An independent investigator has found evidence that Gov. Sarah Palin may have violated ethics laws by accepting private donations to pay her legal debts.

The report obtained by The Associated Press says Palin is securing unwarranted benefits and receiving improper gifts through the Alaska Fund Trust, set up by supporters.

An investigator for the state Personnel Board says in his July 14 report that there is probable cause to believe Palin used or attempted to use her official position for personal gain because she authorized the creation of the trust as the “official” legal defense fund.

To recap, Coburn, an obstetrician and gynecologist who lives with Ensign in Washington, has said he counseled his colleague to end an extramarital relationship with a staffer. But the husband of the former mistress has claimed that Coburn also advised Ensign to pay millions of dollars to the unhappy couple so they could move away from Ensign’s hometown of Las Vegas.

The Center for Responsibility and Ethics in Washington has filed several petitions with the Senate Ethics Committee and the Department of Justice to probe the legality of severance payments that Ensign allegedly made. But Coburn has said that he won’t cooperate in any investigations, claiming that his counseling derived from his capacity as a medical doctor, which prevents him from having to testify in any probe that might follow.

The Washington Post’s Al Kamen today picked up on Coburn’s line of argument to offer the most clever line yet to emerge from the scandal. “If a guy can’t trust his OB-GYN,” Kamen writes, “who can he trust?”

The Pentagon (Department of Defense photo)

In 2007, after passing legislation to rein in the schmoozy junkets that allowed lobbyists to buy face time with lawmakers, congressional leaders from all political walks applauded their effort as a long stride toward limiting the influence of moneyed interests over Washington policymakers.

“We have promised the highest ethical standard,” House Speaker Nancy Pelosi (D-Calif.) said at the time, “and we will deliver it, in an open and honest government.”

Illustration by: Matt Mahurin

She didn’t mention that the restrictions targeted members of Congress and their staffs almost exclusively.

Nearly two years later, a new study reveals that travel by executive branch officials might merit similar scrutiny. From 1998 through 2007, Pentagon officials have been treated to at least 22,000 worldwide trips, worth at least $26 million, funded by outside groups like corporations and foreign governments, many of which have contracts or other interests before the agency, according to the study released Wednesday by the Center for Public Integrity and Northwestern University’s Medill School of Journalism. Such junkets are legal as long as internal screeners grant prior approval, but government watchdog groups say there’s plenty of room for conflicts of interest.

Indeed, the analysts found cases where pharmaceutical giants treated Pentagon doctors and pharmacists to overseas trips totaling thousands of dollars each, including a $7,800 visit to Paris. (Meanwhile, pharmaceutical spending by the Department of Defense jumped nearly 300 percent, to $6 billion a year, between 2000 and 2006.) In another case, a Saudi prince picked up the $24,000 tab for a visit from Richard Millies, deputy director of the Defense Security Cooperation Agency, and his wife. Milles just happened to run the program that sells weapon systems to foreign governments, the report found. (Meanwhile, Saudi Arabia accounted for roughly $4.4 billion in such purchases between 2003 and 2006 alone, according to the Congressional Research Service.)

Government watchdog groups are quick to point out that the spending isn’t meant to be charity. “There’s a business reason for providing these trips to officials,” said Robert M. Stern, president of the Center for Governmental Studies, a Los Angeles-based non-profit research group.

The Defense Department did not respond to requests for comment Tuesday.

It wasn’t supposed to be this way. Confronted with the Jack Abramoff scandal — as well as a similar CPI-Medill study detailing congressional travel trends — lawmakers took steps in 2007 to restrict lobbyist- and corporate- funded junkets. Those efforts culminated in the passage of a bill prohibiting trips of longer than one day for any organization employing a lobbyist and banning lobbyists from going along. The new law also prevents moneyed interests from shuttling lawmakers around on corporate jets and requires congressional ethics panels to OK trips 30 days in advance. Additionally, the law requires that all trips be disclosed online.

By contrast, federal rules allow outsiders to fund trips and other expenses for executive branch employees if internal screeners give prior approval. The rules indicate that the travel must be related to the employee’s normal task and not represent a conflict of interest. The records are held, in paper form, by the U.S. Office of Government Ethics.

Craig Holman, legislative representative for Public Citizen’s Congress Watch, said the difference between the limits on congressional travel and those affecting executive branch officials represents “a gaping chasm.” The federal rules might sound good on the surface, he argued, but the sheer number of internal ethics officers — some hired by political appointees — make oversight of the process almost impossible. In one case, a high-level Interior Department official under the Bush administration employed his girlfriend as his ethics officer, he added.

In another high-profile case, Nancy Nord, the acting chairman of the United States Consumer Product Safety Commission, was found to have taken expensive trips to China, Spain and San Francisco on the tab of some of the same retail manufacturers she’s now charged with regulating. Nord’s term expires in October 2012.

“This is the system of ethics we’ve got in the executive branch,” Holman said.

Holman, along with sources on Capitol Hill, said that any changes to the travel procedures for executive branch officials will likely originate with the Obama administration. The White House on Wednesday did not return a call for comment.

How soon that change occurs could have a significant effect on federal spending. Stern said the potential conflicts of interest between White House officials and special interests are potentially more glaring than those between Congress and lobbyists. “In a sense they’re even more important, because they’re the ones who make the decisions about where the money goes,” Stern said of the executive branch officials. “It’s clearly as important — and maybe more important — because no one’s watching.”

Many watchdogs are hoping that Wednesday’s report could be precisely the spark that sets the process of reform in motion. “It usually takes embarrassment,” Stern said, “before these things are done.”

The changing of the guard at the sensitive ethics office comes just after embarrassing revelations of federal attorney misconduct in the prosecution of former Sen. Ted Stevens (R-Alaska). U.S. District Court Judge Emmett Sullivan earlier this week went so far as to appoint a special prosecutor to investigate the matter, and Holder announced last week that he would dismiss the indictment. Stevens was convicted last fall of ethics violations for accepting about $250,000 worth of gift he never declared from an oil services company executive.

The Office of Professional Responsibility is also in the hot seat now as observers — and some senators — eagerly await a review it has reportedly prepared, analyzing and harshly criticizing the conduct of former lawyers in the Office of Legal Counsel at the Justice Department, including John Yoo and Jay Bybee, who is now a federal judge. Those lawyers are accused of manipulating the law to draft memos justifying harsh interrogation techniques that include waterboarding, a form of torture. That report is still under review by Holder and others. According to Newsweek, former Attorney General Michael Mukasey objected to the report and blocked its disclosure during his tenure.

Mary Patrice Brown, Holder’s pick, now leads the criminal division of the U.S. Attorney’s Office in the District of Columbia. She will become only the third chief of that unit since it was established in 1975, after the Watergate scandal.

H. Marshall Jarrett, the current head of the ethics office, has been tapped to lead the executive office of U.S. attorneys, which sets policy and handles disputes among the Justice Department in Washington and the 94 U.S. Attorneys around the country.

Jarrett will replace Kenneth Melson, who has been named acting head of the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Testifying before the Senate panel Tuesday, Defense Secretary Robert Gates said stringent ethics rules are a major reason it is difficult to fill top posts at the Pentagon.

It’s funny because it’s true.

Ironically, Gates was testifying in support of Lynn’s confirmation. In his attempt to defend his colleague, Gates inadvertently indicted his department and the entire defense industry as a morass of crony capitalism.

Let’s assume that ethics regulations are a significant obstacle to obtaining top talent at the Pentagon. Let’s assume it’s hard to find senior public servants who haven’t already cashed in on their expertise in the private sector. What does that say about the system?

The Lynn affair is another illustration of the real-world consequences of an unchecked revolving door and the institutions that treat this kind of back-and-forth between government and industry as the norm.

Here is a guy who is probably highly qualified, but who will take office under a cloud. His efficacy may suffer as a result. In a lot of people’s minds, he’s always going to be the lobbyist from Raytheon. That may not be fair to him, and it’s certainly not fair to the institution he serves.

Tougher institutional controls on the revolving door, such as those Obama tried to impose with his executive order, are part of the solution. Sustained public pressure is also important. It’s  harder for lobbyists to slip quietly back into government now that Jack Abramoff is a household name.

If journalists and watchdog groups keep up the pressure, politically ambitious people will eventually learn that a lobbying background can be a long-term liability, and not just an easy way to make a quick buck.

One thing is clear, ad hoc ethics waivers like the one Obama gave to Lynn, will only exacerbate the problem. Rules can slow the revolving door, but the problem won’t go away until decision-makers impose real career consequences for candidates who rack up conflicts of interest.

Incoming Treasury Secretary Tim Geithner is expected to announce some new rules tomorrow governing the behavior of lobbyists for financial institutions seeking bailout money under the $700 billion financial rescue plan, according to the The Associated Press:

The new rules are designed to crack down on lobbyist influence over the rescue program, according to an administration official with knowledge of the changes.

This official, who spoke to The Associated Press on grounds of anonymity because the new rules had not yet been announced, said that they went farther than restrictions the Bush administration imposed.

The new rules will restrict the contact officials can have with lobbyists in connection with applications for funds from the bailout program, the official said. This official said the rules, which are aimed at making sure political influence is not a factor in awarding rescue money, will take as a model the limits that are imposed on political lobbying of the Treasury Department on tax matters.

However, Geithner’s new rules might seem more impressive if the incoming treasury secretary showed more concern about lobbyists on his own staff.

As my colleague Mary Kane reported today, Geithner’s own chief of staff, Mark Patterson, is a former lobbyist. Public lobbying disclosure records available from the Senate Office of Public Records show that Patterson lobbied for the Goldman Sachs Group as recently as April of 2008. At that time, Patterson was registered to lobby on credit default swaps, foreclosures, credit rating agencies, sovereign wealth funds, and a host of other financial issues that are directly related to the collapse of the financial sector and the Treasury’s attempts to clean up the mess.

Goldman Sachs is already a major recipient of TARP funds.

The fact that Patterson is eligible to work for Geithner appears to illustrate some gaping loopholes in Obama’s supposedly tough executive order on ethics for executive branch employees. Under Obama’s new rules, lobbyists are forbidden from seeking employment at any agency they lobbied.

The last two years of SOPR records show that Patterson lobbied Congress on legislation that affected the Treasury Department, but not the Treasury Department itself. If Patterson had lobbied the Treasury Department directly, he would appear to be ineligible to serve under Obama’s executive order, which bars former lobbyists from “seek[ing] or accept[ing] employment with any executive agency that [they] lobbied within the 2 years before the date of [their] appointment.”

The same executive order also forbids lobbyists from having any contact with their former clients or making any decisions regarding their old lobbying issues during their first two years on the job. Is the Bailout Czar’s chief of staff going to be making decisions about his old lobbying issues? I guess it depends on what the meaning of “is” is.

If appointed, Obama’s nominee for deputy secretary of defense, former Raytheon lobbyist William Lynn, wouldn’t have to recuse himself from decisions involving Raytheon–despite Obama’s stringent new ethics rules, The Associated Press reported Saturday.

A former Raytheon Co. lobbyist, who is nominated to be deputy defense secretary, has agreed to sell his stock in the military contractor and similar holdings but will not be forced to step back from decisions related to his former employer, the Defense Department said Friday.

Instead, William J. Lynn’s dealings at the Pentagon will be subject to ethics reviews for one year, Pentagon spokesman Geoff Morrell said.

Ethics reviews? Allowing Lynn to do business with his former employer would make a mockery of President-elect Obama’s new ethics rules for his administration.

On his first day in office, Obama signed an executive order to slow the “revolving door” between lobbying and government work, drawing widespread praise for taking a tough stance against influence-peddling.

Under these new rules, lobbyists hired fresh off K Street would be subject to severe restrictions during their first two years on the job. They would be barred not only from making any decisions about their former clients, but also from working on any of their old lobbying issues, as well as from seeking employment with any federal agency they lobbied.

The rules appear to disqualify Lynn on all three counts. According to Raytheon’s 2008 first-quarter lobbying disclosure form, available at OpenSecrets.org, Lynn — who, according to his company bio,  was Raytheon’s senior vice president of government operations and strategy from August 2002 until last week –  lobbied on the FY09 Defense Appropriations Bill and other key defense and intelligence legislation for “provisions related to acquisition policy, force protection, military space and intelligence, command and control, simulation and training, self-defense systems and decoys, missile defense, sensors and radars, missiles, munitions and artillery, and advanced technology programs.” Doesn’t leave much out, does it? If Lynn had to recuse himself from all those areas, his first two years in office wouldn’t be very busy.

The same lobbying disclosure form shows that Lynn’s team lobbied the Department of Defense, where he now hopes to work–which would be another no-no if Obama’s rules applied to Lynn.

Allowing Lynn to take over the No. 2 spot at the Pentagon invites conflicts of interest, both real and perceived. The deputy secretary of defense is the department’s chief operating officer – which includes overseeing acquisitions. If he gets the job, he’ll pretty much have to do business with Raytheon.

Raytheon received $11.62 billion in federal contracts in 2007 (the last year for which complete records are available) with billions more going to Raytheon’s subsidiaries and strategic partners, according to OMB Watch’s database, FedSpending.org–not a bad return on its lobbying investment that year, which OpenSecrets.org pegs at $6.58 million.

So, how did our president reconcile his tough ethics standards with doing what he wanted? He didn’t. Instead, Obama wrote Lynn a special permission slip to exempt him the new revolving door ban. And with Senate Armed Services Committee Chairman Carl Levin’s (D-Mich.) announcement that he is dropping his hold on Lynn’s nomination, the path is now clear for Lynn’s confirmation.

Of course, Lynn deserves the benefit of the doubt — he hasn’t taken office and he hasn’t done anything unethical. Presumably, the Obama administration will be vigilant to make sure it stays that way, considering all the negative press this appointment has generated.

But putting a lobbyist for a major defense contractor at the helm of the Defense Department’s acquisitions operation is hardly change we can believe in.

Here’s what Palin told the Anchorage Daily News:

“Well, I’m very, very pleased to be cleared of any legal wrongdoing … any hint of any kind of unethical activity there,” the governor said from her car on the way to a campaign stop in Philadelphia.

Here’s an image of the report’s findings. Note finding No. 1:

For the reasons explained in section IV of this report, I find that Governor Sarah Palin abused her power by violating Alaska Statute 39.52.110(a) of the Alaska Executive Branch Ethics Act. Alaska Statute 39.52.110(a) provides

The legislature reaffirms that each public officer holds office as a public trust, and any effort to benefit a personal or financial interest through official action is a violation of that trust.

I’m not sure how to reconcile Palin’s statement on the report with, well, the report.

The most remarkable is a push by Palin in 2002 to pass a zoning exception, which she ultimately received, so that she could sell her $327,000 house on Lake Wasilla:

Two months before Palin’s tenure as mayor ended in 2002, she asked city planning officials to forgive zoning violations so she could sell her house. Palin had a buyer, but he wouldn’t close the deal unless she persuaded the city to waive the violations with a code variance.

Palin also cut taxes on snow machines and snow machine races at a time when she and her husband ran a snow mobile store. She also accepted freebies like an “awesome facial” and “gorgeous flowers.”

Perhaps these are just examples of typical small town politics, but when Palin’s experience at the local level serves as the basis for her national bid, it all looks a bit different.

According to Alaska state records, during her tenure as governor, Palin accepted dozens of gifts worth a total of more than $25,000 from “industry executives, municipalities and a cultural center whose board includes officials from some of the largest mining interests in the state.”

Palin received the majority of these gifts in the early months of her administration, while she was pushing her much-ballyhooed ethics reform package through the state legislature — which banned state officials from accepting such gifts.

From The Post:

The 41 gifts Palin accepted during her 20 months as governor include honorific tributes, expensive artwork and free travel for a family member. They also include more than $2,500 in personal items from Calista, a large Alaska native corporation with a variety of pending state regulatory and budgetary issues, and a gold-nugget pin valued at $1,200 from the city of Nome, which lobbies on municipal, local and capital budget matters, documents show.

About a quarter of the entities bestowing gifts on the governor are represented by one of Alaska’s most influential mining lobbyists, who said in an interview that she was not involved in the tributes. The lobbyist, Wendy Chamberlain, has a relationship with the governor’s family through the friendship of their teenage daughters.

On forms disclosing the gifts, Palin, who is the Republican vice presidential nominee, routinely checked “no” when asked whether she was in a position to “take official action that may affect the person who gave me the gift,” and a spokeswoman for Sen. John McCain’s presidential campaign said the gifts had no undue influence on her.

In response to e-mailed questions, Meghan Stapleton, who is based in Alaska for the McCain-Palin campaign, wrote: “Throughout her career Gov. Palin has stood for the highest standards of ethics. She spearheaded new ethics reforms in Alaska and took on her own party and entrenched interests to return Alaska’s government to its people.”

Records show that 23 of the gifts were offered during Palin’s early months in office, when she was pushing the legislature to address a state corruption scandal by passing a package of ethics reforms. She accepted 18 gifts after the law passed in July 2007. Among other provisions, the law forbade executive branch officials from taking gifts from lobbyists or from interests with pending state business.

According to the article, Palin introduced her ethics reform legislation in January 2007, her first month in office.

That month, she accepted three gifts from Calista’s chief executive, Matthew Nicolai: a $2,200 ivory puffin mask, a woven grass fan worth $300 and a $150 ivory necklace. Nicolai, who did not return phone calls, runs the large corporation, which profits from a multibillion-dollar gold-mining operation on its land.

Palin, who holds significant sway over budgetary issues affecting cities, also accepted for “personal use” the gold-nugget pin from Nome. Mayor Denise Michels said the memento was meant to remind the governor that “Nome is a historic mining community.” Palin approved about $6 million in funding this year for a public safety building in the city. “Anything our state can do to help us in capital projects, we’re very grateful,” Michels said.

Palin’s husband, Todd, also accepted two fact-finding trips sponsored by mining companies as gifts, according to The Post. A list of all the gifts is available here.

The article does not appear to allege illegal activity. But much like the “Bridge to Nowhere” and the hundreds of millions of dollars worth of earmarks Palin requested for her state, it clearly pokes another hole in the alternate reality that the McCain campaign has tried to create around Palin’s record in Alaska.

As MSNBC’s Keith Olbermann noted Thursday on “The Rachel Maddow Show,” because Palin was a relative unknown on the national stage when McCain chose her as his running mate, the campaign saw in her a blank slate on which to project the image of their choosing — in this case, that of the maverick reformer, which neatly coincided with the image McCain has sought to project for himself.

However, the more information has come out about her past, the more difficult it is to square that image with the facts.