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Husband May Pose Conflict-Of-Interest Problems For Carla Hills

December 11, 1988

WASHINGTON (AP) _ Carla Hills, nominated to be the new U.S. trade representative, may pose conflict-of-interest problems for the Bush administration because her husband is a private trade consultant.

Mrs. Hills, former secretary of the Department of Housing and Urban Development and the only woman tapped by President-elect Bush for a senior administration post, has promised to do everything necessary to avoid any conflicts of interest.

Her husband, Roderick Hills, is a former chairman of the Securities and Exchange Commission and is chairman of the Manchester Group Ltd., an international trade consulting firm that specializes in investment banking.

If a situation presents a conflict, he said, ″I just won’t do it any more.″ But Hills acknowledged in an interview that his wife’s prospective new job could put a damper on his business. He isn’t worried, though.

″I’ve even run a coal mine once, so there are plenty of things to do,″ he said.

Hills, a lawyer, said he does ″very little trade work″ these days, although a primary interest is international finance. He said much of his time is spent helping ailing companies.

If the Senate confirms his wife’s nomination and she takes her Cabinet- level post as trade representative, Hills said, ″I don’t see off-hand any problem with the trade finance area so far as we don’t get into anything ... that requires the discretionary activities of the federal government.″

The Hills were spending part of the weekend with Bush transition aides, reviewing the couple’s financial dealings. Hills said they might be required to transfer some of their investments into other funds.

The situation facing the Hills is becoming increasingly common in an era when both spouses are employed. Federal conflict-of-interest statutes prohibit government employees from taking any action that would affect their financial interest or the interest of a spouse, dependent child or business partner.

David Martin, former head of the Office of Government Ethics, said Mrs. Hills will have to be ″very, very careful″ about her husband’s business.

As the trade representative, Mrs. Hills will negotiate trade agreements with foreign countries and formulate administration trade policy.

Sheila Tate, a spokeswoman for the Bush transition team, said the staff was confident Mrs. Hills and her husband would satisfy any questions about potential conflicts.

Conservatives have raised questions about Mrs. Hills’ ability to remain neutral in light of her husband’s work.

″It’s shocking to learn that the next head of the key post of U.S. trade representative may be someone so vulnerable to potential conflict-of-inter est charges in trade-related matters,″ said Anthony Harrigan, president of the U.S. Business and Industrial Council, a group of conservative business leaders.

Until August, Hills was registered as a foreign agent for C. Itoh, a Japanese company. He ″monitored legislative and regulatory activities″ for them, according to forms filed with the Justice Department.

Hills also has been a consultant to Manchester Associates, a group that has had dealings with the trade representative on behalf of clients such as Nissan Motor Co. and the Korean Traders Association. In 1986, Hills did work for Korean Air Lines.

Mrs. Hills, a lawyer in the Washington office of the New York-based law firm of Weil, Gotshal and Manges, also has worked for foreign companies, according to a Jan. 19, 1987, article in Legal Times. She represented Crown Forest Industries Ltd. and British Columbia Forest Products in a lumber trade fight between the United States and Canada, the report said.

Mrs. Hills did not return a telephone call to discuss what she did for the firms.

Mrs. Hills’ nomination is expected to be approved by the Senate Finance Committee despite the opposition of some conservatives who regard her as too liberal.

Paul Weyrich, a conservative organizer, said he told Bush at a meeting Friday that ″I can’t rally the conservative movement for Carla Hills.″

Mrs. Hills’ politics have been an issue since 1973 when she was nominated as assistant attorney general, according to a document released Friday by the National Archives. At the time, she was a lawyer in Los Angeles, and President Reagan was governor of California.

″Governor Reagan has cleared her for this position but has not endorsed her,″ the White House memo said. ″She is considered a liberal by Reagan’s standards ...″ Mrs. Hills subsequently went to the Justice Department, where she received high marks for her performance.

Sen. Lloyd Bentsen, D-Texas, chairman of the Finance Committee, predicted Mrs. Hills would be confirmed by the Senate, but he questioned her knowledge of trade issues.

″I had hoped, frankly, that we’d have someone from the business world who had extensive international experience in trade,″ Bentsen said.

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