Ban on officers serving on boards expands.

• Author: D'Agostino, L. James
• Position: Ethics Corner

* The Department of Defense recently expanded the scope of its prohibition on certain military officers serving on the board of directors of an entity, including any non-profit, which conducts department business or otherwise focuses on military personnel.

The absolute bar on such service is now expanded to cover all flag officers--pay grades 0-7 through 0-10--instead of being limited to pay grades 0-9 and 0-10.

This new policy also provides an occasion to revisit ethics rules related to service on boards, and examine how those rules have been applied in recent cases. Military officers and corporate leadership covered by the department's ethics rules should understand these restrictions before offering or accepting any board position.

A review of these restrictions is especially important in light of recent ethics interpretations that have deemed improper leadership of non-profit military auxiliary associations by department personnel under governing ethics standards, even where such leadership roles have been fulfilled by base commanders.

The under secretary of defense for personnel and readiness issued a memorandum Nov. 30 recognizing four categories of personnel subject to the bar on outside service: regular component and reserve component officers in grades 0-9 and 0-10; regular component officers at the 0-7 and 0-8 levels; reserve component officers at the 0-7 and 0-8 levels; regular component officers, 0-6 and below; and regular component E-9 enlisted personnel serving in a leadership position that spans an entire installation, such as base commander or base sergeant major.

The purpose of the expansion to include 0-7 and 0-8 personnel is "to avoid any suggestion of impropriety that a military leader's participation in the management of certain outside businesses suggests governmental endorsement or sanction of the business."

This memorandum also defines companies that "do business" with the department as those named on the annual $25,000 list of entities that receive more than $25,000 in Defense Department contracts or grants. This list includes traditional defense contractors, colleges, universities, think tanks and non-profits that receive grants or contracts. The memorandum identifies companies that "focus their business principally on military personnel" to include insurance companies, financial planning companies and credit unions or banks whose primary clientele are military members.

The bar on the first category--regular and...