It looks like a classic case of Washington hubris. Richard N. Perle, chairman of the clubby Defense Policy Board, has accepted a contract that will pay him up to $725,000 if he can help the bankrupt telecom Global Crossing Ltd. 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 under fire for allegedly using his position and access for personal gain. On Mar. 25, Michigan's John Conyers Jr., the ranking Democrat on the House Judiciary Committee, asked the Pentagon's Inspector General to look into Perle's business ties.
Perle, no stranger to controversy, is likely to get through this dust-up. That's largely because, right or wrong, the intersection of his 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 (table). 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, has already 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."
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.
In a written statement to BusinessWeek, Perle says he will advise Global Crossing on how to structure the sale of a stake in its telecom network to Hutchison Whampoa Ltd., 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 says he won't be lobbying and his advisory position "is in no way compromised." Defense Dept. ethics lawyers have given Perle's deal with Global a green light.
Some insiders suggest that advisory boards may 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.
Corrections and Clarifications
Henry Kissinger did not set up a venture capital firm with Richard Perle called Trireme Partners, to invest in defense and homeland-security companies ("Richard Perle is not alone," Cover Story, Apr. 7). He agreed only to serve on an advisory board to Trireme, which was supposed to meet once a year. It has never met. Kissinger has no financial interest in Trireme, has never received any payment from it, and, since agreeing to act as an adviser, says he has had no discussions about it with Perle.
By Lorraine Woellert in Washington