[Federal Register Volume 61, Number 30 (Tuesday, February 13, 1996)]
[Notices]
[Pages 5554-5557]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3129]
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FEDERAL DEPOSIT INSURANCE CORPORATION
Policy Statement on the Fitness and Integrity of Lessors of Real
Property to the FDIC
AGENCY: Federal Deposit Insurance Corporation (FDIC).
ACTION: Statement of policy.
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SUMMARY: The FDIC has adopted a statement of policy which establishes
the standards of fitness and integrity for Lessors who lease space to
the FDIC. The policy statement ensures that the FDIC addresses
conflicts of interest associated with the ownership of buildings leased
by the Corporation. The policy statement is consistent with the
purposes of section 19 of the RTC Completion Act.
EFFECTIVE DATE: February 6, 1996.
FOR FURTHER INFORMATION CONTACT: Joanna K. Lyckberg, Policy Analyst,
(202-942-3217), Division of Administration, 550 17th Street NW.,
Washington, DC 20429.
SUPPLEMENTARY INFORMATION: The text of the policy statement follows:
Policy Statement on the Fitness and Integrity of Lessors of Real
Property to the FDIC
I. Purpose. To establish:
A. Minimum standards governing Conflicts of Interest and ethical
responsibilities for Lessors who have entered into Leases with the
FDIC, or who seek to lease real property to the FDIC; and
B. Official written guidance for FDIC personnel including, without
limitation, personnel in the Division of Administration, the Division
of Supervision and the Office of the Executive Secretary, on the
implementation of those minimum standards.
II. Applicability. This policy will apply to:
A. All Leases of 10,000 square feet or more awarded as a result of
Requests for Proposals issued after the date of this policy; and
B. All Lease Amendments entered into after the date of this policy
to (1) Existing Leases of 10,000 square feet or more, or (2) existing
Leases of less than 10,000 square feet where the total square footage
of the Lease will be 10,000 square feet or more if the Lease Amendment
is executed.
III. Definitions. As used in this policy statement:
A. Company means any corporation, firm, partnership, society, joint
venture, business trust, association or similar organization, or any
other trust, or any other organization or institution.
B. Conflict of Interest means a situation in which:
(1) A Lessor or a Lessor's Affiliate is adverse to the FDIC, RTC,
Federal Savings and Loan Insurance Corporation (FSLIC), or their
successors in a lawsuit, for which no final adjudication or settlement
has occurred; or
(2) A Lessor or a Lessor's Affiliate has caused a Substantial Loss
to Federal Deposit Insurance Funds within the ten year period preceding
the submission of its offer; or
(3) A Lessor or a Lessor's Affiliate has been convicted of a Fraud
Offense or of conspiring to commit a Fraud Offense affecting any
Insured Depository Institution; or
(4) A Lessor or a Lessor's Affiliate has Defaulted on a Material
Obligation within the last five years; or
(5) A Lessor or a Lessor's Affiliate has been removed from, or
prohibited from participating in the affairs of any Insured Depository
Institution pursuant to any final enforcement action by the Office of
the Comptroller of the Currency, the Office of Thrift Supervision, the
Board of Governors of
[[Page 5555]]
the Federal Reserve System, or the FDIC or their successors; or
(6) A situation in which the FDIC determines, in its sole
discretion, that the FDIC's award of a Lease to a Lessor could cause a
reasonable person to question the integrity of the FDIC's operations.
An example (without limitation) of a Conflict of Interest determined by
the FDIC is a situation in which an individual who is not a Lessor's
Affiliate, but has a direct or indirect equity interest in the Lessor,
or directly or indirectly controls the Lessor, has been convicted of a
Fraud Offense.
C. Default on a Material Obligation means a loan or advance from an
Insured Depository Institution which has been delinquent for 90 or more
days as to payment of principal or interest, or a combination thereof,
with a remaining balance of principal, and accrued interest on the
ninetieth day, or any time thereafter, in an amount in excess of
$1,000,000.
D. Family Member means the Lessor's spouse or dependent child.
E. FDIC means the Federal Deposit Insurance Corporation in its
receivership and corporate capacities. It does not mean the FDIC in its
conservatorship capacity or when it is operating a bridge bank.
F. Fraud Offense means any felony offense under the sections of
title 18 U.S. Code as listed in Part IX, or similar offenses under
state laws.
G. Insured Depository Institution means any bank or savings
association the deposits of which are insured by the FDIC.
H. Insurer means the FDIC, RTC, FSLIC or their successors; or the
Bank Insurance Fund, the Savings Association Insurance Fund, the FSLIC
Resolution Fund, or funds maintained by the RTC for the benefit of
insured depositors.
I. Lease means a lease or sublease of real property for the use of
the FDIC (including its contractors) as tenant, including but not
limited to warehouse, office and retail space. As used herein,
``Lease'' does not include contracts for storage services.
J. Lease Amendment means any change to a Lease which extends the
term of the Lease, increases the rentable square footage of the
premises leased, or increases the rent paid under the Lease. As used
herein, however, ``Lease Amendment'' does not refer to the exercise of
a priced renewal option or an expansion option at a predetermined
rental rate under any Lease entered into prior to the date of this
policy.
K. Lessor means an individual or a Company which intends to or has
submitted an Offer to lease or sublease real property to the FDIC, or
which has entered into a Lease or a sublease with the FDIC.
L. Lessor's Affiliate means:
(1) if the Lessor is a Company, (a) any general partner of the
Lessor, or (b) any beneficial owner of a 25% or greater equity interest
in the Lessor; or
(2) any Company of which the Lessor is (a) A general partner, or
(b) in which the Lessor is the beneficial owner of a 25% or greater
equity interest; or
(3) if the Lessor is an individual, any Family Member of the
Lessor.
A Lessor's Affiliate may be either an individual or a Company.
M. Obligation means a commitment to pay money to an Insurer, that
is currently owing to, and held by, an Insurer, and which currently is
not performing in accordance with the terms thereof (including any
modifications thereto), including, without limitation, (1) Any
unsatisfied final judgment, and (2) any guarantee of any Obligation.
N. Offer means a proposal to enter into a Lease.
O. RTC means the Resolution Trust Corporation in any of its
capacities.
P. Substantial Loss to Federal Deposit Insurance Funds means: An
Obligation that is or has been delinquent for 90 or more days as to
payment of principal, interest, or a combination thereof and on which
there remains a legal duty to pay an amount in excess of $50,000. A
Substantial Loss to Federal Deposit Insurance Funds does NOT include
situations where the Obligation (1) has been fully resolved and the
debtor has been released in full by the applicable Insurer, or (2) has
been sold or transferred by the applicable Insurer and such Insurer
retains no interest therein.
IV. Policy.
A. General. The FDIC will not consider Offers from Lessors, award
Leases to Lessors, or enter into Lease Amendments with Lessors that
either (a) fail to provide any of the information required by this
policy; or (b) have Conflicts of Interest, unless such Conflicts of
Interest are eliminated by the Lessor or waived by the FDIC.
B. Waivers. Waivers of Conflicts of Interest will be granted only
when, in light of all relevant circumstances, the Executive Secretary,
or the designee of the Executive Secretary determines in his or her
discretion that the interests of the FDIC in entering into a Lease or a
Lease Amendment with the Lessor outweigh the concern that a reasonable
person may question the integrity of the FDIC's operations.
V. Procedures.
A. Conflicts of Interest.
(1) Conflicts of Interest in existence prior to submission of an
Offer.
(a) A Lessor shall provide all information and certifications
required in paragraph V.B. hereof at the time it makes an Offer to the
FDIC.
(b) A Lessor that has a Conflict of Interest as defined at
paragraph III.B.(1) through (4) of this policy statement shall, with
its Offer, request that the Conflict of Interest be waived in
accordance with paragraph IV.B., or propose how the Lessor will
eliminate the Conflict of Interest.
(c) The Executive Secretary or designee, in his or her discretion,
may waive the Conflict of Interest in accordance with paragraph IV.B.,
or may approve in writing a Lessor's proposal to eliminate the Conflict
of Interest for purposes of the specific Lease.
(2) Conflicts of Interest arising after submission of an Offer but
prior to entering into a Lease.
(a) If, after submitting its Offer, but prior to entering into a
Lease, a Lessor discovers that it has a Conflict of Interest, it must
notify the FDIC in writing within five business days of such discovery.
The Lessor shall include with such notification a detailed description
of the Conflict of Interest, and either (i) A statement of how it
intends to eliminate the Conflict of Interest; or (ii) a request for a
waiver of the Conflict of Interest.
(b) The Executive Secretary or designee, in his or her discretion,
may waive the Conflict of Interest in accordance with paragraph IV.B.,
or may approve in writing a Lessor's proposal to eliminate the Conflict
of Interest for purposes of the specific Lease.
(3) Conflicts of Interest that arise after entering into a Lease.
FDIC Lease agreements shall require that the Lessor notify the FDIC in
writing within five business days after discovering a Conflict of
Interest that arises after the Lessor and the FDIC have entered into a
Lease. The Lessor shall include with such notification a detailed
description of the Conflict of Interest, and either (i) A statement of
how it intends to eliminate the Conflict of Interest; or (ii) a request
for a waiver of the Conflict of Interest. After receipt of such notice
from the Lessor, the FDIC shall take such action as it determines is in
the FDIC's best interests, including:
(a) The FDIC shall notify the Lessor in writing of its finding as
to whether a Conflict of Interest exists. If the FDIC finds that a
Conflict of Interest exists, the FDIC shall also notify the Lessor in
[[Page 5556]]
writing of the basis for such determination, and when applicable
(i) whether a waiver will be granted, and if so, the terms and
conditions of such waiver; or
(ii) a description of the corrective actions, if any, that the
Lessor will take in order to eliminate the Conflict of Interest.
Corrective actions must be completed by the Lessor not later than 30
days after notification is mailed by the FDIC unless the FDIC, in its
sole discretion, determines that it is in the best interests of the
FDIC to grant the Lessor an extension in which to complete such
corrective action.
(b) Unless the FDIC waives the Conflict of Interest or the Lessor
eliminates the Conflict of Interest the FDIC shall not enter into any
Lease Amendments with the Lessor.
(4) Conflicts of Interest discovered by the FDIC. The FDIC will
review all information provided by the Lessor with its Offer, as well
as information from other sources that the FDIC determines is relevant.
If the FDIC, in its sole discretion determines, based on such reviews,
that a Conflict of Interest exists, an FDIC representative shall notify
the Lessor of the basis for such determination.
(a) If the FDIC discovers a Conflict of Interest after submission
of an Offer, but prior to entering into a Lease:
(i) The Lessor must respond to the FDIC in writing, within five
business days of the FDIC's notification of its determination in one of
the following ways:
[1] Stating how it intends to eliminate the Conflict of Interest;
or
[2] Requesting that the FDIC waive the Conflict of Interest; or
[3] If the FDIC's determination was based solely on information
from a source other than the Lessor, and the Lessor can demonstrate
that such information was incomplete or incorrect, the Lessor may
provide additional or corrected facts and request that the FDIC
consider such facts and reevaluate its determination that a Conflict of
Interest exists. After reviewing the Lessor's additional or corrected
information, the FDIC will notify the Lessor promptly whether it
confirms its determination that a Conflict of Interest exists.
(ii) If the Lessor does not respond in writing to the FDIC within
five business days, the FDIC shall deem the Lessor's Offer to have been
withdrawn.
(b) If the FDIC discovers a Conflict of Interest after entering
into a Lease, the FDIC shall take such action as it determines is in
the FDIC's best interest, including the actions described at V.A.(3)
(a) and (b). As detailed at V.A.(4)(a)(i)[3], the Lessor can request
that the FDIC reevaluate its determination if the FDIC's determination
was based solely on information from a source other than the Lessor,
and the Lessor can demonstrate that such information was incomplete or
incorrect. After reviewing the Lessor's additional or corrected
information, the FDIC will notify the lessor promptly whether or not it
will reverse its determination that a Conflict of Interest exists.
(5) Reconsideration of decisions. The Lessor may request that the
Chairman or designee(s) reconsider FDIC decisions regarding acceptance
of a Lessor's proposal for the elimination of a Conflict of Interest,
or the issuance of a requested waiver to a Conflict of Interest. Such
requests must be in writing and contain the reasons for the request.
The Chairman or designee(s) shall have the right to decline
reconsideration.
B. Information required to be submitted.
(1) Initial submission. Every Lessor shall submit a completed
``FDIC Leasing Representations and Certifications'' form, including
Part II, ``Lessor Fitness and Integrity Certification'' and such other
information as the FDIC may deem appropriate to permit it to make a
determination with respect to Conflicts of Interest at the time the
Lessor submits an Offer and prior to entering into any Lease Amendment.
Among other items, the form shall require that the Lessor provide the
following:
(a) Certifications that no Conflicts of Interest, as defined in
paragraph III.B. (1) through (4) exist, or;
(b) In the event that one or more Conflicts of Interest exist, the
following information:
(i) When applicable, a description of any lawsuit in which the
Lessor or any Lessor's Affiliate is adverse to the FDIC, RTC, FSLIC, or
their successors and for which no final adjudication or settlement has
occurred;
(ii) When applicable, a list and description of any instance during
the five years preceding the submission of the Offer in which the
Lessor or any Lessor's Affiliate has caused a Substantial Loss to
Federal Deposit Insurance Funds;
(iii) When applicable, a list and description of any Fraud Offense
of which the Lessor or any Lessor's Affiliate has been convicted;
(iv) When applicable, a list and description of any instance during
the five years preceding the submission of the Offer in which the
Lessor or any Lessor's Affiliate has Defaulted on a Material
Obligation;
(v) When applicable, a list and description of any instances in
which the Lessor or any Lessor's Affiliate has been removed from, or
prohibited from participating in the affairs of any Insured Depository
Institution pursuant to any final enforcement action by the Office of
the Comptroller of the Currency, the Office of Thrift Supervision, the
Board of Governors of the Federal Reserve System, or the FDIC or their
successors; and
(vi) The Lessor's request for waiver of such Conflicts of Interest
or proposal for elimination of such Conflicts of Interest; and
(c) A description of any commitment to pay $50,000 or more to an
Insurer that has been fully released by the Insurer but for which the
Insurer received less than 100% (including interest, late charges and
other costs of collection) of the amount due; and
(d) Any other information which the FDIC may deem appropriate.
(2) Subsequent submissions. FDIC Lease agreements shall require
that during the term of the Lease, the Lessor shall:
(a) immediately notify the FDIC if any of the information submitted
pursuant to this policy was incorrect at the time of submission or has
subsequently become incorrect; and
(b) at any time, submit such information as the FDIC requests in
order to permit the FDIC to determine if a Conflict of Interest exists.
(3) Failure to provide information. Any Lessor who fails to provide
any of the information required by this policy will neither be
considered for, nor be eligible for, the award of a Lease or a Lease
Amendment.
(4) Misstatement of material fact. Any Lessor who misstates or
fails to disclose to the FDIC a material fact or any Conflict of
Interest, as defined in paragraph III.B.(1) through (4), whether prior
to or during the term of the Lease, will not be considered eligible for
the award of any Lease or Lease Amendment.
VI. Lease agreement requirements
A. Retention of information. FDIC Lease agreements shall specify
that the Lessor shall retain the information upon which it relied in
preparing its certification(s) during the term of the Lease and for a
period of three years following the termination or expiration of the
Lease or any extension thereof, and shall make such information
available for review by the FDIC upon request.
B. Response to requests for additional information. FDIC Lease
agreements shall specify that any Lessor who fails to respond to a
request for information
[[Page 5557]]
made by the FDIC pursuant to Section V.B.2.(b) of this policy, shall be
in default under the Lease for which such information was requested.
C. Additional Lease agreement provisions. In addition to the
provisions of this policy, the FDIC may include in its Lease agreements
such provisions, conditions and limitations as the FDIC deems
necessary, including additional standards for Lessor fitness and
integrity, and minimum standards of ethical responsibility for Lessors.
VII. Delayed compliance in emergencies. In emergencies, when
unforeseeable circumstances make it necessary to enter into a Lease
immediately in order to protect FDIC personnel or property, the FDIC
may delay compliance with this policy.
VIII. Finality of determination. Any determination made by the FDIC
pursuant to this policy shall be in the FDIC's sole discretion and
shall not be subject to further review, except as otherwise provided
pursuant to a specific Lease agreement.
IX. General. Felony offenses as used in the standards set forth in
this statement of policy mean the following statutes that establish
standards to which a Lessor's conduct must conform and which shall not
have been violated. This list is as follows:
A. Bribery of Public Officials (18 U.S.C. 201).
B. Offer of a loan or gratuity to bank examiners (18 U.S.C. 212).
C. Continuing financial crimes enterprise (18 U.S.C. 225).
D. Taking or using papers relating to claims (18 U.S.C. 285).
E. Conspiracy to defraud the Government with respect to claims (18
U.S.C. 286).
F. False, fictitious or fraudulent claims (18 U.S.C. 287).
G. Bonds and obligations of certain lending agencies (18 U.S.C.
493).
H. Contractors' bonds, bids, and public records (18 U.S.C. 494).
I. Contracts, deeds, and powers of attorney (18 U.S.C. 495).
J. Chapter 31 Embezzlement and Theft (18 U.S.C. 642 through 668).
K. Statements or entries generally (18 U.S.C. 1001).
L. Possession of false papers to defraud United States (18 U.S.C.
1002).
M. Bank entries, reports and transactions (18 U.S.C. 1005).
N. Federal credit institution entries, reports and transactions (18
U.S.C. 1006).
O. Federal Deposit Insurance Corporation transactions (18 U.S.C.
1007).
P. Loans and credit applications generally (18 U.S.C. 1014).
Q. Concealment of assets from conservator, receiver, or liquidating
agent of financial institution (18 U.S.C. 1032).
R. Chapter 63 Mail Fraud (18 U.S.C. 1341 through 1344).
S. Laundering of monetary instruments (18 U.S.C. 1956).
By order of the Board of Directors, dated at Washington, DC,
this 6th day of February, 1996.
Federal Deposit Insurance Corporation.
Jerry L. Langley,
Executive Secretary.
[FR Doc. 96-3129 Filed 2-12-96; 8:45 am]
BILLING CODE 6714-01-P
