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It looked like a classic case of Washington hubris. Richard N. Perle, chairman of the clubby Defense Policy Board, accepted a contract that would pay him up to $725,000 if he could help bankrupt telecom Global Crossing persuade the Defense Dept. to bless its sale to a Hong Kong conglomerate.
Now Perle -- a former Assistant Defense Secretary in the Reagan years, a leading neoconservative hawk, and close pal of Defense Secretary Donald Rumsfeld -- is paying the price. On Mar. 27, he resigned his chairmanship and gave up his deal with Global Corssing, after coming under criticism that he used his position and access for personal gain. Perle still retains a seat on the policy board, however, and Michigan's John Conyers Jr., the ranking Democrat on the House Judiciary Committee, continues to push the Pentagon's Inspector General to look into Perle's business ties.
ELITE CLUB. Right or wrong, the intersection of Perle's business dealings and his part-time public service is not unusual. Many former officials, industrialists, and political loyalists who advise the Administration have connections that might call into question their impartiality (see "Outside Advisers, Inside Connections"). Indeed, panels such as the President's Foreign Intelligence Advisory Board (PFIAB) and the Defense Policy Board were designed to tap the expertise of Corporate America. Appointees don't get paid, but they do get the cachet that comes with being in an elite club.
They also get sensitive, non-public information on world affairs. In the case of the PFIAB, they can boast top security clearances. And they need not disclose their financial interests.
So with a $75 billion (and counting) war under way and a multibillion-dollar reconstruction plan on the drawing board, hawks on advisory panels are well-positioned. Perle, with fellow Defense Advisory Board members Henry A. Kissinger and Gerald P. Hillman, already has set up a venture-capital firm, Trireme Partners, to invest in defense and homeland-security companies. "It looks like hell," says Charles Lewis, executive director of the nonprofit Center for Public Integrity. "We're waging war, and a number of the people serving on these bodies stand to make money from it."
MONEY IN THE BANK. Kissinger calls that statement "overblown." He agreed to advise Trireme a year ago but has since had no contact with Perle, he says. Still, the former Secretary of State vigorously defends the business dealings of board members. "We try to serve our country," he says. "How the hell are we supposed to make a living?" Hillman could not be reached for comment.
Before his resignation, Perle told BusinessWeek he would advise Global Crossing on how to structure the sale of a stake in its telecom network to Hutchison Whampoa, a Hong Kong company with close ties to Beijing. U.S. intelligence experts worry that the deal could make government communications vulnerable. They are holding up the sale until they are convinced that Hutchison won't have direct control over the network. Perle said his advisory position was "in no way compromised," and Defense Dept. ethics lawyers had given his deal with Global a green light.
Some insiders suggest that such panels might not have that much clout anyway. "In my day, we never paid any attention to them," says Lawrence J. Korb, an Assistant Defense Secretary in the Reagan Administration. Still, a seat on one of the boards says you're a player, and that alone can be like money in the bank.
By Lorraine Woellert in Washington
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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