Warren says Pentagon pick Esper must 'clear any ethics cloud'

Army Secretary Mark Esper testifies at a Senate hearing in March, 2019.


By TONY CAPACCIO | Bloomberg | Published: July 15, 2019

Mark Esper, President Donald Trump's nominee for defense secretary, must do more "to clear any ethics cloud" from his seven years as Raytheon Co.'s top lobbyist, according to Sen. Elizabeth Warren.

Warren, a Democratic presidential contender and a member of the Senate Armed Services Committee that will hold a confirmation hearing with Esper on Tuesday, set out her concerns in a four-page letter obtained by Bloomberg News. While offering some praise for the Army secretary who has been serving as acting defense chief, Warren said a "cordial" meeting last week proved disappointing.

"I am extremely disappointed by your unwillingness to commit to take the steps needed to clear any ethics cloud related to your former lobbying work for Raytheon," the Massachusetts Democrat wrote. "If confirmed as defense secretary, your potential conflicts would raise significant questions about whether the Department of Defense's contracting decisions would favor Raytheon."

She said "you refused to commit to extend" a two-year period for recusal from "participating personally and substantially" in "any particular matter involving Raytheon" that will expire in November.

Pentagon spokesman Jonathan Hoffman said in a statement that Esper has assured Warren "that he is fully committed to following his signed Ethics Agreement, all applicable ethics laws, and the President's Ethics Pledge." He added that Esper will "ensure that any particular matter involving his former employer is screened and referred to another appropriate official." The Pentagon will be responding directly to Warren soon, Hoffman said.

The leaders of the Senate panel that will vote on Esper's nomination -- Republican Chairman Jim Inhofe and top Democrat Jack Reed -- have indicated they are determined to expedite Esper's confirmation for the No. 1 job at the Pentagon, which hasn't had a confirmed chief since Jim Mattis stepped down in December over disagreements with Trump's Syria policy and his "America First" downgrading of alliances.

"We need Senate-confirmed leadership at the Pentagon, and quickly," Inhofe and Reed said in a joint statement last week.

In an interview before Warren's letter was made public, Inhofe said "not one person" on the committee, Republican or Democrat, raised concerns with him about Esper's connections to Raytheon.

Warren could assert a senator's traditional prerogative to put a "hold" on the nomination, which would block action at least temporarily, but she didn't threaten to do so in her letter.

Raytheon was the third-biggest U.S. defense contractor in fiscal 2018, according to data compiled by Bloomberg Government. It's reached a deal to be acquired by United Technologies Corp., the sixth-biggest. That would expand the range of potential conflicts Esper may confront if he's confirmed as defense secretary.

Esper will receive $1 million to $5 million in deferred compensation from Raytheon starting in 2022, reflecting the broad ranges that officials must disclose for the value of their assets, according to his financial disclosure statement.

Warren said in the letter that Esper appears not to have participated in decisions involving Raytheon, in keeping with a 2017 ethics agreement for his post as Army secretary. She said that "if confirmed you must continue not to be involved with any matters that would affect Raytheon's or your own financial interests."

The Massachusetts senator said Esper should take five additional steps, such as recusing himself from "participating in all decisions -- including but not limited to policy, budget, contracting and strategy discussions -- involving Raytheon" or any companies that are competing directly against the Waltham, Massachusetts-based contractor "for any DoD contract."

Esper, 55, outlined in a June 24 "screening agreement" steps for his staff to head off potential conflicts while also citing some potential exceptions from the recusal pledge that would reflect his move to the top of Pentagon decision-making.

Aides said the exceptions cited in the memo, reported last week by Bloomberg News, were fully allowed under ethics law and were similar to those in a screening arrangement for former Boeing executive Patrick Shanahan, who served as acting defense secretary until withdrawing last month.

Among the possibilities Esper cited was that he may be given a waiver if a designated department official and an ethics officer agree that his participation in a matter that may directly affect Raytheon's financial interests is "so important that it cannot be referred to another official."

Warren countered in her letter that Esper's recusal commitment was too limited and should encompass all decisions that could affect Raytheon, not simply those that affect its ability to pay his deferred compensation. She wants Esper to "clarify and amend" the screening memo "to ensure it does not weaken or create loopholes for your recusal commitments."

The memo, if left unchanged, "would appear to allow you to participate in decisions that affect Raytheon's financial standing and should disqualify you from serving as Secretary of Defense, even in an acting capacity," she wrote.

Esper's updated Ethics Agreement could be finalized by the independent Office of Government Ethics and submitted to the Senate panel by Tuesday, according to a Pentagon official who asked not to be identified because the information isn't public.

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