Donald Trump Pentagon Pick Mattis Made Nearly $1,000,000 On Board Of Defense Contractor

BY AVI ASHER-SCHAPIRO AND DAVID SIROTA

ON 12/02/16 Ibtimes.com

In his farewell address, President Dwight Eisenhower warned that for security and liberty to prosper together, “We must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex.”

Fifty-five years later, a new president is planning to have his Pentagon run by a top official at one of the world’s largest defense contractors. President-elect Donald Trump announced Thursday that he will appoint retired General James Mattis as the U.S. Secretary of Defense. Not only would Mattis be the first general to hold the traditionally civilian position, he would move into the job directly from his position helping to run General Dynamics — a $30-billion colossus that heavily relies on Pentagon contracts overseen by the Defense Secretary.

Mattis is currently listed as one of 13 independent directors of the company. Financial filings reviewed by International Business Times show that since taking the position in 2013, Mattis has been paid $594,369 by General Dynamics, and has amassed more than $900,000 worth of company stock. While on the General Dynamics board, Mattis testified before Congress, where he called caps on defense spending — known as the sequestration— a national security threat. “No foe in the field can wreak such havoc on our security that mindless sequestration is achieving,” he said during the 2015 hearing.

Some legislators have already questioned the legality of a military official being appointed to a traditionally civilian position. Meanwhile, ethics experts interviewed by IBT say Mattis’ link to General Dynamics poses major conflict-of-interest questions for a Defense Department that annually directs more than $250 billion worth of spending to private military contractors. “General Dynamics could try to use this relationships to get access into the Pentagon,” Richard W. Painter, the former chief ethics counsel to President George W. Bush, told IBT. “I am very worried about this.”

General Dynamics and the Trump transition team declined to comment.

Over the last few years, lawmakers and watchdog groups have raised alarms about what they say is a corrupting revolving-door culture between the Pentagon and private industry. In 2008, a survey conducted by the Government Accountability Office (GAO) found that 2,435 former generals, senior executives and acquisition officers later went to work for 52 different major defense contractors. More than 400 of those military figures, the GAO found, took private sector jobs where they competed for specific Pentagon contracts that they previously oversaw.

In the case of Mattis and General Dynamics, the potential conflicts could reach a level “never seen before in the modern era,” said William Hartung, the author of Prophets of War: Lockheed Martin and the Making of the Military-Industrial Complex. .“You’d have to go back to Eisenhower, who appointed the head of General Electric — then a major defense contractor — to be secretary of defense.”

General Dynamics is not just any run-of-the-mill weapons manufacturer that a defense secretary might easily avoid in the job. It routinely ranks among the top five Pentagon contractors and reliably receives over $10 billion a year in deals. The company offers a full spectrum of services to the Pentagon, from information technology support to retrofitting armored combat vehicles. It is also the main exporter of tanks abroad to U.S. allies like Saudi Arabia and Egypt — deals that will rely upon approvals from the incoming Trump administration.

As secretary of defense, Mattis could oversee lucrative new General Dynamics deals: The company has won a number of contracts to build the $100 billion replacement fleet for the Ohio class nuclear submarines. Disagreement over how many submarines will be built and how much each unit should cost has already generated major friction among lawmakers, the Pentagon and watchdogs.

General Dynamics’ business model relies on a significant investment in lobbying. According to the Center for Responsive Politics, the company has spent over $100 million pushing its interests in Washington over the last decade. And filing reports show that it is consistently among the top three contractors directly lobbying the Department of Defense.

With Mattis at the head of the Pentagon, his former employer’s business interests could be a priority, said Hartung, who is now the director of the Arms and Security Project at the Center for International Policy.

“It's got to be reassuring to them that a former board member will be running the Pentagon,” he told IBT. “The possibility of Mattis intervening on their behalf if one of their programs gets into trouble is always there.”  

There are some provisions in place to guard against unethical behavior. Painter, the former Bush administration ethics official, says conflicts laws will require Matthis to sell his holdings in the company.  With Mattis on the board, General Dynamic’s stock price has nearly tripled, and he will be able to take advantage of a tax loophole that allows appointees to postpone capital gains tax when selling stocks to comply with conflict of interest rules.

Painter expects Mattis will be required to recuse himself from any decisions involving General Dynamics for one year. But those working directly below Mattis in the Pentagon hierarchy would have no such prohibition. And there’s nothing to stop Mattis from staying in close contact with his former employer — even as it seeks contracts from a Mattis-run Pentagon. “I’d like him to promise to cease contact as well,” Painter said. “But the law doesn’t extend that far.”

Concerned about corporate-military crossover, Congress in 2008 tasked the Pentagon with keeping a database to track the revolving door. Six years later, though, an Inspector General report found that the Pentagon failed to update its database.

“We really think it’s become corrosive how many senior military officers go to work for defense contractors,” Mandy Smithberger, director of the Straus Military Reform Project at the Center for Defense Information at the Project On Government Oversight, told IBT.

The revolving door, Smithberger said, isn’t just a question of optics: It promotes bad policy decisions. She highlighted a number of examples, including the infamous case of Marine Corps Gen. James E. Cartwright, who fought for a flawed missile defense system furnished by Raytheon — and then joined the Raytheon board.

Mattis has also mixed business interests with his military career. Emails disclosed by the Washington Post Friday show that in 2012, a year before Mattis left the military, he personally intervened to help the controversial blood-testing company Theranos secure approval for military field tests. After he left the Pentagon, Mattis joined the Theranos board.

“So he has not only had potential conflicts, he has acted on behalf of a firm that he later received compensation from — a clear conflict, in my opinion,” Hartung said. “This does not bode well for his treatment of weapons contractors as secretary of defense.”

Trump campaigned on a pledge to tighten federal ethics rules and slow down the revolving door between government and lobbying firms. As an executive branch employee in a Trump administration, Mattis will be obligated to sign an ethics agreement that the federal Office of Government Ethics approves.

Painter, though, said those safeguards shouldn’t reassure Americans concerned about undue corporate influence on government:  “Can someone in the White House tell him with a straight face to recuse himself, with Trump sitting on top of his own business organization?”