[Congressional Record Volume 149, Number 53 (Wednesday, April 2, 2003)]
[House]
[Pages H2673-H2674]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
{time} 1800
INQUIRIES OF MEMBERS OF DEFENSE POLICY BOARD AND REQUEST FOR
INVESTIGATION OF MISCONDUCT INVOLVING RICHARD N. PERLE
The SPEAKER pro tempore (Ms. Ginny Brown-Waite of Florida). Under a
previous order of the House, the gentleman from Michigan (Mr. Conyers)
is recognized for 5 minutes.
Mr. CONYERS. Madam Speaker, I rise today to put into the Record a
letter that I have sent to the Office of the Inspector General of the
Department of Defense asking that we investigate or have investigated
the allegations of conflict of interest and other possible misconduct
involving Mr. Richard N. Perle, formerly chairman of the Pentagon's
Defense Policy Board.
As a special government employee, he is caught by all the ethics
rules that preclude and severely limit his ability to operate with
businesses connected with the military.
Madam Speaker, I include for the Record this letter.
The material referred to is as follows:
House of Representatives,
Committee on the Judiciary,
Washington, DC, March 24, 2003.
Hon. Joseph E. Schmitz,
Office of the Inspector General, Department of Defense, The
Pentagon, Washington, DC.
Dear General Schmitz: I am writing to request that your
office immediately open an investigation into allegations of
conflict of interest and other misconduct involving Richard
N. Perle, Chairman of the Pentagon's Defense Policy Board. As
a result of this position, 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. As you know, under the
Inspector General statute, your office is authorized to
conduct investigations into any abuse or misconduct by senior
officials.
I am aware of several potential conflicts that warrant your
immediate review. First, Mr. Perle has contracted with
bankrupt telecommunications company Global Crossing Ltd. to
try to win U.S. government approval of its $250 million sale
to two Asian companies over the objections of the FBI and the
Department of Justice. Perle is being paid $125,000 for his
advice and stands to reap a highly unusual $600,000 bonus if
the sale is approved by the U.S. Committee for Foreign
Investment in the United States (CFIUS), a government group
that includes representatives from the Defense Department.
Although Perle has denied that he has sought to use his
government position to benefit Global Crossing, he has
reportedly signed an affidavit which directly contradicts
this contention. According to the New York Times, in a March
7, 2003 affidavit, Perle stated, ``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 CFIUS review process that
is not and could not be available to the other CFIUS
professionals.'' According to this article, Perle has even
acknowledged contacting at least one government official on
Global Crossing's behalf, though Perle refuses to identify
this person. The fact that Mr. Perle may be reconsidering
filing the affidavit does not alter the existence of the
alleged conflict.
Second, Perle's position on the Board of Directors of
software developer Autonomy, a data mining company that lists
the Defense Department and the Homeland Security Department
as customers would appear to present a significant conflict
with his Defense Department. While Perle has drawn no salary,
he has received more than 120,000 share options from
Autonomy. 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 Perle comes up
for reappointment this summer because the group feels that
share options ``compromise the independent status'' of
independent directors such as Perle.
Third, Mr. Perle 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. Again, this would seem to
present a conflict of interest with his position as Chairman
of the Defense Policy Board. In this regard, Pulitzer Prize-
winning journalist Seymour Hersh recently reported that on
January 3, 2003, that Mr. Perle met with Saudi businessmen,
including arms dealer Adnan Kashoggi, in Marseilles, France,
to secure their investment in Perle's company. The article
contains a highly disturbing quote from Prince Bandar bin
Sultan, the Saudi ambassador to the U.S.: ``There were
elements of the appearance of blackmail--`If we get in
business, he'll back off on Saudi Arabia'--as I have been
informed by participants in the meeting.''
Finally, I would note that it has been reported that on
March 19, 2003, 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's title was ``Implication of an Imminent War: Iraq
Now. North Korea Next?''. Again, I would submit that it is a
conflict of interest for a high ranking government official
to be proffering advice on how to profit from the war.
As the Ranking Member of the House Judiciary Committee,
which has jurisdiction over conflict of interest rules, I
have a strong interest in ensuring that our laws are being
complied with, particularly those which touch on the
integrity of our ethical requirements at a time of war.
Please respond to me through the House Judiciary Committee
Democratic Staff, B 351-C Rayburn House Office Building,
Attn: Perry Apelbaum/Ted Kalo, tel. 202-225-6504, fax 202-
225-7680.
Sincerely,
John Conyers, Jr.,
Ranking Member.
Also, I will place into the Record a letter to the Honorable
Secretary of Defense, Donald H. Rumsfeld, which requests that copies of
financial disclosure be submitted by the members of the Defense Policy
Board to be made public. This is an effort to short-circuit the
investigations of the Inspector General, and also accommodate Mr. Perle
and other members of this board that might be involved in questionable
business dealings with military contractors.
The document referred to is as follows:
House of Representatives,
Committee on the Judiciary,
Washington, DC, April 1, 2003.
Hon. Donald H. Rumsfeld,
Secretary of Defense, 1000 Defense Pentagon, Washington, DC.
Dear Mr. Secretary: I am writing to request copies of the
financial disclosure forms submitted by the members of the
Defense Policy Board as well as the minutes of all past Board
meetings.
As the Ranking Member of the House Judiciary Committee,
which has jurisdiction over conflict of interest rules, I
have a strong interest in insuring that our laws are being
complied with, particularly those which touch on the
integrity of our ethical requirements at a time of war. I
therefore believe it is critical that this material be
provided to help us assess the degree to which members of the
Defense Policy Board face real or perceived conflicts of
interest which would impede their ability to advise the
Defense Department.
I believe such disclosure would be in the best interests of
both the Department and the members of the Defense Policy
Board. Richard Perle himself just wrote in yesterday's Wall
Street Journal that ``the first rule is full disclosure of
financial interests of the adviser . . . the second rule is .
. . if the
[[Page H2674]]
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.'' The
problem is that currently, only your ethics officer receives
the disclosure forms, so only he or she is in a position to
assess whether the rules and safeguards being laid down by
Mr. Perle are being followed. Increased scrutiny and review
of these filings would no doubt lead to greater public trust
and confidence in your Defense Policy Board.
The alternative is to face a continuing and damaging
disclosure of the potential business conflicts of the Board
Members. Just yesterday, my own investigation revealed that
Perle 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
government contractor widely considered the leading candidate
for rebuilding the Iraqi infrastructure and Raytheon Company
which is a provider of defense electronics including the
patriot and tomahawk missiles. I also found out that Perle
holds a directorship in DigitalNet, a Virginia-based
communications company with Army and Defense Department
contracts.
To the extent you are concerned about public disclosure of
this material, I would be willing to develop a procedure
whereby it is reviewed in confidence. As a matter of fact,
several members of my staff have obtained a security
clearance.
I would appreciate your office responding to this letter at
your earliest convenience. Please respond through the House
Judiciary Committee Democratic Staff, B-351-C Rayburn House
Office Building, Attn: Perry Apelbaum/Ted Kalo, tel. 202-225-
6504, fax 202-225-7680.
Sincerely,
John Conyers, Jr.,
Ranking Member.
Madam Speaker, this may serve to end the ongoing e-mails and other
information that I am getting asking me to ask about this, that, and
the other thing. In other words, Madam Speaker, if they were to make
voluntary disclosure, this would put an end to all of this, the public
could be restored in their confidence, and we could move ahead with our
business.
The one matter that is a little puzzling is why Mr. Perle would
resign as chairman but remain as a member of the board, as if the same
ethics requirements do not apply to every member of the board as well
as the chairman. If he feels inclined to explain what motivated him to
step down as chairman but remain on the board, I would love to be
edified by what led to that kind of action.
What we are doing is trying to move this along. The Secretary of
Defense, who nominated Mr. Perle, can expedite this by making these
kinds of disclosures, as well as Mr. Perle himself. So it is in the
spirit of cooperation and responsibility as the ranking member of the
Committee on the Judiciary that I urge my friends in the Defense
Department to accommodate this humble request.
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