Conflict of Interest and Financial Guidelines Announcement of Two Exceptions Published by the Carter-Mondale Transition Group, With the President's Letters to the Two Nominees.
An exception was granted to Navy Secretary-designate W. Graham Claytor, Jr., under President Carter's conflict of interest and financial guidelines, the President announced today.
The exception was necessitated by Mr. Claytor's retention of a concentration of one particular stock (Southern Railway) placed in a blind trust. In addition, the portfolio held by Mrs. Claytor contains concentrations in three stocks. Mrs. Claytor has agreed to place her portfolio in a trust with blind features, in that the trustee will be truly independent of the Claytors. Mr. Claytor has agreed to disqualify himself on all matters relating to Southern Railway and to the three firms concentrated in Mrs. Claytor's portfolio.
To date, two exceptions to the conflict of interest and financial guidelines have been granted to administration appointees. The first was to Deputy Secretary of Defense Charles W. Duncan, Jr., who was permitted by the President to retain his Coca-Cola stock.
Under the President's guidelines, which were released by the Carter-Mondale Transition Group January 4, the President intends that any exceptions to the guidelines be made only with his express consent with respect to Level I and II appointments, and by heads of departments or agencies with reference to other appointments. The President has promised to make public the reasons for any exceptions.
In both the case of Mr. Duncan and Mr. Claytor, the exception was allowed because sale of the stock in question would cause serious and unreasonable financial loss because of the taxes imposed on such a sale of the stock. In addition, Mr. Duncan's and Mr. Claytor's disqualification on matters affecting the firms in question would rarely inhibit their actions.
February 7, 1977
Dear Mr. Claytor:
Pursuant to the guidelines on Conflicts of Interest, you and Mrs. Claytor will each establish trusts with blind features in that the trustee will be truly independent of you and Mrs. Claytor; the trustee will have full investment discretion without consultation, and you will both be insulated from any knowledge of assets in the trust.
The portfolios being transferred to the trusts are well diversified except that there are concentrations in three stocks held by Mrs. Claytor in the portfolio. I understand you will disqualify yourself from acting on any particular matter affecting the interest of any of those three companies. The. portfolio you transfer to a trust is well diversified except that approximately 50 percent of that portfolio is invested in common or preferred stock of Southern Railway. This constitutes a deviation from provisions in the guidelines in that the portfolio is not diversified to the extent normally required. I understand that you have agreed to disqualify yourself on all matters relating to the Southern Railway.
Please be advised that I approve of the foregoing exception. In accordance with the guidelines, this approval will be made public.
[Mr. W. Graham Claytor, Jr., Secretary of the Navy-Designate, Washington, D.C.]
February 7, 1977
To Charles W. Duncan, Jr. I am advised as follows:
You will retain ownership yourself of your real estate interests including residences, partnership interests in ranches and other assets except as described below.
You or your trustee will sell, make charitable gifts, or give to a charitable remainder unitrust all stocks owned by you and your wife on the Department of Defense statistical list used by the Senate Armed Services Committee other than that of The Coca-Cola Company.
You will transfer your other publicly held securities and 'your Coca-Cola stock to a trustee or trustees who will be appropriately instructed to insulate investments from you and your family; and who will be fully authorized and directed to buy and sell assets of the trust in their discretion without your knowledge except that you may limit their discretion to sell some or all of the stock of The Coca-Cola Company.
You will formally disqualify yourself as Deputy Secretary of Defense from acting on any particular matter as defined in 18 U.S.C. 208(a) affecting the financial interests of The Coca-Cola Company.
The assets transferred to your trustees will be diversified with the exception that the stock of The Coca-Cola Company amounts to a substantial portion of the portfolio of one of the trusts.
Because of the facts stated in paragraph five, your proposed course of action deviates from the Guidelines on Conflicts of Interests published by the Carter-Mondale Transition Group with my approval.
Please be advised that I approve of that deviation. My-reasons for such approval which will be made public in accordance with the Guidelines, are:
Your disqualification on matters affecting the financial interests of The Coca Cola Company as Deputy Secretary of Defense will not more than rarely, if ever, require you to refrain from acting on a matter.
A sale of your Coca-Cola stock, amounting to less than three/tenths of one percent of outstanding shares of The Coca Cola Company, would significantly deplete your family's assets by reason of the taxes imposed on such sale.
[Hon. Charles W. Duncan, Jr., Deputy Secretary of Defense-Designate, Washington, D.C.]
Jimmy Carter, Conflict of Interest and Financial Guidelines Announcement of Two Exceptions Published by the Carter-Mondale Transition Group, With the President's Letters to the Two Nominees. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/244065