The flap over defense adviser Richard Perle's business dealings is merely an example of the ethical concerns that plague an influential Pentagon advisory board, and his resignation as its chairman is not the cure, a government watchdog group said yesterday.
Perle, a leading conservative who was an early proponent of attacking Iraqi President Saddam Hussein's government, resigned his unpaid leadership post on the Defense Policy Board this week after disclosures that he was representing Global Crossing, a telecommunications company seeking Defense Department approval to be sold to a firm controlled by Chinese investors.
Perle is not the only panelist with corporate ties to the Pentagon, however. Or the only one with a financial stake in the outcome of the Global Crossing deal.
According to bankruptcy court records, former secretary of state Henry Kissinger's consulting company, Kissinger-McLarty Associates, has been paid $30,000 a month since November to represent Global Crossing, and is scheduled to receive a $200,000 "success fee" if the sale is approved.
Thomas F. "Mack" McLarty, former Clinton White House chief of staff, said in an interview that Kissinger was not participating in the deal. McLarty said the fee arrangement is not unusual.
In all, at least nine of the board's 30 members are linked to companies that won more than $76 billion in contracts with the Defense Department over the past two years, raising concerns that they might be using their public office for private gain, according to a report released yesterday by the Center for Public Integrity.
"It's not a pretty picture," said Charles Lewis, the nonprofit group's executive director. "It is a picture of what has long been suspected of the incestuousness between the defense industry and the Pentagon."
For example, the report says, former CIA director R. James Woolsey is a principal in a firm that is soliciting investment for homeland security companies. He also is a vice president at Booz-Allen Hamilton, a consulting firm that had contracts valued at more than $680 million last year, the report says.
Retired Adm. William Owens, former vice chairman of the Joint Chiefs of Staff, sits on the boards of five companies that won more than $60 million in defense contracts in 2002, according to the report.
Both men, who, like other members of the board are unpaid for their service, said there were no ethical conflicts. Defense contracts are just a small part of the businesses they are involved in, they said, and the firms' interests do not come up in the advisory board's broad policy discussions of such matters as North Korea and military alliances. If they were to, Woolsey and Owens said they would recuse themselves from the discussions.
"We do this kind of thing because we care about the country," said Owens, who lives in Seattle. "We do this kind of thing for free. Indeed, I try to pay for my own travel so the government doesn't have to pay for it. . . . Most of us try very hard not to milk our connections in Washington."
Woolsey noted that there are many similar advisory panels in agencies government-wide, drawing on the expertise of outside specialists who draw no compensation in return.
"Other departments and agencies have these advisory boards, and as far as I'm aware the [ethics] rules apply similarly to all of them," Woolsey said. "What this really involves is whether the government wants to change the way it gets advice from people. And if it wants to have a lot fewer people and a lot fewer boards, that's fine."
Perle, who remains on the defense board, said this week that he had done nothing wrong, and that he left the chairman's job only because he was "dismayed" that the Global Crossing controversy might distract Defense Secretary Donald H. Rumsfeld from the war against Iraq.
"There was no conflict of interest, but it takes time for that to be sorted out," Perle said in an interview yesterday with Canadian Broadcasting Corp. "And the ethics officials at the Defense Department are now looking into all the details of this, and I haven't the slightest doubt how it will come out."
At the Pentagon and elsewhere, federal advisory board members' potential conflicts of interest are difficult to determine because the panelists file confidential annual financial disclosure statements. What's more, federal law allows agency officials to grant waivers of ethics restrictions if they certify that the need for a member's service "outweighs the potential for a conflict of interest."
At a minimum, board members' disclosure forms should be made public, Lewis said. And, he said, the Defense Department should have to report whatever sanctions or discipline it hands down to panelists who are found to have conflicts.
"If you're going to have a system where you welcome that kind of experience and expertise, you'd better have mechanisms in place that assure transparency and openness and accountability," Lewis said. "And that does not seem to be the case with this board. . . . We're supposed to just trust the Pentagon, which always worries me."
The financial disclosures are kept confidential because members of the defense panel and many other advisory boards serve as "special government employees." They are covered by federal ethics laws and regulations known as the Standards of Ethical Conduct, which prohibit conflicts of interest.
Maj. Ted Wadsworth, a Pentagon spokesman, said the defense panel is a valuable source of advice for defense officials and strictly adheres to the ethics laws and regulations.
"If the discussions of the board should involve matters that have a direct and predictable effect on a board member's financial interests, the board member is recused from taking part," he said.
Staff writer Walter Pincus contributed to this report.