Wharton Aerospace & Defense Report

Pentagon Weakens Disclosure Rule for Senior MentorsJuly 23, 2010

The Pentagon has dramatically back-pedaled on financial disclosure rules for mentors — retired generals and admirals who advise the military on strategies and technologies.

Defense Secretary Robert Gates first announced a new policy in April that would restrict how much pay mentors could receive from contractors in order to curb conflicts of interest. At that time, mentors’ public disclosure of financial ties to contractors was to play an important role in the new policy. But William Lynn, deputy defense secretary, announced a new directive this month that does not call for mentors to publicly disclose their business ties or how much they receive from private contractors, according to an article in USA Today.

A Pentagon spokesman told USA Today that Lynn’s directive did not change Gates’ policy because the original policy had no mention of public financial disclosure. However, a Pentagon fact sheet released with Gates’ policy announcement in April clearly stated that any retired military officers who work more than 60 days in a year and receive more than $119,554 in pay "must file a public financial disclosure report. Others file the confidential financial disclosure report."

The key here is the word “public.” Lynn’s directive still calls for “private financial disclosures” based on advice from the Office of Government Ethnics, a Pentagon spokesman told USA Today. The Pentagon will still use these confidential disclosures to find conflicts of interest.

The matter is not ending there. Some members of Congress charge that Lynn’s directive undermines transparency and that lawmakers might mandate public disclosure with new legislation.

"Secretary Gates was exactly right when he initially indicated that public disclosures would be required for those mentors working over 60 days," said Edolphus Towns, a Democrat from New York, who is the House oversight committee chairman. "Public financial disclosures are a cornerstone of ethical and transparent government. Given the important role that senior mentors play in providing critical advice on combat operations, it would be consistent with the goals of the ethics laws for these individuals to file public disclosures."

Gates ordered the new ethics policy after a series of investigations by USA Today revealed that retired officers are paid hundreds of dollars an hour by the military for advice while also receiving consulting fees from private businesses that would like to have their products and services used by the military.

Robert Andrews, a Democrat from New Jersey and chairman of a House defense acquisition reform panel, told USA Today that public disclosure of retired officers' business ties is critical. "We can't evaluate what they're doing without public disclosure."