The New York Times 21 March, 2003

Pentagon Adviser Is Also Advising Global Crossing

by Stephen Labaton

Even as he advises the Pentagon on war matters, Richard N. Perle, chairman of the influential Defense Policy Board, has been retained by the telecommunications company Global Crossing to help overcome Defense Department resistance to its proposed sale to a foreign firm, Mr. Perle and lawyers involved in the case said today.

Mr. Perle, an assistant defense secretary in the Reagan administration, is close to many senior officials, including Defense Secretary Donald H. Rumsfeld, who appointed him to lead the policy board in 2001. Though the board does not pay its members and is technically not a government agency, it wields tremendous influence in policy circles. And its chairman is considered a "special government employee," subject to federal ethics rules, including one that bars anyone from using public office for private gain.

Mr. Perle and his lawyer said yesterday that his involvement with Global Crossing did not violate the ethics rules.

According to lawyers involved in the review and a legal notice that Global Crossing is preparing to file soon in bankruptcy court, Mr. Perle is to be paid $725,000 by the company, including $600,000 if the government approves the sale of the company to a joint venture of Hutchison Whampoa, controlled by the Hong Kong billionaire Li Ka-shing, and Singapore Technologies Telemedia, a phone company controlled by the government of Singapore.

Lawyers said today that Mr. Perle had been helping Global Crossing for several weeks. They said he was brought in as a prominent Republican with close ties to the current officials. He has taken on a particularly important role, they said, since the company recently pulled back its request for the government to clear the sale in the face of opposition from the Defense Department and the Federal Bureau of Investigation. Those agencies have said that the proposed deal presents national security and law enforcement problems, because it would put Global Crossing's worldwide fiber optics network -- one used by the United States government -- under Chinese ownership.

Mr. Perle and his lawyers were preparing to file an affidavit dated March 7 and a legal notice dated today, March 20, that said he was uniquely qualified to advise the company on the matter because of his job as head of the Defense Policy Board.

But after a reporter raised questions today about whether Mr. Perle was using his job at the Defense Policy Board for the benefit of a client, they said the references to his job should not have been in the legal papers and would be deleted before they were filed in the bankruptcy proceeding.

In the March 7 affidavit, Mr. Perle said, "As the chairman of the Defense Policy Board, I have a unique perspective on and intimate knowledge of the national defense and security issues that will be raised by the CFIUS review process that is not and could not be available to the other CFIUS professionals." The company used similar language in its legal notice.

CFIUS refers to the Committee on Foreign Investment in the United States, a government group that includes representatives from the Defense Department and other agencies. It has been considering the deal and has the power to block it. "CFIUS professionals" refers to the other lawyers and lobbyists who have been trying to get the committee to approve the deal.

Mr. Perle, in an interview late this afternoon, said that he had not noticed the language in the affidavit and that it was an erroneous reference because the Defense Policy Board has nothing to do with reviewing the sale of American companies to foreign investors.

"It was drafted by the lawyers, and I frankly didn't notice it," he said.

Shortly after that interview, Mr. Perle called back and said that he remembered that the language concerning the Defense Review Board had appeared in an earlier draft of the affidavit and that he had struck it out because it was incorrect.

"You have a draft that I never signed," he said.

After consulting with a company lawyer, Mr. Perle called back and in a third conversation said that he had taken the phrase out of the affidavit "because it seemed inappropriate and irrelevant" but that someone put it back in the document and he signed it without noticing it.

"This was a clerical error, and not my clerical error," he said.

An adviser involved with one of the parties in the case said tonight that Mr. Perle had not read the affidavit closely and that he had, in fact, signed it but that it would be changed before it was filed.

Mr. Perle said he did not seek an ethics opinion as to whether he could work on the Global Crossing matter, because he said it posed no legal problems.

"I've abided by the rules," he said. "The question, I should think, is have I recommended anything to the secretary or discussed this with the secretary, and I haven't," he said, referring to Mr. Rumsfeld. "The alternative is if you are on the board, you can't have any action before the Defense Department. That isn't the rule. If that were the rule, I'd have to make a choice between being on an unpaid advisory board and my business."

Mr. Perle said that he was not engaged in lobbying with senior officials at the Defense Department and that his role was to advise Global Crossing on the process of gaining approval. He said his sole discussions with Pentagon officials had been over what assurances they would need to satisfy themselves that a deal would not pose any national security problems.

"I'm not using public office for private gain because the Defense Policy Board has nothing to do with the CFIUS process," he said.

But other lawyers and advisers to the companies involved in the deal said that Mr. Perle had been brought in precisely because he has access to top officials. They noted that Mr. Perle's fee was largely contingent on the deal's being approved, an unusual arrangement in Washington legal circles. And they noted that he was retained after Global Crossing, which has a history of using well-connected lobbyists, had realized that many of the other lawyers and lobbyists had strong Democratic ties but no solid Republican ones.

Among others who have been retained to gain approval of the proposed deal are Thomas F. McLarty III, the former Clinton chief of staff; Stuart E. Eizenstat, a former deputy Treasury secretary, and lawyers at Skadden, Arps, Slate, Meagher & Flom and Dewey Ballantine.

Mr. Perle, who as chairman of the Defense Policy Board has been a leading advocate of the United States' invasion of Iraq, spoke on Wednesday in a conference call sponsored by Goldman Sachs, in which he advised participants on possible investment opportunities arising from the war. The conference's title was "Implications of an Imminent War: Iraq Now. North Korea Next?"