Little Country Lost is no longer maintained; you can view the author's latest work at Congressional Dish is a weekly podcast pointing out the corporate influence in the bills passed by Congress.

Wednesday, December 5, 2007

Diane Feinstein: Corrupt War Profiteer

A few months ago, I wrote an open letter to Diane Feinstein after she voted in favor of giving the Bush Administration expanded power to spy on Americans. I couldn’t figure out why, as a highly respected Democrat, Diane Feinstein would be so willing to go along with the Bush Administration’s policies. After all, it wasn’t the first time she had voted with the neo-conservatives. She voted in favor of giving President Bush the authority to attack Iraq in 2002. She voted for the Patriot Act. She voted to extend the Patriot Act. She voted in favor of condemning, and in effect her Democratic base, for questioning the motives of General Petreaus. She voted in favor of confirming Michael Mukasey as Attorney General, even though he made it quite clear he would bend the rules for the Bush Administration. As a Democrat, why would she do these things?

It turns out that she may be going along with Bush Administration policies because she is, for all intents and purposes, a lot like the Bush Administration. An investigation by Peter Byrne, which was not covered by the mainstream press, discovered that from 2001 through 2005 Diane Feinstein used her position as Chairman of the Military Construction Appropriations Subcommittee (MILCON) to funnel huge amounts money to Perini Corporation and URS Corporation, companies that were, at the time, largely owned by her husband, Richard C. Blum. The enormous surge in profits for Perini Corporation and URS Corporation resulted in millions of dollars of additional personal wealth for Diane Feinstein’s immediate family, making her just as much of a war-profiteer as Dick Cheney via Halliburton.

During her tenure as Chairman of MILCON, the committee in charge of deciding which military construction projects will be funded from a list proposed by the Department of Defense, projects approved by Diane Feinstein resulted in $1.5 billion dollars worth of contracts for her husband’s companies, split almost evenly down the middle with Perini Corporation receiving $759 million and URS Corporation receiving $792 million.

This kind of money was unusual for these two companies. URS Corporation received $24 million dollars in 2000 for military construction work. One year later, before the Iraq and Afghanistan wars but after Diane Feinstein became of the Chairman of MILCON, URS Corporation’s federal paycheck rose to $184 million for military construction work. In 2000, Perini Corporation was struggling, receiving $7 million a year from federal contracts. Their specialty at the time was building casinos. By 2004, however, the company had transformed itself into a defense contractor and earned $444 million dollars from federally funded projects. It’s hard to believe that this simultaneous boom in federal business, which coincides with Feinstein’s appointment as the Chairman of MILCON, is a coincidence.

In theory, as Chairman of MILCON, Diane Feinstein would not have known which companies would be bidding on and/or receiving the contracts to complete the projects funded by MILCON. However, Michael Klein, a legal adviser to Diane Feinstein and business partner of her husband, admitted that he had consistently given lists to Diane Feinstein that told her which projects Perini Corporation would stand to benefit from. He volunteered this information to the investigator believing that Diane Feinstein had used the information to recuse herself from those appropriations. But, according to Byrne, “the public record shows that contrary to Klein's belief, Feinstein did act on legislation that affected Perini and URS.”

The Feinstein family is not just profiting from projects related to the war. One of the more egregious and clear examples of Diane Feinstein’s conflict of interest involved the clean up of closed military bases in the United States. According to Peter Byrne, “Year after year, Feinstein has closely overseen the environmental cleanup and redevelopment of McClellan Air Force Base near Sacramento, frequently requesting that officials add tens of millions of dollars to that project.” From 2000 to 2005, URS Corporation and its partners, which specialize in environmental consulting and engineering work at military bases, was given $204 million for work at McClellan Air Force Base.

The following is a revealing excerpt of a March 2002 exchange between Diane Feinstein and Assistant Secretary of Defense Nelson F. Gibbs:

Sen. Feinstein. Is the Air Force capable of executing greater [cleanup] funding in 2003 at McClellan?
Mr. Gibbs. Yes, ma'am.
Feinstein. And how much would that be? How about $22 million?
Gibbs. That would be very close. That would be almost exact as a matter of fact. . . . If you would like, I can provide for you a list of those individual projects.
Feinstein. I would. If you would not mind. Thank you very much.

The week after this exchange took place, Diane Feinstein received a memo from Gibbs, showing the addition of $23 million to the McClellan Air Force Base clean-up project. This money was specifically set aside for groundwater remediation, a URS Corporation specialty.

And the cherry on top: CB Richard Ellis, the real estate company also headed by Diane Feinstein’s husband, Richard C. Blum, is redeveloping McClellan Air Force Base for the private sector.

This is just one of many examples of Diane Feinstein's conflict of interest issues provided by Peter Byrne in his investigative report.

According to Peter Byrne, “In 2005, Roll Call calculated Feinstein's wealth, including Blum's assets, at $40 million, up 25 percent from the year before.” In addition, Diane Feinstein’s husband, Richard C. Blum, resigned from the URS board of directors and sold 5.5 million URS Corporation shares, worth about $220 million at market price.

Diane Feinstein resigned as Chairman of MILCON in March 2007, after Peter Byrne’s expose was printed. But she took over as Chairman of the Senate Rules Committee in 2006, which is the committee in charge of oversight of conflict of interest situations. This is probably the reason that no investigation into her conduct has been launched.

This post is only a fraction of the information from Byrne’s investigation. For the whole story, check out his article. He also wrote a follow up explaining why most people never saw his report.

And for any California residents that read this post… we elected Diane Feinstein to her third term in 2006, meaning that unless we recall her, she will stay in the Senate until 2012. While we unfortunately have bigger fish to fry at the moment (the Bush Administration), recalling Diane Feinstein should probably be added to our To Do List.


Anonymous said...

jen, i hope more people read this!

Anonymous said...

At the time of the "increase" of defense contracts URS acquired EG&G, one of the biggest DOD logistics contractor. So the "increase" is really the EG&G contracts showing up as URS. A 10 minutes of research on Google would tell you that. Please, next time educate yourself first.

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