The New Yorker, 17/03/03, pp. 76-81
ANNALS OF NATIONAL SECURITY
LUNCH WITH THE CHAIRMAN
Why was Richard Perle meeting with Adnan Khashoggi?
BY SEYMOUR M. HERSH
At the peak of his deal-making activities, in the nineteen-seventies, the Saudi-born businessman Adnan Khashoggi brokered billions of dollars in aims and aircraft sales for the Saudi royal family, earning hundreds of millions in commissions and fees. Though never convicted of wrongdoing, he was repeatedly involved in disputes with federal prosecutors and with the Securities and Exchange Commission, and in recent years he has been in litigation in Thailand and Los Angeles, among other places, concerning allegations of stock manipulation and fraud. During the Reagan Administration, Khashoggi was one of the middlemen between Oliver North, in the White House, and the mullahs in Iran in what became known as the Iran-Contra scandal. Khashoggi subsequently claimed that he lost ten million dollars that he had put up to obtain embargoed weapons for Iran which were to be bartered (with Presidential approval) for American hostages. The scandals of those times seemed to feed off each other: a congressional investigation revealed that Khashoggi had borrowed much of the money for the weapons from the Bank of Credit and Commerce International (B.C.C.I.), whose collapse, in 1991, defrauded thousands of depositors and led to years of inquiry and litigation.
Khashoggi is still brokering. In January of this year, he arranged a private lunch, in France, to bring together Harb Saleh al-Zuhair, a Saudi industrialist whose family fortune includes extensive holdings in construction, electronics, and engineering companies throughout the Middle East, and Richard N. Perle, the chairman of the Defence Policy Board, who is one of the most outspoken and influential American advocates of war with Iraq.
The Defence Policy Board is a Defence Department advisory group composed primarily of highly respected former government officials, retired military officers, and academics. Its members, who serve without pay, include former national-security advisers, Secretaries of Defence, and heads of the C.I.A. The board meets several times a year at the Pentagon to review and assess the country’s strategic defence policies.
Perle is also a managing partner in a venture-capital company called Trireme Partners L.P??? which was registered in November, 2001, in Delaware. Trireme’s main business, according to a two-page letter that one of its representatives sent to Khashoggi last November, is to invest in companies dealing in technology, goods, and services that are of value to homeland security and defence. The letter argued that the fear of terrorism would increase the demand for such products in Europe and in countries like Saudi Arabia and Singapore.
The letter mentioned the firm’s government connections prominently: "Three of Trireme’s Management Group members currently advise the U.S. Secretary of Defence by serving on the U.S. Defence Policy Board, and one of Trireme’s principals, Richard Perle, is chairman of that Board." The two other policy board members associated with Trireme are Henry Kissinger, the former Secretary of State (who is, in fact, only a member of Trireme’s advisory group and is not involved in its management), and Gerald Hillman, an investor and a close business associate of Perle’s who handles matters in Trireme’s New York office. The letter said that forty-five million dollars had already been raised, including twenty million dollars from Boeing; the purpose, clearly, was to attract more investors, such as Khashoggi and Zuhair.
Perle served as a foreign-policy adviser in George W. Bush’s Presidential campaign—he had been an Assistant Secretary of Defence under Ronald Reagan—but he chose not to take a senior position in the Administration. In mid-2001, however, he accepted an offer from Secretary of Defence Donald Rumsfeld to chair the Defence Policy Board, a then obscure group that had been created by the Defence Department in 1985. Its members (there are around thirty of them) may be outside the government, but they have access to classified information and to senior policymakers, and give advice not only on strategic policy but also on such matters as weapons procurement. Most of the board’s proceedings are confidential.
As chairman of the board, Perle is considered to be a special government employee and therefore subject to a federal Code of Conduct. Those rules bar a special employee from participating in an official capacity in any matter in which he has a financial interest. "One of the general rules is that you don’t take advantage of your federal position to help yourself financially in any way," a former government attorney who helped formulate the Code of Conduct told me. The point, the attorney added, is to "protect government processes from actual or apparent conflicts."
Advisory groups like the Defence Policy Board enable knowledgeable people outside government to bring their skills and expertise to bear, in confidence, on key policy issues. Because such experts are often tied to the defence industry, however, there are inevitable conflicts. One board member told me that most members are active in finance and business, and on at least one occasion a member has left a meeting when a military or an intelligence product in which he has an active interest has come under discussion.
Four members of the Defence Policy Board told me that the board, which met most recently on February 27th and 28th, had not been informed of Perle’s involvement in Trireme. One board member, upon being told of Trireme and Perle’s meeting with Khashoggi, exclaimed, "Oh, get out of here. He’s the chairman! If you had a story about me setting up a company for homeland security, and I’ve put people on the board with whom I’m doing that business. I’d be had"—a reference to
about me setting up a company for homeland security, and I’ve put people on the board with whom I’m doing that business. I’d be had"—a reference to Gerald Hillman, who had almost no senior policy or military experience in government before being offered a post on the policy board. "Seems to me this is at the edge of or off the ethical charts. I think it would stink to high heaven."
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