18 U.S.C. § 208, the basic criminal conflict of interest statute, prohibits an executive branch employee from participating personally and substantially in a particular Government matter that will affect his own financial interests, as well as the financial interests of:
An employee has a disqualifying financial interest in a particular matter only if there is a close causal link between a particular Government matter in which the employee participates and any effect on the asset or other interest (direct effect) and if there is a real possibility of gain or loss as a result of development in or resolution of that matter (predictable effect). Gain or loss need not be probable. The possibility of a benefit or detriment must be real, not speculative. One common point of confusion is distinguishing between an asset or other interest and a financial interest in a particular matter under 18 U.S.C. § 208. The financial interest is the possibility of gain or loss (of the value of an asset or other interest) resulting from a particular matter, not the asset or interest itself. Thus, a person could have a large holding but only a relatively small financial interest in the particular matter, because the potential for gain or loss is small.
The criminal prohibition has no de minimis level. That is, it applies where any financial interest exists, no matter how small. Under 18 U.S.C. § 208(b)(2), however, OGE has the authority to establish blanket exemptions for financial interests considered too remote or too inconsequential to affect the integrity of the employee's services. OGE has established several exemptions. The exemptions can be found in the implementing regulation for the statute, 5 C.F.R. part 2640. An employee who qualifies for an exemption can participate in official matters without violating 18 U.S.C. § 208, even though he has what would otherwise be a disqualifying financial interest in the matters. In addition to the exemptions established by OGE, there is an exception in the statute itself at 18 U.S.C. § 208(b)(4) for employees that have certain Native American or Alaska Native birthrights. If the financial interest that would be affected by the particular matter is that resulting solely from the interest of employee or the spouse or minor children in certain Native American or Alaska Native birthrights, the employee may participate in the particular matter without violating 18 U.S.C. § 208.
The criminal financial conflict of interest statute has two separate waiver provisions. An employee who has been granted a waiver can participate in official matters without violating 18 U.S.C. § 208, even though he has what would otherwise be a disqualifying financial interest in the matters. Ethics officials often use waivers for broad particular matters, such as general policy matters, in conjunction with a recusal from particular matters involving specific parties for a specific financial interest. The two types of waivers are: