Judicial Watch, the public-interest legal watchdog organization, announced yesterday it has filed a formal complaint against Defense Advisory Board member and former Chairman Richard Perle, citing alleged violations of government ethics regulations as well as federal laws governing prohibited conflicts of financial interests.
The complaint was filed with the Department of Justice, the Office of Government Ethics and the inspectors general of the Defense Department and the Department of Homeland Security.
On March 25, the New York Times reported that Perle is an adviser to Global Crossing, the bankrupt telecommunications giant that is currently seeking to overcome government opposition to its acquisition by Hutchison Whampoa, a Chinese conglomerate.
The opposition is founded upon perceived threats to national security and law-enforcement concerns arising from what allegedly would be foreign (Chinese) ownership and control of fiber optic lines used by the American military.
In a letter dated March 4, Rep. Dana Rohrabacher, R-Calif., urged Defense Secretary Donald Rumsfeld to conduct a “full investigation” into the sale. Rohrabacher wrote, “Chinese military doctrine stresses information warfare and sabotage of communications systems as a key to successful asymmetrical warfare against the United States.”
After encountering opposition from the Defense Department and the Department of Justice, Global Crossing withdrew its initial proposal last month to re-strategize and submit a second proposal.
Bankruptcy documents indicate Perle’s advisory fee is $725,000, including a contingent payment of $600,000 if Global Crossing succeeds in obtaining approval of its controversial sale to Hutchison Whampoa.
In his March 27 resignation letter as board chairman to Rumsfeld, Perle reportedly claimed that he would not accept compensation from Global Crossing.
“My task was to make intelligible to Global Crossing the government’s concerns, not to use influence to get the government to set those concerns aside,” Perle said.
Judicial Watch maintains, “Irrespective of Mr. Perle’s claims and reported pledges concerning remuneration, Mr. Perle clearly served the corporate interests of Global Crossing while simultaneously acting as chairman of the Defense Advisory Board.”
Hutchison Whampoa’s Li Ka-Shing
Hutchison Whampoa is the holding company of Hong Kong businessman Li Ka-Shing, whose net worth approximates $13 billion.
Li’s companies comprise 15 percent of the market capitalization of the Hong Kong Stock Market, and his holdings include strategic ports, air facilities, hotels, telecommunications and energy assets worldwide. In addition, he is well-known as a philanthropist who donates millions to cultural and humanitarian causes.
Close ties to Chinese government leaders have led several investigative reporters for conservative publications to characterize him as an “agent” of Chinese government interests.
Declassified U.S. government intelligence reports uncovered by Judicial Watch under the Freedom of Information Act portray Li’s relationship with the Chinese Government as close and influential.
The documents are included in Judicial Watch’s complaint.
A U.S. Army South “Intelligence Update” states, “Li is directly connected to Beijing and is willing to use his business influence to further the aims of the Chinese government.”
Regarding Hutchison Whampoa’s controversial takeover of the Panama Canal, the intelligence report states, “Li’s interest in the [Panama] canal is not only strategic, but also as a means for outside financial opportunities for the Chinese government.”
An “Intelligence Assessment” from the U.S. Southern Command’s Joint Intelligence Center states, “Hutchison Whampoa’s owner, Hong Kong tycoon Li Ka-Shing, has extensive business ties in Beijing and has compelling financial reasons to maintain a good relationship with China’s leadership.”
In addition, Li is the founder and a board member of the China International Trust and Investment Corporation, or CITIC. In a 1997 report entitled, “Chinese Military Commerce and U.S. National Security,” the RAND Center for Asia Pacific Policy reported that CITIC acts as a “shell” or front operation on behalf of China’s Peoples’ Liberation Army.
The Judicial Watch complaint concludes, that the billionaire is “an agent of the government of the Peoples’ Republic of China.”
From Hutchison Whampoa’s viewpoint, telecom is simply an integral part of its strategic long-term investment plans. Unlike AT&T, Verizon, Vodaphone and others, Hutchison Whampoa was comparatively unaffected by the telecom slump because it was anchored in other industries that were stable. Now, led by the Chinese version of Warren Buffet, and with $14.5 billion in cash and liquid assets on hand, they are pushing ahead aggressively with bold telecommunications plans, including those for a mutli-national 3G (mobile multi-media) network spanning nine countries.
Perle served as foreign-policy adviser during the presidential campaign of George W. Bush. Rumsfeld subsequently appointed Perle in 2001 as chairman of the Defense Policy Board
While he had no official policymaking role, Perle has been described as a chief advocate of war with Iraq. As chairman of the Defense Policy Board, Perle was considered to be a “special government employee” and therefore subject to the Federal Code of Conduct, which prohibits such employees from participating in an official capacity in any matter in which he or she has a financial interest.
At Rumsfeld’s request Perle remains an active Member of Defense Policy Board.
Perle quit his consulting job with Global Crossing last week and said that he would donate his earnings to charity.
Complaint also names Clinton
The Judicial Watch complaint also cites concomitant allegations of conflicts of interest involving former president Bill Clinton, former Secretary of Defense William Cohen and Democratic National Committee Chairman Terry McAuliffe.
The complaint alleges that Global Crossing and its corporate officials “pumped and dumped” Global Crossing stock for personal gain by:
- purportedly using “swaps” to artificially inflate and enhance the price of Global Crossing stock;
- selling their own stock holdings to unsuspecting buyers at fraudulently inflated prices;
- inducing and otherwise causing unwitting shareholders and investors to hold and not sell Global Crossing securities;
- improperly freezing 401(k) retirement accounts of employees to stop them from selling and depressing the market for Global Crossing securities; and
- maneuvering secretly, for personal gain, and using foreign entities and individuals (including, inter alia, Hutchison Whampoa and Li Ka-Shing) to sell bankrupt Global Crossing assets/affiliates at bargain basement prices substantially below true market value.
In addition, the complaint alleges that political payoffs and the offering of lucrative jobs to retiring government and Pentagon officials were granted in exchange for actions favorable to Global Crossing.
The favorable treatment and favors alleged include:
- the initial awarding of a U.S. military contract worth approximately $450 million despite “obvious national-security problems in the possible transfer of sensitive technology and information, as well as unauthorized access to a sensitive U.S. military telecommunications network to foreign Chinese entities and individuals (including Hutchison Whampoa and Mr. Li Ka-Shing, the Chinese billionaire)”;
- Global Crossing donating to former President Clinton at least $1 million for the presidential library;
- Global Crossing awarding former Secretary of Defense Cohen with $500,000 in consulting fees plus a Directorship on Global Crossing; and
- Global Crossing providing current Democratic Committee National Chairman McAuliffe with $18 million in alleged capital gains – all in exchange for allegedly ignoring financial fraud and serious national-security issues involving Global Crossing and its corporate officials.
“There appears to be a lot of dirty fingerprints all over this Global Crossing deal” said Judicial Watch Chairman and General Counsel Larry Klayman. “Regardless of party affiliation, these officials – both past and current – need to be thoroughly investigated and prosecuted to the fullest extent of the law if the conflicts of interest and pocket-lining can be substantiated. If personal greed trumped their duty to the nation’s security, then they belong in prison – period.”
Global Crossing spokesperson Catherine Berthier told WND, “We’re not commenting on the Justice [sic] Watch matter.” Global Crossing gave WND instead a previously released statement regarding the sale, which reads: “We continue to cooperate with regulatory authorities in completing the approval requirements to consummate the transaction with Hutchison Telecommunications and Singapore Technologies Telemedia. Both Hutchison and ST Telemedia are highly regarded investors in the global telecommunications industry.”
Government officials declined to comment on the complaint.
Judicial Watch also has launched an investigation of Perle’s advisory role with Loral Space and Communications, concerning accusations that the firm improperly transferred rocket technology to China, as reported in the March 28 New York Times article, “Adviser to U.S. Aided Maker of Satellites.”