A decided public DOHA case, shown for research, not advice or a prediction.

ISCR Case No. 00-0244

Appeal Board

Decided Jan 29, 2001 · Administrative Judge Michael Y. Ra'anan · Appeal

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The appeal involved an applicant seeking a security clearance who was denied by an Administrative Judge based on concerns related to outside activities with a foreign government. The applicant argued that the judge failed to consider mitigating factors and made factual errors. The Board affirmed the judge's decision, finding no harmful errors that would warrant reversal.

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Appearances

under Item E3.1.15 of the Additional Procedural Guidance, a Judge must resolve any security concerns in favor of the national security. Adverse decision affirmed.

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DATE: January 29, 2001

<HR>

Procedural History

Re:

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SSN: -----------

Applicant for Security Clearance

<HR>

ISCR Case No. 00-0244

APPEAL BOARD DECISION

APPEARANCES

FOR GOVERNMENT

Michael Leonard, Department Counsel

<P ALIGN="C

Findings of Fact

NTER">FOR APPLICANT

Pro Se

Administrative Judge Jerome H. Silber issued a decision, dated September 12, 2000, in which he concluded it is not clearly

consistent with the national interest to grant or continue a security clearance for Applicant. Applicant appealed. For the reasons

set forth below, the Board affirms the Administrative Judge's decision.

This Board has jurisdiction on appeal under Executive Order 10865 and Department of Defense Directive 5220.6 (Directive),

dated January 2, 1992, as amended.

Applicant's appeal presents the following issues: (1) whether the Administrative Judge failed to properly consider Outside

Activities Mitigating Condition 1 in his resolution of the case; (2) whether the Administrative Judge erred in his factual finding

that the person who had supervisory authority over Applicant during approximately 1990 was an active duty military member; (3)

whether the Administrative Judge erred in his conclusion that Applicant did not propose to terminate a conflict of interest between

one job position and his security responsibilities with a defense contractor; and (4) whether the Administrative Judge erred when

he relied on provisions of the United States Constitution and federal law to resolve the case.

<CENTER>Procedural History</ CENTER>

The Defense Office of Hearings and Appeals issued a Statement of Reasons (SOR) dated May 25, 2000 to Applicant. The SOR

was based on Guideline L (Outside Activities).

A hearing was held on August 18, 2000. The Administrative Judge issued a written decision dated September 12, 2000 in which

he concluded it is not clearly consistent with the national interest to grant or continue a security clearance for Applicant. The case

is before the Board on

Analysis

pplicant's appeal from the Judge's adverse decision.

<CENTER>Administrative Judge's Findings</CENTER>

Applicant served on active duty in the U.S. military as an officer from 1962 until his retirement in 1982. He has drawn military

retired pay ever since. In 1988 he went to work for a private defense firm (hereinafter Company 1). In 1990 he was assigned by

Company 1 to work with the foreign military sales (hereinafter FMS) section of a major U.S. Naval command. The government

of a foreign country (hereinafter FC) was purchasing services from that command. The U.S. Navy had contracted with Company

1 to perform the services required by FC. The job required Applicant to generally assist FC in finding appropriate offset work for

FC's defense firms for increased sales by them to the U.S. Department of Defense. Applicant was the only employee in Company

1 assigned to that work.

Day-to-day control and supervision of the Applicant rested with an active duty U.S. naval officer. That officer filed periodic

reports concerning Applicant's efforts with an assistant def

Appeal Issues

nse attache stationed in the embassy of FC in Washington D.C. The

Naval officer in charge was frequently out of the office on temporary duty and in his absence Applicant often answered the phone

calls made by FC's embassy to the FMS section. On one such occasion the FC embassy phoned and asked Applicant to drop what

he was doing and come personally to the embassy to discuss a project. Applicant complied. The Naval officer in charge of the

FMS section later told Applicant that he was not to go to the FC embassy unless he was personally authorized to do so by the

Naval officer. On a second occasion Applicant went to the FC embassy while the Naval officer was absent even though Applicant

told the embassy that he was not authorized to visit the embassy. Upon learning of the second visit the Naval officer told

Applicant he was fired.

In about 1991 FC decided to terminate its FMS agreement with the U.S. government and to contract directly with Company 1 to

obtain the continuation of Applicant's services, to cut out the U.S. Navy as "an unnecessary middleman" and to reduce

administrative costs. Applicant was physically located within Company 1 and under revised agreements he submitted periodic

reports of his efforts through Company 1 directly to the assistant defense attache at the FC embassy. He was the only employee of

Company 1 assigned to that work.

About five years later the assistant defense attache retired from his tour at the FC embassy and left an empty office. Since

Applicant had been routinely visiting the FC embassy, the embassy and Company 1 arranged for Applicant to permanently work

in the vacant embassy office. Applicant submits his periodic reports directly to the Defense Department of FC. He has a business

card with an FC title and an FC government seal. He continues to submit his time and attendance records to Company 1 in order

to get paid by them. He considers his immediate superiors to be specified officials of the FC embassy. He has acknowledged that

the FC officials have the ability to get him fired. He has traveled two or three times to FC on business to participate in export

conferences. His travel expenses are reimbursed directly by the FC embassy outside the contract price with Company 1.

In October 1998 Applicant agreed to start working part-time for a U.S. Government contractor (hereinafter Company 2) as a

consultant. Applicant estimates that he works about 20 hours or two days a week for Company 2 and about 40 hours or about

three days a week at the FC embassy for Company 1. Applicant received permission from the FC embassy in 1998 to share his

time as a contract employee of Company 2. Company 2 is aware of Applicant's work with the FC embassy and "support[s] a

waiver of Guideline L (Outside Activities) in favor of [the Applicant] in order to allow him to receive a security clearance."

<CENTER>Administrative Judge's Conclusions</CENTER>

The Government has established its case with regard to Guideline L. Applicant is a retired regular officer of the U.S. military who

is currently employed by Company 1 as an independent contractor assigned to work in the FC embassy under the supervision of

embassy officials to assist the FC government by advising FC defense industries concerning expansion of their exports. Although

Applicant continues to be paid by Company 1 pursuant to its contract with the FC government, the right to control the

performance of Applicant's work and the manner in which it is done has rested with the FC embassy since about 1991. Applicant

concedes that he could be effectively fired now by his embassy superiors. The fact pattern presented by Applicant's current

service since 1991, whether it be considered outside employment or outside activities, falls prima facie within Outside Activities

Disqualifying Condition 1<A HREF="#N_1_"> (1)</A> because it could raise a present security concern based on a conflict with the security responsibilities

he seeks.

It is well-settled that a retired member of the U.S. Armed Forces holds an "Office of Profit or Trust" of the Federal Government.

The history of Article I, Section 9, Clause 8<A HREF="#N_2_"> (2)</A> of the United States Constitution indicates that the evil intended to be avoided is the

exercise of "undue influence" by a foreign government upon officers of the United States. For the last 23 years a statutory scheme

has existed wherein Congress grants its consent to the civil employment by a foreign government of certain categories of persons

otherwise subject o the Constitutional prohibition, including military personnel. The Constitutional provision is applicable where

the retired military person is technically hired by a private firm but is a de facto employee of a foreign government, as a series of

decisions by the Comptroller General of the United States has "pierced the corporate veil" where the foreign government has the

right to control the performance of the person's work and the manner in which his or her work is done. The rationale of those

decisions is accepted for purposes of Guideline L. Under the facts of this particular case it is clear that Outside Activities

itigating Condition 1<A HREF="#N_3_"> (3)</A> is not met.

The nature of Applicant's conduct and the surrounding circumstances are serious notwithstanding his contributions to the defense

capabilities of FC, a U.S. ally. The potential for pressure and exploitation or inadvertent, unauthorized disclosure of U.S.

classified information cannot be discounted. The Applicant does not propose to terminate his conflict of interest. On balance,

Applicant is ineligible for a U.S. security clearance.

Appeal Issues

1. Whether the Administrative Judge failed to properly consider Outside Activities Mitigating Condition 1 in his resolution of the

case. Applicant asserts that the Administrative Judge at no time in his discussion or conclusions appeared to take into account the

"very basis" of his case, which is that Applicant's employment with the embassy of FC does not pose a conflict with his security

responsibilities. In essence, Applicant is arguing that Outside Activities Mitigating Condition 1 should apply to his case because

(a) a special relationship exists between FC and the United States, and (b) the circumstances of Applicant's position with Company

1 and the FC preclude any possibility that he could be the subject of undue influence. In conjunction with these assertions,

Applicant requests that the Administrative Judge's conclusions be reviewed for specific lack of content and that the Judge's

decision be reversed.

Applicant's comments about the Administrative Judge failing to take into consideration the basis of his case and the specific lack

of content in the Judge's conclusions raises the initial issue of whether the Judge articulated with sufficiency matters in mitigation

asserted by Applicant and explained adequately why he did not employ Outside Activities Mitigating Condition 1 in Applicant's

favor. Administrative Judge's decisions are not measured against a standard of perfection and there is no general requirement that

a Judge recite or comment upon each piece or portion of evidence in the record when issuing a decision. In the present case the

Administrative Judge discusses Outside Activities Mitigating Condition 1 mostly in terms of a current conflict of interest created

by operation of the Constitution and federal law. His decision focuses on these laws, the retired military status of the Applicant

and the resulting conflict and there is no detailed discussion of how undue influence is established by the facts of the case.

Nevertheless, at one point the Judge clearly indicates his concern about undue influence. He clearly states his conclusion that

Outside Activities Mitigating Condition 1 does not operate to overcome the government's case against Applicant. The Judge does

not engage in a sufficiently detailed analysis of the potential for undue influence based on the facts of this case. However, the

Board finds that given the particular record evidence the Judge's failure constitutes harmless error.

Applicant argues that it was error for the Judge to fail to consider what he has labeled the "special relationship" between FC and

the United States when evaluating this case. It should be noted at the outset that Applicant's discussion about that "special

relationship" in his appeal brief contains numerous factual assertions that are not found in the record below. The Board is

precluded from considering new evidence on appeal. Directive, Additional Procedural Guidance, Item E3.1.29.

Concerning the assertions of a special relationship between the United States and FC, the Administrative Judge's decision clearly

reflects his understanding that FC is an ally of the United States and there is a close working relationship between the two

governments. As for the Judge's failure to articulate reasons as to why that relationship was not mitigating, it was not error for the

Administrative Judge to fail to discuss this aspect of the case for reasons that will be discussed below

Guideline L indicates that it addresses the security concerns created when an applicant engages in outside employment or activities

that pose a conflict with a person's security responsibilities and could create a risk of unauthorized disclosure of classified

information. Guideline L specifically indicates that employment with a foreign country or entity can raise such security concerns.

The term "foreign" is not defined in Guideline L nor is it modified or qualified. Thus, nothing in the plain language of Guideline

L requires that the foreign country in question have interests that are inimical to the interests of the United States. The federal

government is entitled to protect classified information from any person, organization, or nation not authorized to receive it,

regardless of whether that person, organization, or nation has interests inimical to those of the United States. See ISCR Case No.

97-0699 (November 24, 1998) at p.3. Accord ISCR Case No. 98-0592 (May 4, 1999) at p. 3. "[T]he Government's 'compelling

interest' in withholding national security information from unauthorized persons," Department of Navy v. Egan, 484 U.S. 518, 527

(1988), is not reduced or diminished because the risk of unauthorized disclosure involves a foreign country that is an ally of, or is

friendly to, the United States. Nothing in Executive Order 10865 or the Directive indicates or suggests that the unauthorized

disclosure of classified information is any less a security concern if it is made to a foreign country that has friendly relations with

the United States than if it is made to a foreign country that does not have friendly relations with the United States. The Applicant

has not demonstrated that the Administrative Judge erred by failing to apply Outside Activities Mitigating Condition 1 in his favor

based on the relationship between FC and the United States.

Applicant also advances his argument with regard to the applicability of Outside Activities Mitigating Condition 1 by providing

reasons why he could not be the subject of undue influence. He claims that his duties with Company 1 and the FC embassy are

very specific and are spelled out by contract or memorandum agreement and any attempt by an FC official to attempt to obtain

classified information or otherwise assert undue influence in order to gain access to classified information would be outside his job

description and contractual obligations. Applicant challenges the Judge's assertion that he could effectively fired from his job by

FC embassy personnel by stating that although he would be removed from that particular position, he would still have a job with

Company 1. Applicant further states that he could potentially make more money by working exclusively for Company 2. In other

words, Applicant contends he cannot be the target of undue influence because he really doesn't need his position with Company 1

in the FC embassy.

Applicant's appeal brief advances his particular interpretation of the record evidence. That interpretation is neither conclusive nor

is it binding on the Administrative Judge. It is the duty of the Administrative Judge to weigh all the evidence in the record, both

favorable and unfavorable and to draw reasonable inferences therefrom. Absent a showing that the Judge acted in a manner that

was arbitrary, capricious or contrary to law, his findings and conclusions will not be disturbed on appeal. While the Judge based

much of his analysis of the applicability of Outside Activities Mitigating Condition 1 on federal case law that was outside the

record, he also stated that "the potential for pressure and exploitation or inadvertent disclosure of U.S. classified information

cannot be discounted here." As Department Counsel contends, there is record evidence supporting a conclusion that Applicant has

failed to satisfy his burden of establishing that his position with Company 1 would not conflict with his security responsibilities at

Company 2. The Judge's adverse conclusion is sustainable on alternate grounds supported by record evidence.

2. Whether the Administrative Judge erred in his factual finding that the person who had supervisory authority over Applicant

during approximately 1990 was an active duty military member. For an unspecified period during 1990, Company 1 contracted

with the U.S. Navy to perform work which included Applicant's job of interacting with the FC embassy. During this period an

employee of the U.S. Navy had supervisory authority over Applicant. The Administrative Judge specifically identifies this person

as an active duty military member. Applicant asserts on appeal that the person is a civilian. The record below does not reveal this

person's status. Department Counsel concedes that the record is not clear on this point. A reading of the record and the

Administrative Judge's decision reveals that the military or non-military status of this particular individual is not material to the

issues in the case nor is it germane to the Judge's analysis. Accordingly, while the record does not support the Judge's finding that

the individual was a member of the military, the Judge has committed harmless error. See, e.g., ISCR Case No. 99-0500 (May 19,

2000) at p. 3 (error is harmless when there is not a significant chance that it fatally affects an otherwise sustainable decision).

3. Whether the Administrative Judge erred in his conclusion that Applicant did not propose to terminate a conflict of interest

between one job position and his security responsibilities with a defense contractor. Applicant takes issue with the Administrative

Judge's conclusion that Applicant does not propose to terminate his conflict of interest. Applicant asserts on appeal that the record

evidence shows he merely expressed a hope that he would not have to make that decision. Applicant suggests that if forced to

make a decision, he might well decide to terminate his position with Company 1. Although he does not say so explicitly in his

decision, the Judge appears to be commenting on the applicability of Outside Activities Mitigating Condition 2.<A HREF="#N_4_"> (4)</A> That mitigating

guideline operates only when a termination of the conflict has already taken place. Cf. ISCR Case No. 99-0447 (July 25, 2000) at

p. 3 ("A promise to take remedial steps in the future is not evidence of reform or rehabilitation."). The Judge's statement that

Applicant had not proposed to terminate the conflict of interest was a fair characterization of Applicant's ambivalence on the

matter. Applicant has failed to demonstrate that the Judge erred.

4. Whether the Administrative Judge erred when he relied on provisions of the United States Constitution and federal law to

resolve the case. In his decision the Administrative Judge advanced the applicability of Article I, Section 9, Clause 8 of the United

States Constitution, related federal laws and federal decisions interpreting those laws. He concluded that this body of law operated

in Applicant's case to show the existence of a real conflict of interest as opposed to a hypothetical or potential one, essentially

because of Applicant's status as a retired military officer. On appeal, Applicant complains that the Judge's reference to the

Constitution was inappropriate. In its reply brief, Department Counsel notes that none of these matters raised by the Judge were

included in the SOR and that nothing in Executive Order 10865 or the Directive makes an applicant's eligibility for military

retirement pay material or relevant to a security clearance decision. Department Counsel states that the applicable legal standards

are the Adjudicative Guidelines in the Directive and characterizes the Judge's reliance on the foreign employment restrictions in

federal law as "arguably erroneous." Notwithstanding this assessment, Department Counsel argues that the Judge's ultimate

decision is sustainable based on the record evidence and Guideline L. In essence, Department Counsel is arguing that the

Administrative Judge's decision should be affirmed on alternate grounds. See, e.g., ISCR Case No. 99-0454 (October 17, 2000) at

p. 6 ("Even in the absence of a cross-appeal, the non-appealing party is entitled to urge affirmance of the decision below on the

basis of any matter supported by the record, even if the argument relies on matters overlooked, ignored, not relied on, or even

rejected by the lower tribunal.").

As Department Counsel notes, there is no denial of procedural due process stemming from the Judge's consideration and use of

federal law, even though it was outside the Directive and was not offered by either party. During the course of the proceedings

below, the Judge informed both parties that he deemed the federal law materials relevant to the case and he gave both parties an

opportunity both before and after the hearing to offer their comments about the materials. Applicant's objection on appeal goes to

the appropriateness of relying on the material, not to any surprise or lack of notice of the Judge's decision to rely on matters

outside the Directive and the record.

Even without prompting from the parties an Administrative Judge can take administrative notice of any pertinent federal court

decision. ISCR Case No. 98-0507 (May 17, 1999) at p. 5. There is no obvious reason why a Judge could not take administrative

notice of a pertinent decision by the Comptroller General of the United States or a pertinent opinion by the Attorney General of

the United States. The larger question in this case is the appropriateness of the Judge's use of federal law and Applicant's retired

military status as a principal underpinning of his decision that Applicant had failed to establish a case in mitigation under Outside

Activities Mitigating Condition 1. The Judge analyzed the Constitution and other federal law along with Applicant's status as a

retired military member to conclude there was a current, ongoing conflict of interest that rendered Applicant ineligible for a

security clearance. The Judge's efforts to conclude a current conflict existed based on matters outside Guideline L was

unnecessary. As Department Counsel argues, there is an adequate basis in the record for concluding that Applicant's duti

Decision

s with

Company 1 are incompatible with any security responsibilities he would have by virtue of receipt of a security clearance while

employed with Company 2.

Notwithstanding Applicant's assertions to the contrary, his attaining of a security clearance under his current employment

circumstances would raise serious security concerns even if he was not a retired military member and had no connection to any

federal office. The record evidence sh