Trump’s top health official traded tobacco stock while leading anti-smoking efforts

Politico

The Trump administration’s top public health official bought shares in a tobacco company one month into her leadership of the agency charged with reducing tobacco use — the leading cause of preventable disease and death and an issue she had long championed.

The stock was one of about a dozen new investments that Brenda Fitzgerald, director of the Centers for Disease Control and Prevention, made after she took over the agency’s top job, according to documents obtained by POLITICO. Fitzgerald has since come under congressional scrutiny for slow walking divestment from older holdings that government officials said posed potential conflicts of interest.  

Buying shares of tobacco companies raises even more flags than Fitzgerald’s trading in drug and food companies because it stands in such stark contrast to the CDC’s mission to persuade smokers to quit and keep children from becoming addicted. Critics say her trading behavior broke with ethical norms for public health officials and was, at best, sloppy. At worst, they say, it was legally problematic if she didn’t recuse herself from government activities that could have affected her investments.

“You don’t buy tobacco stocks when you are the head of the CDC. It’s ridiculous; it gives a terrible appearance,” said Richard Painter, who served as George W. Bush’s chief ethics lawyer from 2005 to 2007. He described the move as “tone deaf,” given the CDC’s role in leading anti-smoking efforts.

Even if Fitzgerald, a medical doctor and former Georgia Department of Public Health commissioner, met all of the legal requirements, “it stinks to high heaven,” Painter said.

A Health and Human Services Department spokesman confirmed “the potentially conflicting” stock purchases, saying they were handled by her financial manager and that she subsequently sold them.

“Like all presidential personnel, Dr. Fitzgerald’s financial holdings were reviewed by the HHS Ethics Office, and she was instructed to divest of certain holdings that may pose a conflict of interest. During the divestiture process, her financial account manager purchased some potentially conflicting stock holdings. These additional purchases did not change the scope of Dr. Fitzgerald’s recusal obligations, and Dr. Fitzgerald has since also divested of these newly acquired potentially conflicting publicly traded stock holdings.”

After assuming the CDC leadership on July 7, Fitzgerald bought tens of thousands of dollars in new stock holdings in at least a dozen companies later that month as well as in August and September, according to records obtained under the Stock Act, which requires disclosures of transactions over $1,000. Purchases included between $1,001 and $15,000 of Japan Tobacco, one of the largest such companies in the world, which sells four tobacco brands in the U.S. through a subsidiary.

The purchases also include between $1,001 and $15,000 each in Merck & Co., Bayer and health insurance company Humana, as well as between $15,001 and $50,000 in US Food Holding Co., according to financial disclosure documents.

On Aug. 9, one day after purchasing stock in global giant Japan Tobacco, she toured the CDC’s Tobacco Laboratory, which researches how the chemicals in tobacco harm human health, according to financial forms obtained from HHS’ Office of Government Ethics and calendars obtained through a Freedom of Information Act request.

The records confirm that Fitzgerald sold the shares of tobacco on Oct. 26 and all of her stock holdings above $1,000 by Nov. 21, more than four months after she became CDC director.

Fitzgerald, who declined to be interviewed for this story, has made tobacco efforts a focus of her public health career, despite owning stock in the industry. She listed tobacco cessation as one of her primary priorities while still serving in the Georgia position in February 2017. Prior to accepting the CDC position, she owned stock in five other tobacco companies: Reynolds American, British American Tobacco, Imperial Brands, Philip Morris International, and Altria Group Inc. — all legal under Georgia’s ethics rules. HHS did not respond to questions about why she invested in tobacco companies while working to reduce tobacco consumption.

“It’s stunning,” said Matthew Myers, president of the Campaign for Tobacco-Free Kids. “It sends two messages, both of which are deeply disturbing. First, it undermines the credibility of a public official when they argue that tobacco is the No. 1 preventable cause of disease. Second, and perhaps even worse, it indicates a public official is willing to put their personal profit above the ethics of investing in a company whose products cause so much harm.”

“It gives you a window, I think, into her value system,” said Kathleen Clark, a professor of law focusing on government ethics at Washington University in St. Louis. “It doesn’t make her a criminal, but it does raise the question of what are her commitments? What are her values, and are they consistent with this government agency that is dedicated to the public health? Frankly, she loses some credibility.”

While holding the newly purchased tobacco, drug company and food stock, along with other financial holdings in various health companies, Fitzgerald participated in meetings related to the opioid crisis, hurricane response efforts, cancer and obesity, stroke prevention, polio, Zika and Ebola, according to a copy of her schedule between Aug. 1 and Oct. 27.

Merck, whose stock Fitzgerald purchased on Aug. 9, has been working on developing an Ebola vaccine and also makes HIV medications. Bayer, whose stock she purchased on Aug. 10, has in the past partnered with the CDC Foundation, which works closely with the CDC, to prevent the spread of the Zika virus.

“If she participated in meetings in which she has financial conflicts of interest, that is not fine in my book,” said Craig Holman, a lobbyist at the liberal watchdog group Public Citizen. Because some of the meetings took place before Fitzgerald had an ethics agreement, Holman said she “could have an easy avenue for excusing herself,” by saying she didn’t understand it was a conflict, or arguing she didn’t make decisions in those meetings. “But that is not how the law should be applied,” he added. “Even if you could claim you didn’t speak up at those meetings, your presence poses a conflict of interest.”

But it could have been possible for Fitzgerald to participate in briefings on topics like tobacco or Ebola without violating government ethics policy, depending on her role, said a former government ethics official. For example, if Fitzgerald was just in listening mode and not making any substantive comments or decisions, she would likely be within the rules, the official said.

Fitzgerald has already been criticized by some lawmakers for her inability to offload two financial holdings, which date to before she became CDC director and left her unable to perform some tasks, such as testifying in front of lawmakers. An HHS spokesperson said she is actively working to address her remaining recusal obligations related to the two companies, adding that both have “complex transfer restrictions.”

HHS officials said Fitzgerald’s lengthy divestment process was due to her complicated stock portfolio. They declined to say whether she had any ethics training. She didn’t enter into a formal ethics agreement with HHS until two months after taking office.

“It’s a little concerning it took two months to get her ethics agreement signed and an additional month for her to dump conflicting stock,” said Scott Amey, general counsel at the Project on Government Oversight, a watchdog group.

The Health and Human Services Department declined to respond to detailed questions about Fitzgerald’s investments, including whether she herself approved the transactions and what activities and decisions she recused herself from due to her holdings.

Normally, senior government officials commence the process of outlining their conflicts of interest before they assume a job, so that they can quickly divest within days of taking office, a former HHS senior legal counsel told POLITICO.

HHS lawyers usually advise employees to avoid purchasing new stock during an interim period, particularly in areas where they would likely need to divest. Fitzgerald’s ethics agreement, dated Sept. 7, identified nearly all the companies in which she bought stocks on the job as conflicts of interest.

But officials are liable for their actions, regardless of whether they have an ethics agreement in place or have been warned by ethics officials that a financial holding is a conflict, multiple former government ethics officials told POLITICO.

One reason Fitzgerald’s divestment may have taken so long is that the Office of Government Ethics has little ability to force government officials to speedily address financial conflicts, unless they are undergoing a Senate confirmation process, said Walter Shaub, who directed the U.S. Office of Government Ethics under Barack Obama from 2013 to 2017. The CDC director is not a Senate-confirmable post.

“There is a lot less transparency around the non-Senate confirmed individuals … and the ethics process lags, even though the rules still apply,” said Max Stier, president of the Partnership for Public Service, a government oversight group. “Those folks put themselves at risk by not getting clearance and understanding the rules.”

https://www.politico.com/story/2018/01/30/cdc-director-tobacco-stocks-after-appointment-316245