Public
Integrity.org Center for Public Integrity, Monday, March
31, 2003 Nine On
[Pentagon's] Defense Policy Board
Have Ties To Contractors By André
Verlöy and Daniel
Politi Data by Aron
Pilhofer 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,
NorthKorea, 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
PerlePerle, 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. ADDITIONAL RESOURCE |