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For Bush’s New Spy Chief, Job Could Be An Ethics Thicket January 30, 2007

Posted by notapundit in US News, White House.
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By Ted Bridis
Of THE ASSOCIATED PRESS

WASHINGTON (AP)–President George W. Bush’s choice for the nation’s next spy chief would give up his $2 million-a-year job at one of Washington’s premier consulting firms for a position that provides him with considerable influence over lucrative, secret government contracts.

Retired Vice Adm. Mike McConnell could face an unusually daunting challenge avoiding ethical entanglements over his decade-long work as a senior vice president for Booz Allen Hamilton Inc., the consulting giant with sales of $3.7 billion worldwide, according to an Associated Press review of McConnell’s personal finances and business deals.

McConnell has worked as a consultant with some of the same senior U.S. military and intelligence officials he would supervise as director of national intelligence.

In May, for example, McConnell and other company executives met privately in San Antonio with Major Gen. Craig Koziol, a top Air Force intelligence chief in charge of cyberwarfare, according to records obtained by the AP under the Freedom of Information Act. The company bid months later on a related contract from the Air Intelligence Agency, part of the U.S. intelligence community that McConnell would oversee as the national director.

More than half of Booz Allen Hamilton’s sales come from such U.S. government contracts. McConnell’s closest colleagues at the company anticipate intense scrutiny over its future relationship with him as the overseer of the nation’s 16 spy agencies.

“I will never be able to go in and see him in his office,” said Richard Wilhelm, another Booz Allen Hamilton senior vice president who has worked with McConnell for more than 30 years. “He’s said, ‘Unfortunately, I’ll not be able to talk to you guys anymore.’ We’ll have to be very careful.”

McConnell’s Senate confirmation hearing is set for Thursday. An Intelligence Committee member, Sen. Ron Wyden, D-Ore., said he already has urged McConnell to be prepared to discuss his work as a consultant and its implications on the job of chief over all U.S. intelligence agencies. Those agencies rely heavily on work by outside consultants, who often are hired under contracts kept secret for national security reasons.

“I’m going to bring it up,” Wyden said. “I made it clear that I was going to be asking questions about issues relating to his work with contractors.”

Efforts to reach McConnell through the White House and through Booz Allen Hamilton were unsuccessful. Presidential nominees routinely do not speak publicly or with reporters before Senate confirmation hearings.

The White House promised that McConnell will divest any financial holdings in Booz Allen Hamilton if he is confirmed as intelligence chief. In addition to his $1,999,840 salary, McConnell owns $1 million to $5 million in company stock, plus up to $1.15 million more in other investment funds owned through the company, according to financial records he submitted to the White House.

McConnell will earn $186,600 annually as director of national intelligence.

Booz Allen Hamilton and the intelligence director’s office separately said each will vigorously enforce ethics rules related to McConnell and the company.

In a statement, the agency pledged to refer potential business conflicts to ethics officers inside federal agencies.

A Booz Allen Hamilton spokesman, George Farrar, said the company will establish contracting firewalls to avoid conflicts with McConnell. “That has to be the case,” Farrar said. “You have to maintain absolutely by-the-rules contracting.”

McConnell’s nomination comes in the midst of a broad, government-wide review by the intelligence director’s own office about the role of private contractors in U.S. spy agencies. That report, which will examine whether the government hires too many such contractors, is nearly finished but has not yet been sent to Congress.

McConnell, a former director for the National Security Agency until 1996, is described by those who have worked with him as an affable and well-respected intelligence expert. He is credited with recognizing more than a decade ago the risks from electronic attacks by foreigners against important U.S. computer networks – years ahead of many other government officials.

“Mike McConnell prided himself on spotting an issue that had to get done,” said John Tritak, former head of the U.S. Critical Infrastructure Assurance Office, which later hired Booz Allen Hamilton for a project to safeguard banks, utilities and vital electronic networks. “He saw this issue was important, and he saw an opportunity.”

McConnell is still expecting an unspecified lump-sum retirement payment, an unspecified bonus and an unspecified payment to his retirement account from Booz Allen Hamilton, according to his financial records. The company also will continue to pay for his medical and dental insurance.

Separately, McConnell draws $90,944 annually from his Navy retirement and owns smaller amounts of stock in other companies that also work extensively with the U.S. government, including Halliburton Co., Boeing Co., L-3 Communications Holdings Inc., Cisco Systems Inc., Oracle Corp., Microsoft Corp. and others. He also earns $16,000 as a board member for CompuDyne Corp., which sells security systems to the federal government, and $30,000 as chairman of the Intelligence and National Security Alliance, a trade group that lobbies the government on intelligence matters.

It was unclear how much McConnell’s finances have changed since he left U.S. government work in 1996. The National Security Agency, which he led, told the AP it couldn’t locate McConnell’s financial records from that period in its files. It suggested the records might have been destroyed because so much time had passed since he worked there.

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