H.R. 732 would prohibit government officials from entering into or enforcing any settlement agreement for civil or criminal actions on behalf of the United States if that agreement requires a party to the settlement to make a donation to a non-victim third party. That prohibition would not include payments to provide restitution that directly remedies actual harm caused by the defendant, including harm to the environment.
In the 2013 JP Morgan settlement with DOJ, the bank was offered credit against its settlement obligations for donations to community redevelopment groups. The Citi and Bank of America settlements in 2014 required $150 million in donations to housing non-profits. These donations earned double credit against the banks’ overall obligations. Meanwhile, credit for direct forms of consumer relief remained dollar-for-dollar.
According to the bill sponsor, “In its last two years, the Obama Justice Department directed nearly a billion dollars to third-parties entirely outside of Congress’s spending and oversight authority. In some cases, these mandatory donation provisions reinstated funding Congress specifically cut.”
Thus, the use of donations to non-victim third parties took funds that would have otherwise gone into the Treasury to be appropriated or not by Congress and redirected them for purposes the administration deemed preferable or at least acceptable without any Congressional involvement.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Oct 24, 2017.
Stop Settlement Slush Funds Act of 2017
(Sec. 2) This bill prohibits government officials from entering into or enforcing a settlement agreement on behalf of the United States (resolving a civil action, a plea agreement, a deferred prosecution agreement, or a nonprosecution agreement) that provides for a payment or a loan to any person or entity other than the United States. The bill provides exceptions to allow payments or loans that: (1) remedy actual harm (including to the environment) caused by the party making the payment or loan and suffered by the payee, or (2) constitute a payment for services rendered in connection with the case or a payment that a court may order for restitution to victims in certain criminal cases or other persons in plea agreements.
Amounts remaining after all claims have been satisfied must be repaid proportionally to each party who contributed to the original payment.
Government officials or agents who violate this prohibition may be removed from office or required to forfeit to the government any money they hold for such purposes to which they may otherwise be entitled.
Federal agencies must report annually for seven years to the Congressional Budget Office about the parties, funding sources, and distribution of funds for their settlement agreements permitted by the exceptions in this bill.
Agency inspectors general must report annually to Congress about any of their agency's settlement agreements that violate this bill.