27 March 2003
The Wall Street Journal, 27 March 2003
By TOM HAMBURGER and DENNIS K. BERMAN
Staff Reporters
of THE WALL STREET JOURNAL
WASHINGTON -- Former Pentagon assistant secretary Richard Perle has been assailed for possible conflicts between his business interests and chairmanship of a Pentagon advisory board, but other panel members have potential conflicts, too.
Mr. Perle has been criticized in recent days following disclosure that he sought defense-related consulting business while heading the Defense Policy Board, which advises the defense secretary on a range of policy and strategic issues. But business interests of at least nine of his colleagues also overlap with their board service.
Former Central Intelligence Agency chief James Woolsey is a senior executive at consultancy Booz Allen Hamilton Inc., which received $688 million in Pentagon contracts in 2002. He also is one of three principals in a venture-capital firm that has been soliciting investment in homeland-security-related firms. Mr. Woolsey insists none of the companies he is affiliated with has ever been discussed at a board meeting, and that he does no lobbying. He said he was unaware of Mr. Perle's personal financial interests and wouldn't comment on them.
Another panel member, retired Adm. David Jeremiah, sits on boards -- one of them advisory -- of five corporations that received more than $10 billion in Pentagon contracts in 2002, according to a forthcoming report from the Center for Public Integrity, a Washington watchdog group. Retired Air Force Gen. Ronald Fogleman sits on the board of five defense firms that received more than a billion dollars in defense contracts in 2002. Adm. Jeremiah and Gen. Fogleman didn't return calls requesting comment.
Panel members must disclose their business interests, but those disclosures aren't open for public examination. The potential for conflict in these arrangements is sparking calls from lawmakers and watchdog groups for government inquiries and greater disclosure of activities of the advisory board and its members.
Mr. Woolsey and others on the board reject such complaints. "I cannot recall a single contractor matter coming before the boards I sit on. In any case, you don't have decision-making authority over contracts," the former CIA director said.
Mr. Woolsey's firm, Paladin Capital Group, and that of Mr. Perle, Trireme Partners, both solicit investment in homeland-security concerns.
Mr. Perle also secured a $725,000 fee from Global Crossing Ltd., a telecommunications firm now operating under bankruptcy-court protection, that is seeking Pentagon permission to sell itself to investors in Asia. The Defense Department has objected to the Global Crossing deal on national-security grounds because the company would be owned by a Hong Kong-based concern with ties to China, Hutchison Whampoa Ltd.
According to documents prepared by Global Crossing to explain its sale plan to the court, Mr. Perle's total fee is $725,000. Of that, $600,000 would be paid if the company obtains approval from the Pentagon. The documents cite Mr. Perle's defense-board chairmanship as a reason for hiring him to press its case.
Mr. Perle didn't return calls requesting comment, but a person close to the transaction said Mr. Perle's primary role was to identify the deal's national-security issues and create a plan to address them. "He had the security credentials to get the investors comfortable" with the structure that now makes Hutchison a passive investor in the reorganized Global Crossing, this person said.
Defense Secretary Donald Rumsfeld is busy and unable to comment on the matter, said a spokesman, Maj. Ted Wadsworth.
Write to Tom Hamburger at tom.hamburger@wsj.com and Dennis K. Berman at dennis.berman@wsj.com
Updated March 27, 2003 12:20 a.m.