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DoD News Briefing: Mr. Kenneth H. Bacon, ATSD(PA)

Presenters: Mr. Kenneth H. Bacon, ATSD(PA)
May 17, 1995 1:30 PM EDT

Tuesday, May 16, 1995, 1:30 p.m.

Mr. Bacon: I just wanted to make one announcement here.

The Secretary tomorrow is giving two speeches: one at a federal procurement conference in Lancaster, Pennsylvania, on procurement reform; and he's also giving a speech at West Point tomorrow night on ethics and foreign policy.

On Thursday he's giving two speeches in New York -- both on the Middle East. He's speaking to the Council on Foreign Relations. It's open to press coverage. It's on security in the Persian Gulf. Then he's speaking to the presidents of major Jewish organizations later in the afternoon at 4 o'clock. You can get details from DDI on both of those.

Q: I know the first one's being piped in. How about the second?

A: I'm not positive about that. We'll find out whether the second one will be piped in. There's also a press conference which we're endeavoring to have piped in on Thursday. As a result, there will be no briefing on Thursday.

Q: A press conference Thursday? Where?

A: The press conference will be after his speech at the Council on Foreign Relations. Q&A. It's actually a separate press conference in a separate room.

Q: Will he discuss, in this 4 p.m. speech, will he discuss this Middle East strategy?

A: That's going to be announced tomorrow, as you know, at 2 o'clock here. I think he'll allude to it. I've not seen a text of the second speech yet, so I can't speak with certainty about it at this stage.

Q: It would be helpful if you would endeavor to pipe that one too.

A: We'll do our best.

Are there any questions?

Q: Topics of his speeches tomorrow, is it procurement, or...

A: Didn't I just announce them? He's doing the first one on procurement reform, and the second one on ethics and foreign policy -- the one at West Point.

Q: Has Secretary Perry given any more consideration to unloading investment in those defense contractors?

A: In which defense contractors?

Q: In Cambridge and Delfin, Illgen, ACM. Through that partnership agreement.

A: Your story about that I think was in error in reporting. He has, in fact, tried to sell the interest in that partnership, HQTP.

Q: The administrator said he hadn't.

A: The administrator was in error. I think he'll be writing your newspaper about that. Dr. Perry has tried to sell it. The whole point of that partnership is that the interests in it are not marketable. There is no public market or ready resale market for the interests in the partnership. That's why the Senate Armed Services Committee allowed him to hold on -- along with Drs. Deutch and Kaminski -- to the interest in that partnership.

It's a venture capital fund. These funds typically make investments in firms that are small -- for which there are no ready markets. I think initially they invested in 13 firms, and now there are ten firms remaining in the partnership in which they've invested. He has tried to sell this without success so far.

Q: He had a similar investment partnership that he donated to Stanford. Has he considered just donating his investment?

A: He has considered that, but he has not, at this time, done it. I want to point out that the law dealing with potential conflicts of interest--or the law designed to allow people with private interests to serve publicly without a conflict between the private and public interests--basically contains four remedies. The first is disclosure. The second is divestiture. The third is disqualification. The fourth is waiver. There is nothing in the law that requires public officials to sell their shares. The Senate Armed Services Committee generally does require public officials--senior public officials--in the Pentagon to sell financial interests. In the case of this partnership--because there was no readily available way to sell the shares--he was allowed to hold on to the interest, but he met two of the other remedies. One, there's full disclosure, as you know; and two, he has recused himself or disqualified himself from dealing with any of the companies whose holdings are represented in the partnership.

Q: Having said that, there's still the appearance of a conflict of interest.

A: I believe there's no appearance of a conflict of interest because there's full disclosure and there's recusal. There may be in your mind an appearance of conflict of interest, but I think...

Q: In the public's mind, too. If suddenly JAST gives them $825,000...

A: I think that's a very regrettable and incorrect assertion on your part. This has passed the screen of the Senate Armed Services Committee, it's passed the screen of the ethics operators here. I think it's a dangerous assertion and assumption to put forward the idea that merely because one holds a financial interest in a company, there's an appearance of a conflict of interest. He has fully disclosed this and he's fully disqualified himself from dealing with any of the companies represented by the partnership.

Q: It's the award of the contact. It's very difficult to find out why this company was picked.

A: The company was picked, as you know, through competitive bidding. There were seven or eight other competitors, and it was one of two companies selected to do the job.

Q: The person who awarded the contract would not speak to why he gave it to Cambridge.

A: The person who awarded the contract said that... And we provided you with information explaining why this contractor was selected. So it's unfair to say that you were not provided with the information.

Q: You provided the information which didn't have anything to do with the selection of Cambridge.

A: We provided you with that information and we got information from the contract officer. But the point here is that one, his interest has been fully disclosed; and two, he had absolutely nothing to do with the awarding of this $825,000 contract in 1994. Those are the two signal points that should be paramount here, because there was absolutely no relationship between any of these three gentlemen and the award of that contract.

Q: On Bosnia. Reportedly, the heaviest fighting in over a year around Sarajevo. I believe the British and the French met yesterday and the French, I believe, are awaiting their formal change of government to announce their intentions, but this may not be so. In fact, I heard reports that they had decided to continue in UNPROFOR. But one, I'd ask if you have any comments about the military activities around Sarajevo, the lack of use of NATO air power there, and if you have any information as to whether the mandate, indeed, will be renewed for UNPROFOR.

A: Starting with the last question first, I cannot shed any light on that. You know that Boutros Boutros-Ghali is holding a meeting this afternoon with the Security Council to consider a number of options for continuing the mandate or for dealing with the problem in Bosnia and in Sarajevo generally. What's happened there--the outbreak of the fighting, the attacks against defenseless civilians--is regrettable and it's wrong, and it's something that the UN has been unable to protect against so far. But that's exactly the type of question that the UN will be examining this afternoon and maybe for some time thereafter--as to exactly what can be done in response to this.

Q: Does the DoD believe that a counter-offensive or an offensive--a general increase in fighting--is underway?

A: The Clinton Administration believes that peace is the answer to what's going on in Bosnia, and we have been promoting, as you know, a peace agreement between the two sides there. That's our view.

Q: Did you say he was considering donating this?

A: I said he has considered donating this. He has considered a number of... He has tried to sell it which has not been possible. He has considered donating it. He has not done that as of yet. There is nothing wrong with his holding... There is no reason for him to dispose of this holding. It is perfectly legal and perfectly acceptable under both the law and the ethics rules.

Q: He's going to retain it then?

A: I didn't say that. I said he has tried to sell it. His offer to sell it remains on the table. He has also considered giving it away for reasons of his own. He has decided not to give it away at this stage. But that doesn't mean he won't. It's something that he's considered. He's considered a number of options for dealing with this.

The point to make is there is nothing... This holding is entirely proper, and as I said, it was screened very carefully by the Senate Armed Services Committee. In fact, the holdings of Dr. Deutch were screened by two committees -- both the Senate Armed Services Committee and the Senate Intelligence Committee -- and passed muster both times.

Q: On the subject of the Philippines and our defense treaty with the Philippines. Is it public knowledge, open to the press I guess, the knowledge of the relationship insofar as how far this defense relationship goes between the U.S. military and the Philippines? And the specific reason that that is... The Chinese rebuked the United States offer or suggestion that the Spratly dispute be mediated. So it becomes relevant as to how we might... It's a question we've asked before, about how we might become involved.

A: I hope this answer doesn't shock you, but I know virtually nothing about our defense agreements, if any, with the Philippines. I will get somebody to find out the answer to that question, but I just cannot give you an answer now.

Press: Thank you.

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