in consideration of the recipient's anticipated services to the federal government. /23/ See also 1962 Hearing 40 (statement of Rep. Lindsay). Moreover, the report on the bill proposed by the New York City Bar Association recognized that "occasionally an outside source may try to make a payment to a government employee before he becomes an employee or after he terminates his government employment, with the intention and purpose of compensating the employee for the work done while in Washington." N.Y. Bar Report 213. The report then stated that although Section 1914 was ambiguous on this point (id. at 64-65, 212-213), the Association's bill explicitly barred such payments "(w)henever received" (id. at 213). See id. at 286-287 (Section 5(b) of Association's proposed bill); 1961 Hearings 47 (Justice Department comments on Section 5(b)). Against this background, whatever uncertainty there may have been regarding the validity of pre-employment payments under the former Section 1914, Congress's omission of the phrase "being a Government official or employee" from the first paragraph of Section 209(a) removed any limitation on its reach in this regard. /24/ This conclusion is reinforced by Congress's deletion of a similar phrase ("being * * * (an) officer or employee of the United States") from the related prohibition in 18 U.S.C. 281 (1958) when it revised and reenacted that provision as 18 U.S.C. 203 in 1962. Section 281, like the present Section 203, barred a person from receiving compensation for services rendered on behalf of a private party before a government agency while the recipient was a government employee. The House Report explained the deletion of the phrase just quoted by observing that although "Section 281 fails to prohibit preemployment receipt or agreement to receive, or postemployment receipt of, compensation with respect to services to be rendered or actually rendered during the period of Government employment," the new Section 203 "would correct this omission." House Report 20; see also Staff Report 8, 22, 25, 49, 51. The legislative history thus shows that Congress was aware, and specifically intended, that deletion of the phrase "being * * * (an) officer or employee of the United States" from the prohibition in 18 U.S.C. 281 (1958) would have the effect of prohibiting receipt of "all compensation" for services rendered on behalf of private parties while in office, "irrespective of the time of its payment." House Report 9. Congress therefore must also have been aware that its deletion of the parallel phrase "being a Government official or employee" in 18 U.S.C. 1914 (1958) would remove any doubt that the new Section 209(a) prohibits the receipt of all compensation for services to be rendered on behalf of the United States while in office, irrespective of the time of payment. Sections 281 and 1914 were viewed as interrelated, and they overlapped in coverage where the services for which the private party paid compensation could be said to have been performed for both the government and the private party. Staff Report 24, 61. See, e.g., 40 Op. A.G. 168 (1942); 31 Op. A.G. 470 (1919); 2 Comp. Gen. 775 (1923); see also 41 Op. A.G. 217, 220 (1955); 40 Op. A.G. 187, 190 (1942). /25/ It also is significant that the prohibition against receipt of outside compensation for government services has consistently been regarded as closely related to the prohibition against bribery (House Report 6, quoting Muschany, 324 U.S. at 68) and "buttresses the bribery sections * * * by eliminating donations to salary, even where it is impossible to prove intent that official action should be influenced by the payment." Staff Report 45; see also id. at 61; N.Y. Bar Report 211. As petitioners concede (Individ. Br. 23), the bribery statute, 18 U.S.C. 201, expressly applies to payments made prior to the formal commencement of federal service, because it covers payments made (with intent to influence official action) to a "person who has been selected to be a public official." /26/ c. Accordingly, the text and legislative history of Section 209(a) establish that "(t)he time of receipt of the outside compensation is clearly irrelevant under the (1962) act, if the compensation is for government services." Perkins, 76 Harv. L. Rev. at 1137. Petitioners suggest (Individ. Br. 18) that the Department of Justice only recently came to that view, because this is the first time it has brought a civil or criminal case against anyone for receiving a severance payment. However, for more than 15 years, the Office of Legal Counsel has consistently taken the position in its advice to other agencies and prospective appointees that Section 209(a) bars "severance" payments made in consideration of the recipient's entering federal service, rather than for past services to the payor, and calculated to compensate the recipient for his lower federal salary and benefits and other expenses incident to his acceptance of the appointment. See App., infra, 3a-50a. /27/ The Office of Government Ethics, which has statutory authority to render advisory opinions on ethics matters (5 U.S.C. App. 402(b)(8)), has also made clear that a severance payment is lawful only if the recipient is being compensated for past services to the company, not future services for the government, and if persons entering federal service are not singled out for special treatment. See Ops. O.G.E. 81 X 16 (1981), 85 X 11 (1985) (App., infra, 51a-55a). /28/ d. Nor are petitioners correct in contending that the purpose of Section 209(a) -- to assure the independence and undivided loyalty of federal officials -- does not support its application to lump-sum "severance" payments made prior to formal commencement of federal service. As in the case of a bribe, Congress obviously concluded that an advance payment can be presumed to have a lingering effect on the recipient when he performs his official duties. Furthermore, the compelling interest in preserving public confidence in the integrity of government officials would be undermined if the parties could so easily circumvent the statutory prohibition against private supplementations of salary. /29/ Petitioners also argue (Individ. Br. 25-28) that Section 209(a) should be construed not to apply here in order to facilitate government recruitment of qualified personnel. Congress, however, carefully weighed the competing needs for qualified personnel and to assure integrity, and it struck what it believed to be the appropriate balance. It chose not to carve out a blanket exception for all "severance" payments, including those made as compensation for the recipient's federal service. The absence of such an exception is especially significant in view of other express exceptions Congress included in Section 209. /30/ Most importantly, at the urging of the New York City Bar Association (N.Y. Bar Report 217-218), Congress sought to mitigate financial hardship by allowing persons entering the government to continue to participate in "bona fide" employee welfare or benefit plans maintained by their former employers. 18 U.S.C. 209(b). But Congress made no further exception permitting supplementations of federal salaries by lump-sum "severance" payments from former employers that are not based on benefit plans of general applicability. Moreover, recognizing that a particular need for highly qualified personnel for defense purposes might warrant exemption from the prohibition against outside compensation, Congress enacted special authority for the President to grant exemptions in certain circumstances. See 50 U.S.C. App. 2160(b)(4). /31/ This narrow provision further contradicts petitioners' efforts to fashion a broad exemption for defense (and other) personnel who do not qualify under it. Nor are the individual petitioners persuasive in relying (Br. 28-32) on common-law principles of agency. The short answer is that Congress did not incorporate common-law principles in Section 209. In any event, Section 209 does not impose an all-inclusive duty of undivided loyalty on a person who has not yet begun federal employment. He is free, for example, to work for a private employer whose interests directly conflict with those of the United States. Section 209 imposes a duty on him only with respect to his prospective federal employment, by barring the receipt of private compensation for that employment. This limited prohibition is directly related to (and serves to maintain the integrity of) the prospective federal employment (cf. United States v. Hood, 343 U.S. 148, 150-151 (1952)), and it affects only payments that would not have been made but for that employment. Even the common law imposes some fiduciary duties on a person who has not yet become an agent. For example, "(a) person who, in view of a prospective agency, invites a confidence from or permits the prospective principal to reveal confidential information to him, is subject to the same duties with respect to such information as if, at the time the confidence was given, he were in fact an agent." Restatement (Second) of the Law of Agency Section 395, comment d (1958). The comparably limited duty of loyalty to the prospective employer under Section 209 scarcely "stretch(es) beyond recognition the fundamental principles of agency law," as petitioners argue (Individ. Br. 28). 3. The Payments Constituted "Compensation For" The Recipients' Federal Service Within The Meaning of Section 209(a) Petitioners' contention (Individ. Br. 43-49; Boeing Br. 17-26) that the payments were not made as "compensation for" the recipients' federal services is premised on an erroneous legal view of Section 209(a) and ignores the overwhelming evidence that the statute was violated. a. Section 209(a) refers to supplementations of salary made "as compensation for" the recipient's services to the United States in order to identify the payments to be barred. Absent some such limitation, any cash payment or other transfer of economic value to a federal employee might fall within the reach of the statute, because it would "supplement" the recipient's federal salary in the sense of being available for him to spend during the period of his federal service. Such a rule could forbid a federal employee from receiving gifts from family members or friends, income from investments, or salary earned in an outside job. That result would not only be unfair to federal employees and inhibit recruitment (see Manning, at 164), it would also extend far beyond the statutory purpose of assuring the independence and undivided loyalty of federal employees in performing their duties. Accordingly, Section 209(a) prevents only those private supplementations of salary that are "directly linked" to the recipient's federal employment (Manning, at 171). As we shall now show, the history of Section 209 establishes that the role of the "as compensation for" language is to interpose that limiting principle. Contrary to the apparent view of petitioners and the district court (Pet. App. 20a), that phrase does not have the further effect of rendering Section 209 one of those rare criminal statutes requiring proof of specific intent. b. The former Section 1914 used different language of limitation, but its purpose was the same. Section 1914 made it unlawful for a government official to receive any salary "in connection with" his services to the government. The Attorney General interpreted this language in a 1942 opinion (40 Op. A.G. at 190): The statute clearly covers a salary received from a private person or source if it is paid or received as compensation or part compensation for the services rendered to the Government. It has also been held to apply if the officer or employee renders the same or similar services to both the Government and a private person (33 Op. A.G. 273 (1922)). It does not, however, prohibit payment for services rendered exclusively to private persons or organizations and which have no connection with the services rendered to the Government. See also 42 Op. A.G. 111, 126 (1962); Manning, at 166-168. The "in connection with" language was, however, imprecise and capable of unduly broad interpretation. N.Y. Bar Report 212-213. For example, it seemed to encompass payments for services performed outside the scope of the recipient's government employment but related to its subject matter, such as compensation received by a government tax auditor who, on his own time, helped a third party with his taxes. See United States v. Gerdel, 103 F. Supp. 635, 638-639 (E.D. Mo. 1952). As the New York City Bar Association pointed out: "Clearly an outside source may not, consistently with Section 1914, pay the government official 'to' take the government job or 'for' his government work. But may a former employer make any payment to the employee that will not raise the inference that it was made 'in connection with' his governmental duties?" N.Y. Bar Report 65 (emphasis in original). At the same time, the prohibition was "peculiarly susceptible of evasion," because the basis for a payment might not be objectively ascertainable (Staff Report 44) and because almost any payment could be characterized as being "in connection with" past services rather than government employment (N.Y. Bar Report 65-66). After canvassing the Attorney General opinions construing Section 1914, the House Judiciary Committee's Staff Report concluded in 1958 that "(s)alary payments avowedly designed to supplement Government salary or as donations to the Government have been held unlawful." Id. at 44, citing 31 Op. A.G. 470 (1919); 33 Op. A.G. 273 (1922); 40 Op. A.G. 265 (1943). /32/ By contrast, "payments in connection with leave with pay from the faculty of a privately endowed engineering school were held to have been made, not in consideration of the performance of Government services in the period of leave, but in consideration of past service to the private employer." Staff Report 44, citing 39 Op. A.G. 501 (1940). In an "effort to provide for a clearer and more predictable standard linking the payments and the employee's job" (N.Y. Bar Report 212), the New York City Bar Association recommended two changes in the prohibition then contained in Section 1914. First, it recommended an exception, ultimately enacted in 18 U.S.C. 209(b), permitting a federal official to continue to participate in an employee welfare or benefit plan maintained by a former employer, provided that the plan is "bona fide." This exception categorically resolved uncertainties under prior law in applying the "in connection with" standard to benefits received under such plans. Moreover, the requirement under Section 209(b) that the payments be made pursuant to a pre-existing plan in which the departing employee is already participating served to minimize the possibility that persons entering federal employment might be singled out for favorable treatment. N.Y. Bar Report 65, 217-218; Perkins, 76 Harv. L. Rev. at 1139-1140; Manning, at 171; 1960 Hearings 821; 1961 Hearings 62; 1962 Hearing 22, 46-47. Second, the Bar Association recommended that the "in connection with" language in Section 1914 be replaced with language barring payments "for or in consideration of" federal government service. N.Y. Bar Report 286. The Justice Department recommended the same change, in order "to emphasize the intent that the prohibition is against private payment made expressly for services rendered to the Government." 1961 Hearings 42. Congress accepted these recommendations, but used different language to achieve the same result. Section 209(a), as reported by the House Judiciary Committee and finally enacted, bars supplementations of salary "as compensation for" the recipient's services to the government; but, echoing the Justice Department's explanation of the phrase "in consideration of," the House Report stated (at 24-25) that the change emphasized that "the prohibition is against private payment made expressly for services rendered to the Government." At bottom, Congress's substitution of the phrase "as compensation for" did not change the scope of the prohibition in the former Section 1914; instead, as the Senate Report explained (at 14), it "reenact(ed) (that) prohibition in substance," albeit using language that "is more precise in expressing what is clearly intended by the present broad phrase." That also was the considered judgment of the Attorney General, who opined immediately after Section 209 was enacted that it "does not vary from (Section 1914) in substance." 1963 Memorandum, 18 U.S.C. 201 note; accord, Perkins, 76 Harv. L. Rev. at 1138 & n.87. Section 209 therefore should be understood to have codified the Attorney General's interpretations of former Section 1914, under which payments that are "avowedly designed to supplement Government salary" are barred. Staff Report 44. And by making clear that the requisite "connection" between the payment and the public employment is that the former is made "as compensation for" the latter, the revised language establishes that the prohibition includes all arrangements where the anticipated public employment is the consideration for the payment in the classic contract sense. Similarly, the fact that the legislative history equates "as compensation for" with "in consideration of" indicates that Section 209 is also implicated where public employment is the "but for" cause of the payment. c. Several important principles informing the interpretation of Section 209 emerge from the derivation of the phrase "as compensation for" -- principles establishing that the payments here violated the statute. Of course, the usual severance payment -- made solely on the basis of past services rendered to the employer, without reference to the anticipated future status or activities of the departing employee -- is lawful under Section 209. Perkins, 76 Harv. L. Rev. at 1138-1139. But here, the payments were "directly linked" to the anticipated federal employment of the recipients (Manning, at 171), not their past services to Boeing. Section 209(a) does not permit such an arrangement. i. Although the payments here were labeled "severance payments," they had little to do with the recipients' services to Boeing. Instead, as the calculations made by both Boeing and the recipients show, the payments were "avowedly designed to supplement Government salary" (Staff Report 44). Such a payment is by its nature "compensation for" the recipient's services to the federal government, and the requisite connection between the payment and those services is established as a matter of law. Indeed, a major element of petitioners' calculations was the difference between th individual's federal salary and benefits and the higher salary and benefits he would have been paid by Boeing. Such differentials are unquestionably "supplementations of salary" within the meaning of Section 209(a). It also is firmly established that moving expenses and cost-of-living allowances paid solely because of the recipient's federal service are prohibited "supplementations of salary" for purposes of Section 209(a). See pages 20-23, supra. Because the payments at issue here were avowedly designed for these purposes, they were, by definition, "compensation for" the recipient's services as a federal official. /33/ ii. Boeing did not have an established policy of general applicability that rewarded past services to the Company by providing severance payments to all employees leaving to take any of a broad range of jobs. The uncontradicted evidence, accepted by both courts below (Pet. App. 8a, 17a-18a), showed that over a 20-year period, Boeing consistently made such payments only to persons who were to assume positions of responsibility with the federal government. Singling out persons entering federal service for special treatment -- and making payments to them only because of their federal service -- is a sufficient basis for finding the payments to be unlawful. 2 Op. O.L.C. 267, 268 (1978); 5 Op. O.L.C. 150, 151 (1981); Op. O.G.E. 81 X 16 (1981) (App., infra, 51a-52a); 45 Comp. Gen. 308, 312 (1965). /34/ Indeed, Boeing did not have a uniform policy of making "severance" payments even to all persons who left to work for the federal government. Instead, Boeing decided on a case-by-case basis whether the particular position warranted a payment and what its amount should be. J.A. 280-283. The statutory relevance of the payor's singling out federal employees and retaining discretion is shown by the exception in Section 209(b) permitting continued participation in a bona fide pension, retirement or other benefit plan. That exception's requirement that the plan be one of general applicability in which the departing employee is already enrolled serves to guard against favored treatment for federal employees as a class and against discretionary payments that have an inherent propensity to be made and accepted as special rewards to individual federal officials. See page 36, supra. iii. Also significant is whether the payor has an interest in the recipient's governmental duties or a sensitive relationship with his employing agency. See 41 Op. A.G. 217, 221 (1955); 31 Op. A.G. 470 (1919); 45 Comp. Gen. 308, 312 (1965); Staff Report 44-45; Manning, at 164-165; McElwain & Vorenberg, 65 Harv. L. Rev. at 967; Davis, 54 Colum. L. Rev. at 904-905; Dembling & Forrest, 20 Geo. Wash. L. Rev. at 191-192. Although Section 209(a) applies to all payors who make a prohibited payment, even those who are unaffected by the agency's work, the existence of a sensitive relationship between the payor and the agency creates a distinct likelihood that the recipient's federal services are (or would be perceived to be) consideration for the payment, and it triggers the concern about divided loyalty (or the appearance thereof) that gave rise to enactment of the prophylactic prohibition against outside compensation. This factor has particular relevance here. Boeing is a large defense contractor, and it therefore has a significant interest in the affairs of the Defense Department generally. Furthermore, although the individual petitioners did not have procurement or contracting responsibilities in the Defense Department, they were involved in crucial areas of research and development and long-range defense planning that were of obvious interest to Boeing because of their impact on future weapons policies and systems. The record demonstrates that those considerations in fact played a role in Boeing's decision to subsidize the government positions at issue here. The President of Boeing Aerospace stated in recommending the payment to Crandon that Crandon would "be an asset to Boeing in the NATO arena" (J.A. 284). A Boeing document supporting the payment to Kitson stated that his "job with the DOD is viewed as bigger than Crandon's -- & has greater influence relative to (Boeing Aerospace)" (J.A. Lodging No. 18). The President of Boeing Aerospace recommended Reynold's payment because he would "hold a key job" (J.A. Lodging No. 17). And he recommended Jones' payment because, inter alia, "having someone with his views will be helpful to us while he is in Washington" (J.A. 277). iv. Finally, the district court found that the payments were made to encourage Boeing employees to accept government positions (Pet. App. 17a); the court of appeals agreed, noting that "Boeing's stated purpose in making the payments was to encourage public service by lessening the financial penalties involved in accepting government employment" (id. at 8a); and petitioners concede in this Court that the purpose of the payments was "to encourage public service by decreasing the financial penalties incurred by employees who left the employ of Boeing to enter public service" (Boeing Pet. 5; see also Boeing Br. 24; Individ. Br. 25-26). Because Boeing effectively paid the individual petitioners to accept their positions in the Department of Defense, those payments were, under Section 209(a), "compensation for" the services that they would perform in those positions: "Clearly an outside source may not, consistently with Section 1914, pay the government official 'to' take the government job" (N.Y. Bar Report 65). In sum, on the basis of the undisputed evidence and the district court's factual findings, all of the factors that render a payment a prohibited "supplementation of salary" as "compensation for" the recipient's government services within the meaning of Section 209(a) are present in this case. Contrary to the individual petitioners' contention (Br. 18), this is not a novel application of the statute. This result and supporting analysis are fully consistent with principles that the Department of Justice has applied for many years in considering the legality of severance payments (see App., infra, 3a-50a) and that have been widely recognized in the literature. d. Petitioners nevertheless seek to avoid liability by arguing that they did not "intend" to make and receive the payments as supplementations of federal salaries or as compensation for the recipients' government services. In petitioners' view, the phrase "as compensation for" in Section 209(a) requires a showing of "specific intent" -- a showing that the payment were made and received for the purpose of compensating the recipients for their federal service. We disagree. As we have explained, the phrase "as compensation for" is designed to identify the nexus that must exist between the payment and the federal services, not to state an elevated standard of mens rea. The quoted phrase does not use language of intent, and Section 209(a) as a whole is silent on that question. We do not suggest that Section 209(a) thereby prescribes no element of intent. Cf. Liparota v. United States, 471 U.S. 419, 425 (1985). But, in light of the silence in the statutory text, Section 209(a) should not be interpreted as one of those rare criminal statutes that requires a showing that the defendant acted with the purpose -- the "conscious object" -- of producing the particular effect that the statute proscribes. United States v. Bailey, 444 U.S. 394, 404 (1980). In accordance with ordinary rules of construction, it is sufficient to prove that the defendant acted with knowledge of the probable consequences of his actions. Compare Bailey, 444 U.S. at 402-409; United States v. United States Gypsum Co., 438 U.S. 422, 438-446 (1978). Such a rule comports with the purpose of Section 209 of preventing not only actual corruption, for which a showing of specific intent might be required (see 18 U.S.C. 201), but also real or apparent conflicts of interest that undermine public faith in the integrity of government. See Mississippi Valley, 364 U.S. at 560-561. Accordingly, criminal liability is established under Section 209 upon proof that the defendant knowingly made or received payments having the characteristics that render them "supplementations of salary" and "compensation for" services performed as a federal official within the meaning of Section 209(a). See Muntain, 610 F.2d at 969. A fortiori, a showing of specific intent is not required in a civil case, in which a party ordinarily is presumed to have intended the natural consequences of his acts. Clarion Bank v. Jones, 88 U.S. (21 Wall.) 325, 337 (1875). As we have explained, under the undisputed evidence and findings in this case, the payments at issue here were, as a matter of law, "supplementations of salary" made "as compensation for" federal services within the meaning of Section 209(a), because they were specifically designed to augment the recipients' income and mitigate financial sacrifices associated with federal employment; the recipients' anticipated federal employment was the reason for the payments; the payments were regarded as inducements to accept the federal positions; and Boeing had an interest in those positions. Regardless of whether each was aware of all the details of the payments' calculation, there is little doubt that the recipients and responsible Boeing officials were aware of the essential nature of the payments that rendered them unlawful under Section 209. /35/ That is all that is required to establish liability. Hence, petitioners err in relying (Individ. Br. 46; Boeing Br. 17-18) on the district court's conclusory findings regarding intent (Pet. App. 20a). The essential nature of the payments as supplementations of federal salary and compensation for federal services under Section 209(a) was established as a matter of law, and petitioners were aware of the nature of the payments. It is irrelevant whether petitioner Boeing "intended" and the individual petitioners "understood" the payments to be a "supplementation" or "compensation" in whatever different sense either petitioners or the district court might have used those terms. In short, the factual "finding" on which petitioners rely rested on significant legal errors regarding the interpretation of Section 209(a) and the elements of a cause of action under it. /36/ Appellate review of a factual finding for possible error in the legal premises on which it rests is not governed by the "clearly erroneous" test in Fed. R. Civ. P. 52(a). Icicle Seafoods, Inc. v. Worthington, 475 U.S. 709, 714 (1986). /37/ For similar reasons, petitioners err in relying (Individ. Br. 47-48; Boeing Br. 22-23) on the testimony by the recipients and Boeing officials that might have been the basis for the district court's finding with respect to their intentions and understandings. In any event, the court of appeals found the record overwhelmingly inconsistent with the witnesses' self-serving testimony and the district court's conclusory findings on these points. /38/ This is not a case where a witness "has told a coherent and facially plausible story that is not contradicted by extrinsic evidence." Anderson v. Bessemer City, 470 U.S. 564, 575 (1985). Rather, as this Court has stated (ibid.): Documents or objective evidence may contradict the witness' story; or the story itself may be so internally inconsistent or implausible on its face that a reasonable factfinder would not credit it. Where such factors are present, the court of appeals may well find clear error even in a finding purportedly based on a credibility determination. In this case, the court of appeals was properly "'left with the definite and firm conviction that a mistake ha(d) been committed.'" Id. at 573 (citation omitted). II. THE UNITED STATES IS ENTITLED TO RECOVER THE AMOUNT OF THE PAYMENTS IN THIS ACTION The court of appeals correctly held that the United States has a civil cause of action to require the individual petitioners to disgorge the payments they received in violation of 18 U.S.C. 209 or, in the alternative, to recover the amount of the payments from Boeing (to the extent recovery is not time-barred). Pet. App. 5a-6a, 8a-9a, 10a-11a. A conflict-of-interest statute such as Section 209 is "evidence of the precise nature of th(e) fiduciary duty" owed to the United States (United States v. Kenealy, 646 F.2d 699, 703 (1st Cir.), cert. denied, 454 U.S. 941 (1981)), and breach of the statutory standard "will establish, as a matter of law, (the agent's) breach of fiduciary duty owed the United States." United States v. Podell, 436 F. Supp. 1039, 1042 (S.D.N.Y. 1977), aff'd, 572 F.2d 31 (2d Cir. 1978). See Mississippi Valley, 364 U.S. at 560-561. Where an employee has received payments relating to his official duties in violation of a fiduciary obligation owed to the United States, he must account for the proceeds to the United States. See Snepp v. United States, 444 U.S. 507, 514 (1980); United States v. Carter, 217 U.S. 286, 305 (1910); United States v. Kearns, 595 F.2d 729 (D.C. Cir. 1978); United States v. Drumm, 329 F.2d 109, 113 (1st Cir. 1964); Restatement of Restitution Section 197 comment c (1937). /39/ And where a third party, such as Boeing, has interfered with an individual's fiduciary duty to the United States by making an illegal payment, the United States has a cause of action for damages against that party -- especially where, as here, the payor's conduct separately contravenes the standards in a conflict-of-interest statute. Continental Management, Inc. v. United States, 527 F.2d 613 (Ct. Cl. 1975). Petitioners do not dispute that the United States has a civil cause of action to recover illegal payments made to its employees. /40/ But the individual petitioners argue (Br. 32-43) that "disclosures" of the payments they claim to have made on their financial-disclosure forms (SF-278s) excuse them from any duty to account to the United States for the payments. This waiver argument was correctly rejected by the court of appeals. Pet. App. 9a-10a. /41/ Unlike other conflict-of-interest laws, Section 209 includes no general provision for a waiver. Compare 18 U.S.C. 207(f), 208(b). When the revision of the conflict-of-interest laws was before Congress, the Department of Defense recommended that the proposed Section 209 include a general provision permitting an agency head to grant exemptions by written order, but Congress declined to adopt that proposal. 1960 Hearings, at insert following p. 583. And although Congress authorized the President to grant waivers to certain highly qualified personnel needed for the defense effort (see 50 U.S.C. App. 2160(b)(4)), petitioners have not been granted a waiver under that provision. In light of the absence of any statutory authority for exempting petitioners from Section 209, petitioners' contention that their alleged disclosures on their SF-278s exempt them from liability is flatly inconsistent with Mississippi Valley. There the Court held that a government official's alleged knowledge of his subordinate's conflict of interest did not excuse the subordinate from the disqualification requirements of 18 U.S.C. 434 (1958). Noting that neither Section 434 nor any other statute granted the superior official the authority to exempt the subordinate, the Court concluded that it would be contrary to the statutory purposes for the Court to fashion an exempting power that Congress had withheld. 364 U.S. at 561. In the Court's view, Congress "recognized that an agent's superiors may not appreciate the nature of the agent's conflict, or that the superiors might, in fact, share the agent's conflict of interest," and the prohibition therefore was "designed to protect the United States, as a Government, from the mistakes, as well as the connivance, of its own officers and agents." Ibid.; see also id. at 566; United States v. Medico Indus., Inc., 784 F.2d 840, 845 (7th Cir. 1986). As in Mississippi Valley, it would be contrary to the purposes of Section 209 for the Court to fashion an exempting authority that Congress withheld. That result would permit petitioners to retain the proceeds of conduct that violated a criminal statute and would unjustly enrich petitioners by excusing them from their duty to account to the United States for payments that they received for their government service and that therefore belong to the United States. Cf. Caplin & Drysdale v. United States, 109 S. Ct. 2646, 2652-2655 (1989). There is another legal defect in petitioners' reliance on their SF-278s in claiming an exemption from liability under 18 U.S.C. 209. The regulations governing the financial disclosure program, which were issued by the Director of the Office of Government Ethics pursuant to statutory authority, 5 U.S.C. App. 402(b)(1), expressly provide that the filing of a financial disclosure report does not exempt a government official from applicable statutory prohibitions. 5 C.F.R. 734.104(a)(6). /42/ Accordingly, to exempt the individual petitioners from liability based on financial disclosure reports filed under the Ethics in Government Act would be contrary to that Act and implementing regulations, as well as Section 209 itself. In any event, the factual predicate for petitioners' waiver argument based on the filing of SF-278 forms is wholly lacking, because none of the SF-278s filed by petitioners mentioned a severance payment. Petitioner Crandon did not even file an SF 278 because he did not occupy a position covered by the filing requirement. Reynolds' SF-278 listed no income from Boeing (J.A. Lodging No. 24). Kitson's SF-278 contained two entries for income from Boeing: $159,530 listed as "salary," and $1100 per month listed as "retire. pay" (J.A. Lodging No. 25); his $50,000 "severance" payment was not separately disclosed, although it might have been included in the aggregate amount listed as "salary." Paisley's SF-278 listed the $180,000 he received from Boeing as "compensation for services," not as a severance payment (J.A. Lodging No. 23). Jones' SF-278 listed three items from Boeing: $68,200 in "salary"; $2,501-$5,000 from the Boeing "Financial Security Plan"; and a further $200,300, which was listed under the heading "Other (Specify)," with no accompanying explanation (J.A. Lodging No. 21). Petitioners seek to overcome this defect by arguing (Individ. Br. 36-38) that regulations governing the completion of disclosure forms did not require them to list the severance payments separately, and that several of the individual petitioners were so informed by Defense Department personnel. That argument misses the point. Petitioners have not been penalized for violating the Ethics in Government Act's disclosure requirements. This suit was brought to require petitioners to disgorge illegal payments. Petitioners contend they do not have to do so because they disclosed the payments on their SF-278s. The simple fact is that those forms do not identify any severance payments as such. As a result, the government officials who reviewed those forms had no occasion to pass on whether those payments were lawful. For this reason, the certification by the reviewing official on each form that "(t)he information contained in this report discloses no conflict of interest under applicable laws and regulations" does not constitute a considered opinion that the severance payments were lawful, as petitioners urge. See Individ. Br. 36. /43/ Petitioners rest their waiver argument on common-law principles that an agent must account to his principal for "secret" payments received in connection with his employment. See United States v. Carter, supra. The standards that petitioners violated here, however, are prescribed by an Act of Congress, not the common law. Section 209(a) prohibits all supplementations of salary as compensation for federal services, not merely those that are "secret." Although a court might apply common-law principles in a cause of action by the United States in the absence of statutory guidance, Congress may displace or expand upon the common law, and it has done so here. Compare Milwaukee v. Illinois, 451 U.S. 304, 313-314 (1981). In any event, even under common-law principles, an agent is not excused from liability in the absence of "full disclosure." As the court of appeals recognized (Pet. App. 9a), "full disclosure" entails a "complete" account of all relevant facts to the government official given "clear actual authority" by statute or regulation to waive the statutory requirement, and an "official response" from that official explicitly waiving the conflict. United States v. Kenealy, 646 F.2d at 705. Cf. Johnson v. Zerbst, 304 U.S. 458, 464 (1938) ("intentional relinquishment of a known right"). Petitioners satisfied none of those requirements. In sum, there was no waiver, or basis for waiver, here. CONCLUSION The judgment of the court of appeals should be affirmed. Respectfully submitted. KENNETH W. STARR Solicitor General STUART E. SCHIFFER Acting Assistant Attorney General LAWRENCE G. WALLACE Deputy Solicitor General EDWIN S. KNEEDLER Assistant to the Solicitor General MICHAEL F. HERTZ DOUGLAS LETTER JOAN E. HARTMAN Attorneys AUGUST 1989 /1/ "Pet. App." refers to the appendix to the certiorari petition in No. 88-938. /2/ Melvyn R. Paisley. On or about May 1981, petitioner Paisley was offered and agreed to accept the position of Assistant Secretary of the Navy for Research, Engineering and Systems. Boeing Exh. (BX) 50 (C.A. App. 253); J.A. 239-240. In July 1981, Paisley was retained as a consultant in the Department of Defense. DX 58, 67; J.A. 238-239. On September 30, 1981, Paisley accepted a $183,000 payment from Boeing. BX 50 (C.A. App. 255). After Senate confirmation, Paisley took the oath of office on December 2, 1981. DX 59 (C.A. App. 101); J.A. 236, 239. Lawrence Crandon. In 1981, petitioner Crandon agreed to Boeing's submission of his name to be a United States member of the NATO Air Command and Control Systems team. BX 50 (C.A. App. 291). On November 25, 1981, Crandon was notified that he had been selected, subject to security clearances and physical examinations. Crandon Exh. 4 (C.A. App. 115); J.A. 239. He accepted a $40,000 payment from Boeing on March 5, 1982, and commenced service three days later. BX 50 (C.A. App. 295, 299). Thomas K. Jones. Petitioner Jones was urged by Defense Department officials in early 1981 to consider accepting the position of Deputy Under Secretary of Defense, and he notified them in March 1981 that he was willing to do so. BX 50 (C.A. App. 240). Jones accepted a payment of $132,000 from Boeing on May 15, 1981 (C.A. App. 243), and he was appointed on June 1, 1981, to the position of Deputy Under Secretary of Defense, Strategic & Space Systems. DX 19 (C.A. 99); J.A. 236, 237, 239. Herbert K. Reynolds. In May 1981, petitioner Reynolds was asked by the Under Secretary of Defense to consider accepting the position of Deputy Director of Space and Intelligence Policy in the Office of the Under Secretary of Defense. On June 1, 1981, he notified Department officials that he was willing to do so. Reynolds accepted a payment of $80,000 from Boeing by check dated July 22, 1981. BX 50 (C.A. App. 267, 270). Four days later, on July 26, 1981, Reynolds was appointed as a consultant to the Department of Defense (DX 115 (C.A. App. 143); J.A. 236, 238), and he was formally appointed by the President in October 1981. BX 50 (C.A. App. 267). Harold Kitson, Jr. In March 1982, petitioner Kitson was asked by the then-Assistant Secretary of the Navy, petitioner Paisley, if he was interested in the position of Deputy Assistant Secretary of the Navy for Command, Control, Communications and Intelligence. In April or May of that year, Kitson requested that his name be submitted. GX 127, at 19-22 (C.A. App. 898-899); J.A. 188. On July 6, 1982, Kitson was appointed as a consultant in the Department of the Navy, pending his formal appointment to office. DX 135 (C.A. App. 108); J.A. 238-239. On July 27, 1982, Kitson accepted a $50,000 payment from Boeing. BX 50 (C.A. App. 282). On September 1, 1982, he was appointed Deputy Assistant Secretary. DX 143 (J.A. Lodging No. 25). /3/ A document signed by the Executive Vice President of Boeing Aerospace Company stated that the payment to petitioner Jones was "conditional on" Jones' "acceptance of the job" (J.A. Lodging No. 14). An internal Boeing document expressed doubts that the Senate would give its consent to Paisley's appointment and suggested that a "memo of understanding" be executed to cover a situation in which Paisley would take the payment but then retire rather than go into government service (J.A. Lodging No. 16). Similarly, a Senior Vice President of Boeing recommended a payment to Paisley only "if Paisley ends up as a govt official or as consultant" (J.A. Lodging No. 15). /4/ The positions were: Office of Director of Defense Research & Engineering (1962); Director of Advance Systems Studies, NASA (1963); Scientific Advisor, DCS/Research & Development, U.S. Air Force (1966); Deputy Associate Administrator for Engineering, Office of Space, Sciences & Applications, NASA (1967); Assistant Director, Strategic Systems, Office of the Director of Defense Research & Engineering (1968); Staff Leader of Aeronautical Research, National Aeronautics & Space Council, Office of the President (1970); Technical Assistant, Strategic & Space System Department, Research & Engineering, Department of Defense (DoD) (1971); Director of Army Aviation Research Laboratories, Lewis Directorate, U.S. Army (1971); Technical Director, Naval Air Development Center (1972); Aeronautical & Space Science Committee, U.S. Senate (1973); Assistant Secretary of Commerce for Science & Technology (1973); Air Force Systems Command, DoD (1973); Assistant Secretary of the Air Force (1973); Staff Specialist, DoD SALT Task Force (1975); Deputy Director, Office of Director of Defense Research & Engineering (1975); Director, Cruise Missile Program, DoD (1978) (moved aborted). J.A. Lodging No. 20. /5/ Petitioner Paisley's calculation was based on the assumption that he would terminate his employment with Boeing. Ultimately, however, Paisley retired, and like retiring employees generally, he received the nonvested portion of the Company's contributions to the investment plan. J.A. 418-419. /6/ Petitioners Kitson and Crandon received payments in 1982, after Boeing charged the payments to Paisley, Jones and Reynolds to the government as "overhead" expenses on Boeing's defense contracts and the Defense Contract Audit Agency questioned the legality of those charges. For Crandon and Kitson, the Industrial Relations Department calculated the proposed payment under both the four-factor approach and an alternative approach, which multiplied 5% of the individual's years of service with Boeing (1) by his current salary, and then (2) by a fraction consisting of the number of years the employee expected to remain in the government over four. See J.A. 282-283. The most significant factor in the alternative calculation was the number of years that the employee expected to remain in the government. The four-factor approach for Kitson yielded a figure of $59,310, and the alternative approach yielded a figure of $34,912. He was paid $50,000. The four-factor approach for Crandon yielded a figure of $52,260, and the alternative approach yielded a figure of $19,311. He was paid $40,000. J.A. Lodging Nos. 8, 9. /7/ Subsequently, an additional $3000 was approved for petitioner Paisley, based on the difference between the Boeing salary he would have earned and the pay that he received as a government consultant while awaiting Senate confirmation. GX 111, Nos. 100165, 100429; J.A. 190, 194-195. /8/ The district court held that the government's claims against Boeing based on four of the five payments were barred by the three-year statute of limitations in 28 U.S.C. 2415(b) for actions founded upon a tort (Pet. App. 29a). The claims against the individual petitioners are governed by the six-year statute of limitations in 28 U.S.C. 2415(a) for actions founded upon a contract, and therefore were not time-barred. The court of appeals affirmed these rulings by the district court, but held that the United States may not recover the full amount of the payment to Kitson, for which recovery from Boeing is not time-barred, from both Boeing and Kitson (Pet. App. 10a-12a). Petitioners do not challenge the court of appeals' holding that the United States' claims are not time-barred to this extent. /9/ Judge Hall dissented from the panel's holding that the payments were made and received with "compensatory intent" (Pet. App. 13a-15a). Petitioners' petitions for rehearing with suggestion for rehearing en banc were denied by a 6-5 vote (id. at 30a-31a). /10/ See 54 Cong. Rec. 2039-2047, 4004-4006, 4010-4013, 4017, 4057-4059, 4859, 4920-4922, 4925 (1917); Memorandum for the Attorney General from Frederick W. Ford, Acting Ass't A.G., Off. Legal Counsel (OLC), Re: "Conflict of Interest Statutes," at 118-120 (Dec. 10, 1956) (1956 A.G. Mem.), reprinted in Federal Conflict of Interest Legislation: Hearings on H.R. 1900, H.R. 2156, H.R. 2157, H.R. 7556 and H.R. 10575 Before the Antitrust Subcomm. (Subcomm. No 5) of the House Comm. on the Judiciary, 86th Cong., 2d Sess. 619, 738-740 (1960) (1960 Hearings); Association of the Bar of the City of New York, Conflict of Interest and Federal Service 54-55 (1960) (N.Y. Bar Report); B. Manning, Federal Conflict of Interest Law 148-149 (1964). /11/ See Manning, at 156-157 ("It must be emphasized that the statute forbids outside compensation even if the payor has no dealings or relations whatever with the government and no special interest in its policies. It is not limited in its application to compensation paid by a source in a sensitive relationship with the government employee's agency -- a supply contractor dealing with the agency, for example."); Accord, Perkins, The New Federal Conflict-of-Interest Law, 76 Harv. L. Rev. 1113, 1137 (1963). /12/ Congress extensively relied on the congressional staff and Bar Association studies and the views of leading commentators when it revised the conflict-of-interest laws in 1962, and those materials therefore are a reliable source of guidance in construing Section 209. Because petitioners contend that this case involves a novel application of the statutory prohibition that they could not have anticipated, the statutory background and publications of authoritative commentators have special relevance here. This Court has examined studies and commentary submitted to Congress over a period of years to inform its interpretation of Congress's enactments. See, e.g., Western Air Lines, Inc. v. Criswell, 472 U.S. 400, 409-412 (1985); Lowe v. SEC, 472 U.S. 181, 190-202 (1985); EEOC v. Wyoming, 460 U.S. 226, 229-233 (1983); ICC v. New York, N.H. & H. R.R., 372 U.S. 744, 753-758 (1963). /13/ President Kennedy appointed a special committee to study the conflict-of-interest laws in the spring of 1961, and he sent a message to Congress on the subject on April 27, 1961. H.R. Doc. No. 145, 87th Cong., 1st Sess. (1981). The President also transmitted a proposed bill to implement that message, which was introduced as H.R. 7139, 87th Cong., 1st Sess. (1961). House Report 8; 1961 Hearings 21-25, 30-32, 57-63. Congress also had before it an extensive study of the conflict of interest laws (including 18 U.S.C. 1914 (1958)) undertaken by OLC in 1956 (see 1956 A.G. Mem., note 10, supra), as well as studies of Section 1914 and other conflict-of-interest laws by a number of commentators. See Staff Report 44 nn. 254 & 256, citing McElwain & Vorenberg, 65 Harv. L. Rev. at 966-967, and Dembling & Forrest, Government Service and Private Compensation, 20 Geo. Wash. L. Rev. 174, 193 (1952); 1956 A.G. Mem. (1960 Hearings 747-749), quoting Davis, The Federal Conflict of Interest Laws, 54 Colum. L. Rev. 893, 905-907 (1954). /14/ On May 19, 1958, "based upon the() recommendations" in the Staff Report, Representative Celler introduced H.R. 12547, 88th Cong., 2d Sess. That bill was reintroduced in the next Congress as H.R. 2156, 86th Cong. 1st Sess. (1959), and the Subcommittee's 1960 Hearings focused in large part on the latter bill. The recommendations of the New York City Bar Association were embodied in H.R. 10575, 86th Cong., 2d Sess. (1960), which was introduced by Representative Lindsay. The Subcommittee received extensive testimony from Roswell Perkins, the Chairman of the Bar Association's special committee. House Report 7-8; 1960 Hearings 383-483; 1961 Hearings 100-132; see also 1962 Hearing 42-52. H.R. 10575 was reintroduced in 1961 as H.R. 3050, 87th Cong., 1st Sess. In that same year, Representative Celler introduced H.R. 3411, 87th Cong., 1st Sess., which was based on both the Staff Report and the Bar Association's proposals. The bill enacted into law in 1962 (H.R. 8140, 87th Cong., 2d Sess.) was a composite that included provisions of both those proposals. 1962 Hearing 36 (remarks of Rep. Lindsay). /15/ Compare Buckley v. Valeo, 424 U.S. 1, 27 (1976): Of almost equal concern as the danger of actual quid pro quo arrangements is the impact of the appearance of corruption stemming from public awareness of the opportunities for abuse inherent in a regime of large individual financial contributions. See United States Civil Service Comm'n v. National Ass'n of Letter Carriers, 413 U.S. 548, 565 (1973). /16/ Section 209(a) exempts amounts "contributed out of the treasury of any State, county, or municipality." This exception was included to preserve agricultural extension and similar programs. Manning, at 172. /17/ Roswell Perkins was regarded by Members of Congress as a leading expert on the conflict-of-interest laws. Senator Keating stated that "(t)here is probably no one better informed person on this subject" (1962 Hearing 37), and Representative Lindsay described him as the "author of 80 percent of the House bill" and stated that his committee's report was "probably the leading work on the subject of conflicts of interest in the Federal branch that has been written to date" (id. at 35). /18/ See 2 Comp. Gen. 775 (1923) ("salary and expenses"); 18 Comp. Gen. 460 (1938) (travel expenses incident to employee's detail to foreign country); 26 Comp. Gen. 15 (1946) (cost-of-living allowance); 35 Comp. Gen. 639 (1956) (cost-of-living allowance); see generally Manning, at 161. /19/ Professor Manning, of the Yale Law School, was the Staff Director of the New York City Bar Association's study of the conflict-of-interest laws (N.Y. Bar Report viii) and served on the special committee appointed by President Kennedy in 1961 to study those laws (H.R. Doc. No. 145, at 2). /20/ Section 1914 was understood to prohibit payment of moving expenses as well. See 1961 Hearings 63. /21/ The calculation of the proposed severance payment by both Boeing and the recipients also took into account the value of unvested portions of past contributions by Boeing to the individual petitioner's accounts under the Company's Voluntary Investment Plan. The unvested portion ordinarily is forfeited when an employee leaves the Company. See pages 4-5, supra. Accordingly, the inclusion in the severance payments of an amount attributable to that unvested portion was indistinguishable for present purposes from any other transfer of economic value made solely to reduce the financial hardship of accepting a federal position, rather than to compensate for past services to the payor. It therefore constituted a "supplementation" of the recipient's federal salary within the meaning of Section 209(a). /22/ See DOJ Mem., Conflicts of Interest Questions Arising From Stock Options, Pension Rights and Other Executive Benefits of Individuals Entering Government Employment From Private Business, at 5 (emphasis added), quoted in Perkins, 76 Harv. L. Rev. at 1139 n.89; see also id. at 1141 n.93 ("'an ad hominem grant of (a stock) option upon the employee's leaving his company to enter the Government might contravene the statute'"). /23/ See McElwain & Vorenberg, 65 Harv. L. Rev. at 967 ("It is perfectly plain that Section 1914 outlaws double compensation for Government service, but it is sometimes difficult to determine when a particular payment is 'in connection with his services' as a Government employee. For example, it is sometimes hard to tell whether a bonus paid just before an entry into Government service constitutes in fact a payment for past services rendered the employer or whether it is a prospective sweetening of the employee's Government salary."); Davis, 54 Colum. L. Rev. at 905 (footnote omitted) ("(T)he retirement bonus given to a departing company official is permissible when it is said to be paid in gratitude for past services rendered or as an inducement to return after the termination of the Government job, but the same bonus is not acceptable when its purpose is to enable the company official to carry on financially in a low-paying Government position."). /24/ Petitioners contend that the Kennedy Administration could not have intended to criminalize pre-employment severance payments because the Secretary of Defense in that Administration, Robert S. McNamara, received payments totalling $618,750 from his former employer. See Br. 22 n.14, citing McNamara To Get $618,750 As Bonus, N.Y. Times, Jan. 22, 1961, at 49, col. 6. However, as the newspaper article explains, those payments were made pursuant to an established company policy and were compensation for his past services. See also Nomination of Robert S. McNamara: Hearing Before the Senate Comm. on Armed Services, 87th Cong., 1st Sess. 33-35 (1961). /25/ Petitioners also rely (Individ. Br. 20) on a passage in the Senate Report stating (at 14) that Section 209 forbids payments "to a Government employee," without expressly referring to a person who has not yet formally commenced his federal service. The Senate Report described the statutory ban in general terms; it did not purport to explain all the details of its application. The Senate Report similarly explained (at 9) the new 18 U.S.C. 203 in general terms as prohibiting "officers or employees of the Government from receiving compensation for services rendered for others," without expressly referring to payments received before the formal commencement of federal service; yet it is clear that Section 203 reaches such payments. /26/ Petitioners point out (Individ. Br. 23) that the bribery section specifically mentions payments made to persons who have not yet assumed office while Section 209 does not. However, Section 209 broadly applies to "(w)hoever" receives "any" supplementation of salary for his government services; this all-encompassing language clearly includes recipients who have not yet formally assumed office. Compare Monsanto, 109 S. Ct. at 2663. The fact that Section 209 does not specifically identify that (or any other) subcategory of recipients "'does not demonstrate ambiguity' in the statute: 'It demonstrates breadth.'" Ibid., quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499 (1985). The difference in the wording of Sections 201 and 209 is attributable to the fact that the bribery provisions were the subject of a somewhat distinct study and revision (see Staff Report (Pt. II)), and Congress therefore did not use the same terminology in revising Section 201 as it used in revising the conflict-of-interest laws. Accordingly, the appropriate place to look for parallels to the precise text of Section 209 is the related conflict-of-interest provision in 18 U.S.C. 203, which unquestionably covers pre-employment payments even though its text does not specifically refer to them. Petitioners also argue (Individ. Br. 23-24) that they were beyond the reach of the bribery statute at the time they accepted the severance payments because they had not been officially informed that they would be nominated or appointed (see 18 U.S.C. 201(a), para. 2), and that it therefore would be anomalous to apply Section 209 to them. This argument is without merit. Each of the individual petitioners had already either started federal employment as a consultant or been sufficiently assured of his nomination or appointment at the time the payments were made. See note 2, supra. In any event, the fact that the reach of Sections 209 and 201 might not precisely coincide at the margins (due to their different drafting histories) does not warrant a construction of Section 209 that altogether excludes payments made prior to the formal commencement of federal service. /27/ Because most of the relevant OLC opinions are unpublished, they were appended to the government's brief in the court of appeals and are appended to this brief as well. The OLC opinions are cited principally to rebut petitioners' suggestion that the government adopted its position recently and to ensure that the Court has all relevant materials (and may give them whatever weight they warrant), rather than in an attempt to bind petitioners to the holdings in the opinions. The individual petitioners contended in their reply brief at the petition stage (at 5) that under 5 U.S.C. 552(a)(2), no reliance can be placed on these OLC opinions because they were not indexed and made available to the public for inspection and copying. However, OLC opinions are exempt from that requirement by virtue of 5 U.S.C. 552(b)(5). Courts frequently refer to such agency counsel opinions where relevant to the issues before them. See, e.g., Greentree v. U.S. Customs Service, 674 F.2d 74, 84-85 (D.C. Cir. 1982); Symons v. Chrysler Corp. Loan Guarantee Bd., 670 F.2d 238, 243 n.7 (D.C. Cir. 1981); NTEU v. Reagan, 663 F.2d 239, 251 n.19 (D.C. Cir. 1981). Petitioners rely (Individ. Br. 24-25) on the statement in the Attorney General's 1963 interpretative memorandum that Section 209 "uses much of the language of the former 18 U.S.C. 1914 and does not vary from that statute in substance." Memorandum Regarding Conflict of Interest Provisions of P.L. 87-849 (Feb. 1, 1963), 18 U.S.C. 201 note. That general statement appears to address the nature of the payments that are barred (see page 37, infra), not the distinct issue presented here. Moreover, because Section 1914 apparently was understood by this Department to apply to pre-employment payments, the language quoted from the Attorney General's 1963 memorandum is consistent with a similar reading of Section 209(a). The longstanding position of OLC also demonstrates that this general language in the Attorney General's 1963 memorandum was not understood to exempt such payments. /28/ Petitioners refer to annual payments to be made to Deputy Secretary of Labor Roderick DeArment by his former law firm and a $200,000 severance payment made to Deputy Secretary of State Lawrence Eagleburger. See Individ. Br. 22-23 n.16, citing U.S. Allows Long-Term Severance Pact, Wash. Post, May 20, 1989, at A11, col. 1. The public account of the former arrangement makes clear that the payments are made pursuant to an existing plan, based on past services to the firm. We have been informed by the Office of Government Ethics that it approved the payment to Deputy Secretary Eagleburger because it was satisfied that the payment was made as compensation for his past services to Kissinger Associates, not in consideration of his accepting a government position. /29/ Petitioners err in citing United States v. Muntain, 610 F.2d 964 (D.C. Cir. 1979), and United States v. Raborn, 575 F.2d 688 (9th Cir. 1978), for the proposition that "Congress intended Section 209 to be limited to incumbent federal officials" (Individ. Br. 25 n.18). Muntain merely held Section 209 inapplicable because the payments were made for an outside job that the defendant performed while on annual leave and that had no connection to his official duties. Raborn involved defendants who concededly were government employees, and the Ninth Circuit, in that context, observed that the statute "prohibits * * * an officer or employee of the executive branch" from receiving any supplementation of salary. 575 F.2d at 691-692. /30/ The statute contains exceptions for special Government employees, who serve less than 130 days annually, 18 U.S.C. 202 (18 U.S.C. 209(c)); employees serving without compensation (18 U.S.C. 209(c)); payments made by state and local governments (18 U.S.C. 209(a)); certain travel and moving expenses (18 U.S.C. 209(d) and (e)); and certain payments to employees injured while protecting the President (18 U.S.C. 209(f)). /31/ For other special exemptions from 18 U.S.C. 209, see 5 U.S.C. 3343(e) (expenses of employees detailed to international organizations); 45 U.S.C. 362(h) (employers and employees assisting the Railroad Retirement Board); 7 U.S.C. 2220 (employees engaged in agricultural or Forest Service cooperative extension programs); 8 U.S.C. 1353c (reimbursement for services of immigration officers inspecting aliens in foreign countries). /32/ Accord, International Ry. v. Davidson, 257 U.S. 506, 515 (1922); 2 Comp. Gen. 775 (1923); 18 Comp. Gen. 460 (1938); 26 Comp. Gen. 15, 17-18 (1946); 29 Comp. Gen. 163, 167 (1949); 36 Comp. Gen. 135 (1956). /33/ The word "compensation" connotes not only payment for services rendered, but also "recompense" and "something that makes up for a loss" (Webster's Third New International Dictionary 463 (1986)). By making up for the recipient's financial losses resulting from his performance of services for the federal government, payment of moving expenses and cost-of-living allowances serves as "compensation" for federal services in this sense as well. /34/ See Perkins, 76 Harv. L. Rev. at 1139: The sole test should be, we submit, the factual one of whether the payment is made in consideration of past services. To test its own intent, the board of directors of the corporation from which the executive is departing should ask itself: would we make the same severance payment if the corporate executive were leaving, with no idea of returning, to accept the presidency of a college or of a charitable foundation, or to enter the ministry? /35/ The individual petitioners cite (Br. 48) testimony that they did not know how the responsible Boeing officials computed the final amount of their payments. They do not dispute, however, that they submitted worksheets computing the financial loss that would result from entering government service. Because, from the individual petitioners' perspective, the payments clearly constituted a mechanism for making up some or all of that loss, the payments were received as "supplementation of salary" and "as compensation for" their federal services. Similarly, although Boeing cites (Br. 24) the district court's finding that its chief executive officer (Mr. Wilson), who gave final approval to the payments, did not know the "specific calculation method" (Pet. App. 20a), Boeing surely cannot avoid liability on that basis. Mr. Wilson knew that the payments were to be made only because of the recipients' anticipated federal service, and he approved the recommendation of responsible Boeing officials who concededly utilized a method of calculation that, in itself, rendered the payments unlawful under Section 209. In any event, Mr. Wilson was aware that the calculations were based in part on the salary differential and moving expenses, which sufficiently informed him that the payments had characteristics that rendered them unlawful. See pages 5-7, supra. /36/ For example, the district court was of the view that all "severance" payments are per se lawful under the statute and that "the formula for calculation of severance pay cannot make the payment something other than severance pay" (Pet. App. 26a). /37/ Petitioners also assert that the district court "found" that the payments were made "to sever the relationship with these employees based on past performance and accumulated benefits" (Individ. Br. 46, quoting Individ. Pet. App. 25a (emphasis added by petitioners)). The quoted statement, however, appears in the district court's "Conclusions of Law," not its "Findings of Fact." Moreover, although the recipients' past services to Boeing obviously furnished an occasion for making the payments -- Boeing presumably would not make such payments to persons having no affiliation with the Company -- the triggering event for the payments and the basis of their calculation was the recipients' anticipated federal employment. In any event, petitioners' ties with Boeing were severed through their receipt of separate checks reflecting the value of accrued benefits to which every other terminating employee would be entitled. By contrast, the overwhelming percentage of each individual's payment request to Boeing consisted of future financial losses. The submissions also included the amounts of Boeing contributions to benefit plans that were accrued but unvested at the time of termination, and the value of stock options that were granted in the year before termination. But because these benefits otherwise would have been lost when they left the Company, it was not necessary for the individuals to receive cash payments for them in order to "sever" their ties. The value of those two items also was relatively small in relation to the total payments. See pages 4-5, supra. /38/ This Court has held in civil cases that self-serving declarations by a party as to his intent, unsupported by any extrinsic evidence and contradicted by objective facts, may be found to be insufficient as a matter of law to justify a verdict on behalf of that party. See, e.g., United States v. Generes, 405 U.S. 93, 106-107 (1972); United States v. Union Pac. R.R., 226 U.S. 61, 92-93 (1912); District of Columbia v. Murphy, 314 U.S. 441, 449, 456 (1941). /39/ This remedy was ordered in the one other civil action based on Section 209. United States v. Pezzello, 474 F. Supp. 462, 463 (N.D. Tex. 1979). See also N.Y. Bar Report 56 (discussing Comptroller General decisions stating that payments received in violation of former Section 1914 may be collected by deduction from employee's pay); see, e.g., 30 Comp. Gen. 246, 250 (1950). /40/ Boeing argues (Br. 26-32) that it is not liable because there was no "actual conflict of interest," but only an "appearance" of improper activity. This argument reflects a fundamental misconception: the statute is not addressed solely to appearances. Section 209 is a conflict of interest statute "(i)n the strictest sense" (N.Y. Bar Report 55), as was 18 U.S.C. 434 (1958), at issue in Mississippi Valley. "The employee does not have to do anything improper in his office to violate the statute" (N.Y. Bar Report 55-56), and specific corruption likewise is not an element of the payor's offense under 18 U.S.C. 209(a). Because the harm caused by payments made in violation of Section 209(a) is "uncertain in its mathematical calculation," and nominal damages will deter no one, the amount of the payment is the proper measure of damages. Continental Management, 527 F.2d at 619; see also Snepp, 444 U.S. at 514-515. Finally, contrary to petitioners' contention (Individ. Br. 26-27), the government did not "concede" or "stipulate" that no conflict of interest or breach of fiduciary duty occurred. See Br. in Opp. 18 n.11. /41/ To support their claim of waiver and certain other arguments, petitioners rely on affidavits attached to their motions for summary judgment. See J.A. 44-82. The affidavits are hearsay, Fed. R. Evid. 801(c), could not have been admitted into evidence, Fed. R. Evid. 802, and do not constitute a part of the trial record that forms the basis for the district court's opinion. /42/ The cited regulation states: "Nothing in the (Ethics in Government) Act or this part requiring reporting of information or the filing of any report shall be deemed to authorize the receipt of income, gifts, or reimbursements, the holding of assets, liabilities, or positions, or involvement in transactions that are prohibited by law, Executive order or regulation." /43/ The individual petitioners also rely (Br. 40) on the district court's finding that Jones and Paisley disclosed the fact and amount of the severance payments to certain Defense Department officials. Pet. App. 21a. However, not all payments labeled as "severance" payments are either lawful or unlawful under Section 209. Petitioners do not allege that Paisley and Jones disclosed to Defense Department personnel the essential characteristics that rendered the payments at issue here unlawful. Moreover, although petitioners argue that Paisley and Jones received informal assurances that they could accept the payments, they neither requested nor received a formal written opinion to that effect from the Designated Agency Ethics Officer for the Department of Defense, the only Department official authorized to decide that question. See 32 C.F.R. 40.5(b). See also 5 U.S.C. App. 402(b)(8) (OGE advisory opinions). Inexplicably, the individual petitioners also rely (Br. 42) on disclosures made by Boeing in 1981 to the Defense Contract Audit Agency (DCAA) about the nature of its severance-pay practice. Those disclosures were made only after Boeing charged the first three of the payments at issue here to the government and after the DCAA questioned the basis for the payments. Boeing also argues (Br. 35) that "disclosures" insulate it from liability. Although the record contains some correspondence on the subject (J.A. 541-583), the payments for the most part are not described in much detail. Moreover, a 1973 letter from a Boeing official to the General Counsel of the Air Force states that a Boeing employee had been told by a Defense Department official that a severance payment might violate Section 209 if it was based on the difference between the employee's Boeing and federal salaries (J.A. 542). The record contains no response to that letter or any other document stating that Defense Department officials formally approved payments having the characteristics that render those at issue here unlawful. APPENDIX