Feinstein Caught in Conflict of Interest on Military Contracts

Billions in military construction projects to husband’s firms were approved by Sen. Feinstein’s committee, Metro Newspapers investigation reveals


San Jose, Calif., January 25, 2007 — Sen. Dianne Feinstein’s husband was a major beneficiary of military appropriations blessed by a subcommittee that she headed, Metro Newspapers reports this week.

Feinstein (D-Calif.) acted in a conflict of interest while approving billions of dollars in military construction expenditures for the global war on terror, according to an investigative story by award-winning journalist Peter Byrne. The story was published jointly in the North Bay Bohemian and Metro Silicon Valley weekly newspapers this week. Research assistance was provided by the Investigative Fund of the Nation Institute.

Following Feinstein’s participation at the legislative level, large contracts were awarded to two firms — URS Corporation and Perini Corporation — that were controlled by an investment group headed by the senator’s spouse, financier Richard C. Blum.

Byrne’s investigation reveals the following details about Feinstein’s service as a member of the United States Senate’s Military Construction Appropriations subcommittee (MILCON):

  • From 1997 through the end of 2005, with Feinstein’s knowledge, her husband’s group held a majority interest in two defense contractors active in Iraq and U.S. military bases: URS and Perini.
  • While setting MILCON agendas, Feinstein supervised her own staff of military construction experts and lobbied Pentagon officials in public hearings.
  • From 2001 to 2005, URS earned $792 million from military construction and environmental cleanup projects approved by MILCON; Perini earned $759 million from MILCON projects.
  • Attorney Michael R. Klein, a top Feinstein legal adviser and long-time Blum business partner, also served as vice-chairman of Perini’s board of directors. In an interview with Byrne 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 instead exacerbated it.
  • Klein explains: “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.”
  • The public record shows, however, that contrary to Klein’s belief, Sen. Feinstein did in fact act on legislation that affected Perini and URS.

The story published in the North Bay Bohemian and Metro Silicon Valley examines the many ways in which Sen. Feinstein committed repeated breaches of ethics as MILCON’s chairwoman or ranking member from 2001-2005.

CONTACT: Gretchen Giles
707.527.1200, ext. 202
ggiles at bohemian.com

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