[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.

                          ____________________