[Congressional Record Volume 149, Number 51 (Monday, March 31, 2003)]
[House]
[Pages H2509-H2512]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    REVELATIONS ABOUT RICHARD PERLE

  The SPEAKER pro tempore (Ms. Ginny Brown-Waite of Florida). Under the 
Speaker's announced policy of January 7, 2003, the gentleman from 
Michigan (Mr. Conyers) is recognized for 60 minutes as the designee of 
the minority leader.
  Mr. CONYERS. Mr. Speaker, I rise today to discuss several matters 
that have become intertwined in the Iraq circumstance, and of course, 
our thoughts and prayers are with the brave men and women who are 
fighting overseas, faced with a number of troubling episodes, though, 
here at home that may involve conflicts of interest of high-level Bush 
administration officials.
  I take the floor tonight to raise the discussion on the ongoing 
revelations that Richard Perle, a member of the Pentagon's defense 
policy board, may have used his government position for private 
financial gain. It could be that he did not use his position for 
private financial gain, but I am alarmed with a number of lucrative 
government contracts that were recently awarded to the company formerly 
headed by the Vice President of the United States, Dick Cheney.
  What I am troubled about is the apparent link between the private 
financial gains made by the administration and their friends and the 
administration's prosecution of the war in Iraq. In the short term, 
American businesses could stand to gain nearly $2 billion in government 
contracts for reconstruction projects in Iraq; and over the long run, 
over the long term, the next 3 years, the United Nations Development 
Program estimates it will cost up to $30 billion or more to rebuild 
that country. Indeed, some of that money has already been awarded, 
including a contract to a subsidiary of Halliburton Company, which the 
Vice President was the CEO of from 1995 to the year 2000.
  Many in the government are already benefiting from these payouts, 
including Mr. Richard Perle, who, for example, is on the board of 
directors for Onset Technology. Onset is the world's leading provider 
of message conversion technology. The company's customers include 
Bechtel, a well-known government contractor widely considered the

[[Page H2510]]

leading candidate for rebuilding the Iraqi infrastructure, and Raytheon 
Company, which is a provider of defense electronics, including the 
Patriot and the Tomahawk missiles.
  There are many ways in which Mr. Richard Perle could be benefiting 
from his government position on the Defense policy board. For example, 
he has contracted with bankrupt telecommunications company Global 
Crossing, Limited to try to win the United States Government approval 
of its $250 million chapter 11 buyout by two Asian companies, Hutchison 
Whampoa, controlled by the Hong Kong billionaire Li Ka-shing, and 
Singapore Technologies Telemedia, a phone company controlled by the 
Government of Singapore itself.
  Mr. Perle was being paid $125,000 for his efforts but stood to reap a 
$600,000 bonus if the sale was approved by his superior, Secretary of 
Defense Donald Rumsfeld. Both the Department of Defense and the Federal 
Bureau of Investigation were opposed to the sale for national security 
reasons because it would place Global Crossing's fiber optic network, 
used by the United States Government, under foreign control.
  In a March 7, 2003, affidavit, Mr. Perle said, ``As the chairman of 
the Defense Policy Board, I have a unique perspective on and intimate 
knowledge of the national defense and security issues that will be 
raised by the review process.'' Mr. Perle even acknowledged contacting 
at least one government official on Global Crossing's behalf, though he 
refused to identify this person. And though Mr. Perle said he is no 
longer lobbying on Global Crossing's behalf and will donate his 
$125,000 fee to American servicemen and their families, which I 
applaud, the fact remains that he may well have used his government 
position improperly to secure this fee. It is not relevant what he 
chooses to do with the money after he gets it.
  Mr. Richard Perle also serves as managing partner of a private 
venture capital firm called Trireme Partners that invests primarily in 
companies that deal in goods and services related to national security. 
Pulitzer Prize-winning journalist Seymour Hersh recently reported that 
on January 3 of this year, Mr. Perle met with Saudi businessmen, 
including arms dealer Adnan Kashoggi, in Marseilles, France, to secure 
their investment in Perle's company.
  The report contains a disturbing quote from Prince Bandar bin Sultan, 
the Saudi ambassador to the United States, and he said, ``There were 
elements of the appearance of blackmail. `If we get in business, he'll 
back off in Saudi Arabia,' as I have been informed by participants in 
the meeting.'' Though Perle denied that securing investment in his 
company was the purpose of the meeting, he said that he did meet with 
the Saudis concerning Iraq.
  There is also concern about Perle's position as a nonexecutive on the 
board of directors of software developer Autonomy, a data mining 
company that lists the Defense Department and Homeland Security 
Department as customers. For example, last October the company won a 
major contract with Homeland Security. While Mr. Perle has drawn no 
salary, he has received more than 120,000 share options from Autonomy.
  Mr. Perle's award of these share options gives him a direct financial 
stake in the success of this company. Indeed, the National Association 
of Pension Funds recently recommended that shareholders abstain when 
Mr. Perle comes up for reappointment this summer because the group 
feels that share options compromise the independent status of the 
independent directors such as Perle.
  In yet what some term an amazing incident on March 19 of this year, 
Mr. Perle spoke in a conference call sponsored by Goldman Sachs, in 
which he advised participants on possible investment opportunities 
arising from the war in Iraq. The conference title was ``Implication of 
an Imminent War: Iraq Now. North Korea Next?'' Clearly, Mr. Perle has 
little regard for the conflict-of-interest rules that are in place for 
government officials, and I am assuming in that statement that he is 
aware of the rules in the first place.
  The most recent Perle revelation is that while on the Defense policy 
board he advised a major American satellite maker, Local Space and 
Communications, as it faced government accusations that it improperly 
transferred rocket technology to China.
  In an attempt to divert us from continuing to look into these 
matters, Mr. Perle has recently announced that he would immediately 
step down as chairman of the Defense policy board last week. Yet he 
does remain on the board as a member, along with 29 others.
  According to a recent study by the Center for Public Integrity, of 
the 30 Defense policy board members, some of them have ties to 
companies that have won more than $76 billion in defense contracts in 
last year and the year before. Indeed, four members are, in fact, 
registered lobbyists, one of whom represents two of the three largest 
defense contractors.

                              {time}  1945

  Perle, like the others, continues to be a key adviser to the 
administration on defense issues, even as he pursues his personal 
business in the same area, a potential violation of the Federal 
criminal ethics rules.
  In order to get to the bottom of this matter, I plan to ask the 
distinguished Secretary of Defense, Secretary Donald Rumsfeld, to 
publicly release the financial disclosure forms that each member of the 
board must file with his office. To date, these forms have not been 
seen by anyone outside the Pentagon. I am further requesting of the 
Secretary of Defense to release the minutes of all meetings held by the 
Defense policy board so that we can see whether issues relating to the 
private financial interests of the members have been discussed. There 
are persons on my staff who have security clearance and can view the 
minutes of these meetings without any danger of compromising national 
security. As a matter of fact, I would be willing to do so myself. Of 
course, regardless of what was discussed at the meeting, the fact still 
remains that the members of the board are still government employees 
who simultaneously sit on the boards of and are employed by private 
companies that can and do benefit from Defense Department contracts. 
This is a direct and disturbing conflict of interest.
  Mr. Perle and the other members of the Defense policy board are not 
the only ones capitalizing on the war in Iraq. I turn now to the Vice 
President of the United States, whose former company, Halliburton, has 
already secured a number of contracts in the Middle East since the Vice 
President took office. For example, on March 25 of this year, the 
United States Army announced that it awarded the main Iraq oil well 
firefighting contract to a unit of Halliburton, which incidentally was 
let without any bidding whatsoever. Furthermore, it was reported that 
Halliburton had been working closely with U.S. Army engineers prior 
even to the awarding of the contract.
  This was not the first time Halliburton has profited from a 
government contract since the Bush-Cheney administration has taken 
office. Halliburton recently secured a $140 million contract by the 
Saudi Arabian Government through their state-owned petroleum firm, 
Saudi Aramco, to develop oil fields in their country. And a Halliburton 
subsidiary was also hired by the Saudis to build a $40 million ethylene 
plant.
  Now, it is a matter of record that Halliburton gave nearly $18,000 to 
the Bush-Cheney Presidential campaign of 2000. There is some concern 
that these campaign contributions from Cheney's former company, coupled 
with Halliburton's success in securing government contracts under this 
administration, at the very least create the appearance of favored 
treatment. And while the Vice President divested nearly all of his 
financial interests in Halliburton when he stepped down as CEO to be 
President Bush's running mate, he still continues to receive $1 million 
a year in deferred compensation from his Halliburton severance package. 
And though he sold most of his shares when he left the company, he 
retained options worth in the range of $8 million. Like Perle's 
donation of his $125,000 fee to war victims, the Vice President has 
also arranged to pay any profits derived from his Halliburton stock to 
charity. How nice. It seems, Madam Speaker, that the Bush 
administration is not opposed to using government position for private 
gain as long as one does not keep all the profits for oneself.

[[Page H2511]]

  Quite frankly, like Mr. Perle, it is time for the Vice President to 
make a much fuller disclosure than he has up till now. The American 
people have a right to know if their officials are or are not using 
their office for self-interested reasons. From the evidence already 
made public, Mr. Perle and others really should, and I recommend this, 
give a full accounting of their business dealings; and the Vice 
President must completely divest himself of any and all financial ties 
to Halliburton. Then the American people can be sure that their 
representatives in Washington, their leaders, are working for the good 
of the many and not in any kind of personal way to benefit themselves.
  Now, while it is true that Halliburton, and I am not picking on them, 
but they are the subject of these discussions, while it is true that 
Halliburton is now out of the running for the prime contract to rebuild 
Iraq, and I presume they took themselves out, there is nothing that 
prevents them from being subcontractors in many instances.
  Madam Speaker, I am submitting for the Record a couple of articles, 
from the Washington Post and even from the Wall Street Journal, which 
are critical of Mr. Perle. I quote from today's paper: ``Our own view 
is that Mr. Perle should have understood that Global Crossing was 
politically toxic.'' As well, Madam Speaker, I would like to include a 
statement of Mr. Perle that explains his position and what has happened 
in this matter. It is one that I think, in all fairness to him, should 
be reproduced in the Record.

                            [Mar. 31, 2003]

                             For the Record

                           (By Richard Perle)

       Last week I resigned my position as chairman of the 
     advisory Defense Policy Board after news stories, rich in 
     innuendo, suggested that I had acted improperly in advising 
     Global Crossing (the New York Times) and, in a separate 
     matter, in meeting over lunch with two Saudi businessmen (The 
     New Yorker). They provoked an avalanche of stories, mostly 
     repeating points in those first two, with each iteration 
     making more extreme allegations than the last. There was no 
     way I could quickly quell the press criticism of me, even 
     though it was based on factual errors and tendentious 
     reporting. So I wrote to Donald Rumsfeld, ``I have seen 
     controversies like this better and I know that this one will 
     inevitably distract from the urgent challenge in which you 
     are now engaged. I would not wish to cause even a moment's 
     distraction from that challenge.''
       Let me explain my milieu, and context. Government 
     officials, particularly at the most senior level, frequently 
     seek advice from outside the departments they superintended. 
     The perspective of knowledgeable outsiders is often a needed 
     corrective to an institutional view that may have come to 
     dominate the department's thinking. Sometimes senior 
     officials face vexing questions for which their staffs 
     provide unsatisfying answers, or they want a longer-term 
     view. It is only natural that an intellectually curious 
     cabinet officer will reach out to peers who have occupied 
     similar positions, in the hope that their experience will 
     help avoid mistakes or point the way to new ideas. When he 
     does so, he must have confidence that the advice he receives 
     is candid, that it is the product of serious deliberation, 
     and that it is free from advocacy reflecting private 
     interests. The relationship between official and adviser is 
     ultimately one of trust.
       Most often, the people best able to help are professionally 
     involved in the businesses for which the official is 
     responsible: health professionals or pharmaceutical company 
     executives advising the Department of Health and Human 
     Services, for example, or energy company officials advising 
     the Department of energy, or defense executives advising the 
     Department of Defense. If the secretary of defense wants 
     advice on new approaches to the conflict between India and 
     Pakistan, or how far and how fast to press technical 
     innovation in precision-guided weapons, he is unlikely to 
     turn to a dress designer or a molecular biologist. (Hollywood 
     personalities might be similar ill-equipped, but he is likely 
     to get their advice whether he wants it or not.)
       There is no way, of course, to be sure that an outside 
     adviser (or for that matter, a subordinate) is not driven by 
     a private passion, a deeply held conviction that skews his 
     judgment, or a private policy agenda. Only by judging the 
     cogency of the advice he receives--and over time the track 
     record of the adviser--can he be confident that he is 
     receiving balanced counsel.
       But there are ways to ensure that advice does not advance 
     personal financial interests, and they are reflected in rules 
     that apply to the many thousands of individuals serving on 
     hundreds of boards which advise government at all levels. The 
     two key rules are simply and flow from a familiar principle: 
     that public office should not be used for private gain.
       The first rule is full disclosure of the financial 
     interests of the adviser. This is accomplished by annual 
     filings of the board member's business interests, sources of 
     income, clients, share holdings and the like. The second rule 
     is straighforward: If the discussions or advice of the board 
     should involve matters that have a direct and predictable 
     effect on an adviser's financial interests, he is recused 
     from taking part. An adviser following these rules should be 
     free to give his best candid advice, and the official 
     receiving advice should not have to worry that it might be 
     tainted. These are the rules that members of government 
     advisory boards accept when they agree to serve on them. They 
     are not obliged to terminate their employment or abandon 
     business interests, even those that may benefit from 
     decisions of the department or agency they advise.
       Since most people with experience and knowledge relevant to 
     defense and national security policy are likely to earn their 
     livelihood in defense-related enterprises, the possibility of 
     conflict of interest is always present and must be contained 
     by adherence to the two rules, disclosure and recusal. 
     Without those rules, and the protection they afford, few 
     individuals with knowledge or experience would agree to serve 
     on advisory boards, and the benefits of those boards would be 
     lost to policy officials.
       I have been privileged to chair the Defense Policy Board 
     for nearly two years. During that time the board has debated 
     many issues, including U.S. policy with respect to Iraq, 
     weapons of mass destruction, European-U.S. relations, the war 
     on terrorism and the like. The discussions have been lively, 
     the views expressed diverse, and the board's experienced 
     members--former secretaries of state, defense and energy, 
     former directors of Central Intelligence, former speakers of 
     the House from both parties, a former vice-president, 
     professors, a Nobel laureate (in economics) and several 
     recently retired general officers--have used the board's 
     meetings to share their views with the secretary of defense.
       The Times story about my work for Global Crossing gave the 
     impression that I had been retained to use influence stemming 
     from my chairmanship, my ``close ties to current officials,'' 
     to obtain favorable ruling on the acquisition of Global 
     Crossing by a joint venture including a Hong Kong company. 
     This is incorrect. (When I asked the times to publish a 
     letter in reply, I was told that they would not unless I 
     dropped the word ``incorrect.'' Thus I learned that the Times 
     censors letters to the editor.)
       In truth, I was retained to advise Global Crossing on how 
     it could meet the government's security concerns about the 
     transaction, not to ``help overcome Defense Department 
     resistance'' to it. To do this I had to persuade Global 
     Crossing to accept some far-reaching safeguards, which it has 
     now done. My task was to make intelligible to Global Crossing 
     the government's concerns, not to use influence to get the 
     government to set those concerns aside--the precise opposite 
     of the Times' characterization.
       The New Yorker piece by Seymour Hersh is a masterpiece--of 
     falsehood and innuendo. He describes a lunch I had with two 
     Saudi businessmen, during which the situation in Iraq was the 
     sole topic of discussion, as a ``cover story'' for another 
     purpose--eliciting a private Saudi investment in a fund in 
     which I am a partner. And he quotes Saudi Ambassador Prince 
     Bandar to the effect that ``if we get in business,'' I would 
     ``back off on Saudi Arabia.'' Sprinkled in the article are 
     references to conflicts of interest, although the incoherence 
     of the piece reflects Mr. Hersh's Houdini-like twists and 
     turns, intended to question my integrity.
       Neither piece shows that I departed from the rules of 
     disclosure and recusal. Global Crossing was never a topic in 
     my board. Had it been, I would have recused myself. Mr. Hersh 
     implies that my involvement in a fund set up to invest in 
     homeland security technologies might by itself constitute a 
     conflict of interest. But there is nothing in the rules 
     governing the board, or in any reasonable ethical judgment, 
     that would preclude my working in such a fund. He implies 
     there may be a conflict of interest issue because I am a non-
     executive director of a software company, Autonomy, which 
     recently won a contract to supply software for homeland 
     security. But Autonomy never came before my board--specific 
     companies almost never do. Had it, I would have recused 
     myself.
       The Times story further suggested that the very fact that I 
     served on a board--and that this service was mentioned in 
     documents that summarized my background and qualifications--
     was in itself a conflict. But this suggestion cannot be 
     serious. Everybody I work with knows who I am and what I have 
     done, whether I attach my resume to the paperwork or not. 
     Those who serve without any compensation on these boards do 
     so as a civic responsibility. We give time and expertise and 
     we accept the terms of membership, including rules concerning 
     conflicts of interest, willingly. But few of us could do so 
     if we were prevented from working in the areas about which we 
     are consulted, and the value of our advice would be sharply 
     diminished if we left our professional pursuits.
       Somewhere there is probably a board that advises some 
     agency of government on fashion trends. I suppose I could 
     join it without fear that the New York Times or Seymour Hersh 
     would accuse me of a conflict of interest. My wife would be 
     appalled.

                     [From the Wall Street Journal]

                      Center for Public Ignorance

       Richard Perle explains the attack on his tenure at the 
     Defense Policy Board nearby.

[[Page H2512]]

     Our own view is that Mr. Perle should have understood that 
     Global Crossing was politically toxic. But you can tell 
     something else is going on here because the ethics attack is 
     now extending to the rest of the Board.
       An outfit called the Center for Public Integrity--moral 
     modesty is not part of its charter--has issued a report 
     warning that ``at least'' nine of the 30 Board members have 
     some sort of ties to defense contractors. Keep in mind that 
     the Defense Board is purely advisory, its members work 
     without pay and they abide by disclosure rules even though 
     they have zero decision-making power. They serve only because 
     the Secretary of Defense thinks their counsel might 
     occasionally be worth listening to.
       The suggestion nonetheless is that former CIA Director Jim 
     Woolsey, former Secretary of State Henry Kissinger and 
     retired Admiral William Owens, among others, shouldn't be 
     able to serve on the advisory panel. How about taking a phone 
     call from Donald Rumsfeld? Is that also too ``incestuous?'' 
     We have reached the state of ethics in Washington in which 
     Madonna could presumably serve as a Pentagon adviser but 
     people who actually know something about national security 
     cannot.
       The objection is so transparently silly that one can only 
     conclude that the real motivation here is political. The 
     opponents of war with Iraq and change in the Middle East are 
     trying to drive from public influence the folks who speak on 
     behalf of those Bush Administration policies. ``Integrity'' 
     is simply a smokescreen.

                          ____________________