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Conflicts of Interest
Advisors of Influence: Nine Members of the Defense Policy Board
Have Ties to Defense Contractors
By Andre Verloy and Daniel Politi (Data by Aron Pilhofer)
Center for Public Integrity
March 28, 2003
Of the 30 members of the Defense Policy Board, the government-appointed group that advises the Pentagon, at least nine have ties to companies that have won more than $76 billion in defense contracts in 2001 and 2002. Four members are registered lobbyists, one of whom represents two of the three largest defense contractors.
The board’s chairman, Richard Perle, resigned yesterday, March 27, 2003, amid allegations of conflicts of interest for his representation of companies with business before the Defense Department, although he will remain a member of the board. Eight of Perle’s colleagues on the board have ties to companies with significant contracts from the Pentagon.
Members of the board disclose their business interests annually to the Pentagon, but the disclosures are not available to the public. “The forms are filed with the Standards of Conduct Office which review the filings to make sure they are in compliance with government ethics,” Pentagon spokesman Maj. Ted Wadsworth told the Center for Public Integrity.
The companies with ties to Defense Policy Board members include prominent firms like Boeing, TRW, Northrop Grumman, Lockheed Martin and Booz Allen Hamilton and smaller players like Symantec Corp., Technology Strategies and Alliance Corp., and Polycom Inc. Defense companies are awarded contracts for numerous reasons; there is nothing to indicate that serving on the Defense Policy Board confers a decisive advantage to firms with which a member is associated.
According to its charter, the board was set up in 1985 to provide the Secretary of Defense “with independent, informed advice and opinion concerning major matters of defense policy.” The members are selected by and report to the Under Secretary of Defense for Policy—currently Douglas Feith, a former Reagan administration official. All members are approved by the Secretary of Defense. The board’s quarterly meetings—normally held over a two-day period—are classified, and each session’s proceedings are summarized for the Defense Secretary. The board does not write reports or vote on issues. Feith, according to the charter, can call additional meetings if required. Notices of the meetings are filed at least 15 days before they are held in the Federal Register.
The board, whose list of members reads like a who’s who of former high-level government and military officials, focuses on long-term policy issues such as the strategic implications of defense policies and tactical considerations, including what types of weapons the military should develop.
Michael O’Hanlon, a military expert at The Brookings Institution, told Time magazine in November 2002 that the board “is just another [public relations] shop for Rumsfeld.” Former members said that the character of the board changed under Rumsfeld. Previously the board was more bi-partisan; under Rumsfeld, it has become more interested in policy changes. The board has no official role in policy decisions.
The agendas for the last three meetings, which were obtained by the Center, show a variety of issues were discussed. The Oct. 10-11, 2002 meeting was devoted to intelligence briefings from the Defense Intelligence Agency and other administration officials. One of the first items on the agenda was an ethics brief by the Office of the General Counsel.
In December 2002, a two-hour intelligence briefing, strategy, North Korea, and the Defense Advanced Research Projects Agency were on the agenda. In February 2003, the topics discussed on the first day included North Korea, Iran and Total Information Awareness, the controversial Pentagon research program that aims to gather and analyze a vast array of information on Americans. As the Center previously reported, research for the program is being conducted by private contractors.
Richard Perle, who has been a very public advocate of the war in Iraq, resigned the chairmanship of the Defense Policy Board after being criticized in recent weeks because of his involvement in companies that have significant business before the Defense Department. He did not return the Center’s phone calls.
In a March 24 letter, Rep. John Conyers, the ranking Democrat on the House of Representatives Judiciary Committee, asked the Pentagon’s inspector general to investigate Perle’s role as a paid adviser to the bankrupt telecommunications company Global Crossing Ltd. The Hamilton, Bermuda-based company sought approval of its sale of overseas subsidiaries from the Committee on Foreign Investment in the United States, a government panel that can block sales or mergers that conflict with U.S. national security interests. Rumsfeld is a member of the Committee.
Perle reportedly advised clients of Goldman Sachs on investment opportunities in post-war Iraq, and is a director with stock options of the U.K.-based Autonomy Corp., whose customers include the Defense Department. “Mr. Perle is considered a ‘special government employee’ and is subject to government ethics prohibition—both regulatory and criminal—on using public office for private gain,” Rep. Conyers wrote in the letter obtained by the Center.
Potential conflicts not limited to Perle
Perle, however, is not the only Defense Policy Board member with ties to companies that do business with the Defense Department:
Retired Adm. David Jeremiah, a former vice chairman of the Joint Chiefs of Staff who served over 38 years in the Navy, is a director or advisor of at least five corporations that received more than $10 billion in Pentagon contracts in 2002. Jeremiah also sat on the board of Getronics Government Solutions, a company that was acquired by DigitalNet in December 2002 and is now known as DigitalNet Government Solutions. According to a news report by Bloomberg, Richard Perle is a director of DigitalNet Holdings Inc., which has filed for a $109 million stock sale.
Retired Air Force Gen. Ronald Fogleman sits on the board of directors of companies which received more than $900 million in contracts in 2002. The companies, which all have longstanding business relationships with the Air Force and other Defense Department branches, include Rolls-Royce North America, North American Airlines, AAR Corporation and the Mitre Corp. In addition to being chief of staff for the Air Force, Fogleman has served as a military advisor to the Secretary of Defense, the National Security Council and the President. He also served as commander-in-chief of the U.S. Transportation Command, commander of Air Mobility Command, the 7th Air Force and the Air Component Command of the U.S./ROK Combined Forces Command.
Retired Gen. Jack Sheehan joined Bechtel in 1998 after 35 years in the U.S. Marine Corp. Bechtel, one of the world's largest engineering-construction firms, is among the companies bidding for contracts to rebuild Iraq. The company had defense contracts worth close to $650 million in 2001 and more than $1 billion in 2002. Sheehan is currently a senior vice president and partner and responsible for the execution and strategy for the region that includes Europe, Africa, the Middle East and Southwest Asia. The four-star general served as NATO’s Supreme Allied Commander Atlantic and Commander in Chief U.S. Atlantic Command before his retirement in 1997. After his leaving active duty, he served as Special Advisor for Central Asia for two secretaries of Defense.
Former CIA director James Woolsey is a principal in the Paladin Capital Group, a venture-capital firm that like Perle’s Trireme Partners is soliciting investment for homeland security firms. Woolsey joined consulting firm Booz Allen Hamilton as vice president in July 2002. The company had contracts worth more than $680 million in 2002. Woolsey told the Wall Street Journal that he does no lobbying and that none of the companies he has ties to have been discussed during a Defense Policy Board meeting. Previously, Woolsey worked for law firm Shea & Gardner. He has held high-level positions in two Republican and two Democratic administrations.
William Owens, another former high-level military officer, sits on boards of five companies that received more than $60 million in defense contracts last year. Previously, he was president, chief operating officer and vice chair of Science Applications International Corporation (SAIC), among the ten largest defense contractors. One of the companies, Symantec Corp., increased its contracts from $95,000 in 2001 to more than $1 million in 2002. Owens, who served as vice chairman of the Joint Chiefs of Staff, is widely recognized for bringing commercial high technology into the U.S. Department of Defense. He was the architect of the Revolution in Military Affairs (RMA), an advanced systems technology approach to military operations that represents a significant change in the system of requirements, budgets and technology for the U.S. military since World War II. Owens serves on the boards of directors for several technology companies, including Nortel Networks, ViaSat and Polycom.
Harold Brown, a former Secretary of Defense under President Jimmy Carter, and James Schlesinger, who has served as CIA director, defense secretary and energy secretary in the Carter and Nixon administrations, are two others that have ties to defense contractors. Brown, a partner of Warburg Pincus LLC, is a board member of Philip Morris Companies and a trustee of the Rand Corporation, which respectively had contracts worth $146 million and $83 million in 2002. Schlesinger, a senior adviser at Lehman Brothers, chairs the board of trustees of the Mitre Corp., a not-for-profit that provides research and development support for the government. Mitre had defense contracts worth $440 million in 2001 and $474 million in 2002.
Chris Williams is one of four registered lobbyists to serve on the board, and the only one to lobby for defense companies. Williams, who served as a special assistant for policy matters to Defense Secretary Rumsfeld after having been in a similar capacity for Sen. Trent Lott (R-Miss.), joined Johnston & Associates after leaving the Pentagon. Although the firm had represented Lockheed Martin prior to Williams’ arrival, the firm picked up two large defense contractors as clients once Williams was on board: Boeing, TRW and Northrop Grumman, for which the firm earned a total of more than $220,000. The firm lobbied exclusively on defense appropriations and related authorization bills for its new clients. Johnston & Associates is more often employed by energy companies; its founder, J. Bennett Johnston, is a former Democratic senator from Louisiana who chaired the Energy Committee.
None of the members with ties to defense contractors responded to requests for comment.
The board’s membership also contains other well known Washington hands, including some who are registered lobbyists. Richard V. Allen, a former Nixon and Reagan administration official, who is now a senior counselor to APCO Worldwide, registered as a lobbyist for Alliance Aircraft.
Former Congressional representative Tillie Fowler joined the law firm Holland & Knight in 2001. She served eight years in the U.S. House of Representatives where she was a member of several committees including the House Armed Services Committee and the Transportation Committee. In 2002 she lobbied for such clients as the Minnesota Department of Transportation and the American Plastics Council.
Thomas S. Foley is a partner at Akin, Gump, Strauss, Hauer & Feld law firm, which he joined in 2001. He was the U.S. ambassador to Japan from 1997 to 2001 and was the Speaker of the House of Representatives from 1989 to 1994, after being a representative since 1965. Foley is a registered lobbyist, but has no defense clients.
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