Ignored Stories - Dianne Feinstein's Lack Of Ethics

It's time once again to add another entry to the category of Ignored Stories. These are very newsworthy stories that the Daily Dead Fish Wrapper chooses not to publish because they would put Democrats (or liberals in general) in a bad light.

Today's entry is about Dianne Feinstien, Democrat (definitely not Democratic) senator from that bastion of liberalism known as California. Back in January, Metroactive published an article exposing a huge ethical conflict of interest Feinstein had in her position on the Military Construction Appropriations subcommittee.

IN THE November 2006 election, the voters demanded congressional ethics reform. And so, the newly appointed chairman of the Senate Rules Committee, Dianne Feinstein, D-Calif., is now duly in charge of regulating the ethical behavior of her colleagues. But for many years, Feinstein has been beset by her own ethical conflict of interest, say congressional ethics experts.

Each year, MILCON's members decide which military construction projects will be funded from a roster proposed by the Department of Defense. Contracts to build these specific projects are subsequently awarded to such major defense contractors as Halliburton, Fluor, Parsons, Louis Berger, URS Corporation and Perini Corporation. From 1997 through the end of 2005, with Feinstein's knowledge, Blum was a majority owner of both URS Corp. and Perini Corp.

While setting MILCON agendas for many years, Feinstein, 73, supervised her own staff of military construction experts as they carefully examined the details of each proposal. She lobbied Pentagon officials in public hearings to support defense projects that she favored, some of which already were or subsequently became URS or Perini contracts. From 2001 to 2005, URS earned $792 million from military construction and environmental cleanup projects approved by MILCON; Perini earned $759 million from such MILCON projects.

In her annual Public Financial Disclosure Reports, Feinstein records a sizeable family income from large investments in Perini, which is based in Framingham, Mass., and in URS, headquartered in San Francisco. But she has not publicly acknowledged the conflict of interest between her job as a congressional appropriator and her husband's longtime control of Perini and URS—and that omission has called her ethical standards into question, say the experts.

The article goes on to show how Feinstein took (or rather, misused) information provided to her that was supposed to help her avoid a conflict of interest and used it to help her husband's companies.

The tale thickens with the appearance of Michael R. Klein, a top legal adviser to Feinstein and a long-time business partner of Blum's. The vice-chairman of Perini's board of directors, Klein was a partner in Wilmer, Cutler & Pickering, a powerful law firm with close ties to the Democratic Party, for nearly 30 years. Klein and Blum co-own ASTAR Air Cargo, which has military contracts in Iraq and at Guantanamo Bay, Cuba. Klein also sits on the board of SRA International, a large defense contractor.

In an interview with this reporter in September, Klein stated that, beginning in 1997, he routinely informed Feinstein about specific federal projects coming before her in which Perini had a stake. The insider information, Klein said, was intended to help the senator avoid conflicts of interest. Although Klein's startling admission was intended to defuse the issue of Feinstein's conflict of interest, it had the effect of exacerbating it.

Klein said that he regularly gave Feinstein's chief of staff, Mark Kadesh, lists of Perini's current and upcoming contractual interests in federal legislation, so that the senator would not discuss, debate, vote on or participate in matters that could affect projects in which Perini was concerned.

"Earmarks, you know, set asides, you name it, there was a system in place which on a regular basis I got notified, I notified her office and her office notified her," Klein said.

"We basically identified any bid that Perini was going for and checked to see whether it was the subject of already appropriated funds or funds yet to be appropriated, and if it was anything that the senator could not act on, her office was alerted and she did not act on it."

This is an extraordinary thing for Klein and the senator to do, since the detailed project proposals that the Pentagon sent to Feinstein's subcommittee for review do not usually name the firms already contracted to perform specific projects. Nor do defense officials typically identify, in MILCON hearings, which military construction contractors were eligible to bid on upcoming work.

In theory, Feinstein would not know the identity of any of the companies that stood to contractually benefit from her approval of specific items in the military construction budget—until Klein told her.

Klein explained, "They would get from me a notice that Perini was bidding on a contract that would be affected as we understood it by potential legislation that would come before either the full Congress or any committee that she was a member of. And she would as a result of that not act, abstain from dealing with those pieces of legislation."

However, the public record shows that contrary to Klein's belief, Feinstein did act on legislation that affected Perini and URS.

For example:

  • At a MILCON hearing in 2001, Feinstein interrogated defense officials about the details of constructing specific missile defense systems, which included upgrading the early warning radar system at Cobra Dane radar on Shemya Island, Alaska. In 2003, Perini reported that it had completed a contract to upgrade the Cobra Dane radar system. It has done similar work at Beale Air Force Base in California and in the United Kingdom. URS also bids on missile defense work.
  • In the 2002 MILCON hearings, Feinstein questioned an official about details of the U.S. Army's chemical demilitarization program. URS is extensively involved in performing chemical demilitarization work at key disposal sites in the United States.
  • At that same hearing, Feinstein asked about the possibility of increasing funding for anti-terrorism-force protection at Army bases. The following year, on March 4, 2003, Feinstein asked why the anti-terrorism-force protection funds she had advocated for the year before had not yet been spent. On April 21, 2003, URS announced the award of a $600 million contract to provide, among other services, anti-terrorism-force protection for U.S. Army installations.
  • Beginning in 2003, both Perini and URS were awarded a series of open-ended contracts for military construction work around the world, including in Iraq and Afghanistan. Under Feinstein's leadership, MILCON regularly approved specific project "task orders" that were issued to Perini and URS under these contracts.
  • At a March 30, 2004, MILCON hearing, Feinstein grilled Maj. Gen. Dean Fox about whether or not the Pentagon intended to prioritize funding the construction of "beddown" maintenance facilities for its new airlifter, the C-17 Globemaster. After being reassured by Fox that these funds would soon be flowing, Feinstein said, "Good, that's what I really wanted to hear. Thank you very much. Appreciate it very much, General." Two years later, URS announced a $42 million award to build a beddown maintenance facility for the C-17 at Hickam Air Base in Hawaii as part of a multibillion dollar contract with the Air Force. Under Feinstein's leadership, MILCON approved the Hickam project.
  • In mid-2005, MILCON approved a Pentagon proposal to fund "overhead coverage force protection" in Iraq that would reinforce the roofs of U.S. Army barracks to better withstand mortar rounds. On Oct. 13, 2005, Perini announced the award of a $185 million contract to provide overhead coverage force protection to the Army in Iraq.
  • In the 2005 MILCON hearings, Feinstein earmarked MILCON legislation with $25 million to increase environmental remediation at closed military bases. Year after year, Feinstein has closely overseen the environmental cleanup and redevelopment of McClellan Air Force Base near Sacramento, frequently requesting that officials add tens of millions of dollars to that project. URS and its joint ventures have earned tens of millions of dollars cleaning up McClellan. And CB Richard Ellis, a real estate company headed by Feinstein's husband Richard Blum, is involved in redeveloping McClellan for the private sector.
  • And the article goes on to show in great detail how the fortunes of these two firms somehow improved tremendously once Feinstein became of member of the subcommittee. Interestinly enough it also showed how Feinstein was against the creation of an office of public integrity.

    Last week, the Senate voted to close some significant loopholes in its ethics rules. But it stopped short of creating an office of public integrity, which would independently monitor lobbyists and members of Congress for ethical compliance. Setting her own limits on the extent of reform she will countenance, Feinstein says she is opposed to the creation of an independent congressional ethics watchdog. "If the law is clear and precise, members will follow it," she assured The New York Times on Nov. 18, 2006.

    The problem with the existing rules governing congressional ethics is that they are neither clear nor precise, and neither are they effective. Senate rules governing conflicts of interest are so vaguely worded, say government watchdogs, that short of stashing cash bribes in the refrigerator, the line between serving constituents and serving oneself is often blurred. The public record shows that Feinstein has a history of crossing that blurry line.

    Hmmm, she wouldn't want her dealings with her husband's company to come under scrutiny now, woul she?

    Then, as also published by Metroactive, Feinstein stepped down from her position on the subcommittee.

    SEN. Dianne Feinstein has resigned from the Military Construction Appropriations subcommittee. As previously and extensively reviewed in these pages, Feinstein was chairperson and ranking member of MILCON for six years, during which time she had a conflict of interest due to her husband Richard C. Blum's ownership of two major defense contractors, who were awarded billions of dollars for military construction projects approved by Feinstein.

    As MILCON leader, Feinstein relished the details of military construction, even micromanaging one project at the level of its sewer design. She regularly took junkets to military bases around the world to inspect construction projects, some of which were contracted to her husband's companies, Perini Corp. and URS Corp.

    Perhaps she resigned from MILCON because she could not take the heat generated by Metro's expose of her ethics (which was partially funded by the Investigative Fund of the Nation Institute). Or was her work on the subcommittee finished because Blum divested ownership of his military construction and advanced weapons manufacturing firms in late 2005?

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    Hmm, good question. But wait; there's more. Not only did she steer huge contracts towards her husbans' companies, she also failed in her duty to provide medical care for wounded vets.

    The MILCON subcommittee is not only in charge of supervising military construction, it also oversees "quality of life" issues for veterans, which includes building housing for military families and operating hospitals and clinics for wounded soldiers. Perhaps Feinstein is trying to disassociate herself from MILCON's incredible failure to provide decent medical care for wounded soldiers.

    Two years ago, before the Washington Post became belatedly involved, the online magazine Salon.com exposed the horrors of deficient medical care for Iraq war veterans. While leading MILCON, Feinstein had ample warning of the medical-care meltdown. But she was not proactive on veteran's affairs.

    Feinstein abandoned MILCON as her ethical problems were surfacing in the media, and as it was becoming clear that her subcommittee left grievously wounded veterans to rot while her family was profiting from the occupations of Iraq and Afghanistan. It turns out that Blum also holds large investments in companies that were selling medical equipment and supplies and real estate leases—often without the benefit of competitive bidding—to the Department of Veterans Affairs, even as the system of medical care for veterans collapsed on his wife's watch.

    As of December 2006, according to SEC filings and www.fedspending.org, three corporations in which Blum's financial entities own a total of $1 billion in stock won considerable favor from the budgets of the Department of Defense and the Department of Veterans Affairs:

     

  • Boston Scientific Corporation: $17.8 million for medical equipment and supplies; 85 percent of contracts awarded without benefit of competition.
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  • Kinetic Concepts Inc.: $12 million, medical equipment and supplies; 28 percent noncompetitively awarded.
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  • CB Richard Ellis: The Blum-controlled international real estate firm holds congressionally funded contracts to lease office space to the Department of Veterans Affairs. It also is involved in redeveloping military bases turned over to the private sector.
  • Now, let's ask the usual question in a case like this; what if it had been a Republican? Simple; there would have been huge headlines and loud demands for an investigation, subpoenas, hearings, the works. But since this is a Democrat, it is swept under the carpet and ignored. I can already hear the editors justification on their blog about how it wasn't relevant, just like the ignored story about the former ACLU president arrested for child porn wasn't relevant since it happened 3,000 miles away. I guess since Washington D.C. is that far away, that must mean it's not relevant.

     

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