Probe Clears Acting Defense Chief of Favoring Boeing While at Pentagon -- 2nd Update
26 April 2019 - 4:47AM
Dow Jones News
By Nancy A. Youssef and Gordon Lubold
The Defense Department Office of Inspector General has concluded
that acting Defense Secretary Pat Shanahan didn't seek preferential
treatment for his longtime former employer, Boeing Co., while
serving in government, removing a major hurdle to his formal
nomination to the post.
The investigation focused on Mr. Shanahan's conduct during
meetings and other events he attended as deputy defense secretary,
including those touching on equipment and procurement matters. In
particular, complaints centered on discussions involving the F-35
combat aircraft built by Boeing competitor Lockheed-Martin Corp.
and the KC-46 Pegasus tanker designed by Boeing.
"We determined that Mr. Shanahan did not make comments promoting
or favoring Boeing," part of the 43-page report read. "Rather, Mr.
Shanahan shared his aircraft industry experience to highlight best
practices, decrease costs, and increase performance, not
specifically to promote Boeing or any specific aircraft."
The Office of Inspector General report added: "We also concluded
that Mr. Shanahan did not make comments that specifically
disparaged Boeing's competitors, including Lockheed Martin and its
CEO. We determined that Mr. Shanahan's comments were directed at
holding contractors accountable and saving the Government money,
consistent with his duties as deputy secretary of defense."
President Trump could nominate Mr. Shanahan within days to be
the permanent defense secretary, U.S. officials said, although they
stressed it remains unclear what Mr. Trump will do. Mr. Shanahan
became acting secretary of defense in January following the abrupt
departure of Jim Mattis, who resigned as secretary over policy
differences with Mr. Trump.
The Pentagon's inspector general initiated the investigation
last month after several complaints, including one filed on March
13 by Citizens for Responsibility and Ethics in Washington, an
independent watchdog and advocacy group, citing news reports in
charging that Mr. Shanahan during meetings had made statements
promoting his former employer before subordinates.
The inspector general's report said one complaint came from an
attorney for the Senate Armed Services Committee and several others
were from the office of Sen. Elizabeth Warren (D., Mass.).
While finding no evidence of wrongdoing, the investigation shed
light on the numerous mechanisms put in place for Mr. Shanahan to
avoid a possible conflict of interest, a step commonly taken when a
defense contracting executive takes a high-level post at the
Pentagon.
Secretary of the Air Force Heather Wilson voiced concern about
Mr. Shanahan holding a December 2018 meeting with SpaceX founder
and Chief Executive Elon Musk, given that his company competed with
Boeing on a launch-vehicle contract. Mr. Shanahan sought an ethics
opinion beforehand and thus didn't violate ethical standards, the
inspector general found.
"Secretary Shanahan has at all times complied with his Ethics
Agreement, which screens Boeing matters to another DoD official and
ensures no potential for a conflict of interest with Boeing on any
matter," Mr. Shanahan's spokesman, Army Lt. Col. Joe Buccino,
said.
The inspector general report was based on reviews of 5,600
unclassified documents, 1,700 classified documents and interviews
with 34 witnesses, including Mr. Shanahan, nearly every top service
chief, the secretaries of the Air Force and Navy, the chairman and
the vice chairman of the Joint Chiefs of Staff and Mr. Mattis.
Mr. Mattis is quoted defending his former deputy's approach to
the job, saying: "I didn't pay him to be a shrinking violet when it
came to saving the government money."
The findings were reached relatively quickly, as some
investigations by the inspector general's office last for months.
Mr. Shanahan was briefed on the inspector general's conclusions
late Wednesday, officials said.
If nominated, Mr. Shanahan still faces a confirmation vote in
the Senate, where some members have expressed concern over his
limited policy experience as a decadeslong industry executive.
Mr. Trump, while believed to favor Mr. Shanahan as a defense
chief, also has maintained that he enjoys the flexibility of having
individuals serving in acting capacities.
Mr. Shanahan is the longest-serving acting defense secretary in
the department's history. He served previously as deputy defense
secretary for 17 months.
Write to Nancy A. Youssef at nancy.youssef@wsj.com and Gordon
Lubold at Gordon.Lubold@wsj.com
(END) Dow Jones Newswires
April 25, 2019 14:32 ET (18:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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