Sen. Elizabeth Warren is calling for President Trump’s pick for Under Secretary of the Army to sell his stock in a defense contractor that experts say would pose a clear conflict of interest.
In a federal ethics agreement first reported by The Intercept, Michael Obadal, Trump’s pick for the second most powerful post at the Army, acknowledged held equity in Anduril Industries, where he has worked for two years as an executive. Obadal said that contrary to ethics norms, he will not divest his stock, which he valued at between $250,000 and $500,000.
In a letter shared with The Intercept in advance of Obadal’s confirmation hearing Thursday, Warren, D-Mass., says Obadal must divest from Anduril, calling the current arrangement a “textbook conflict of interest.”
“By attempting to serve in this role with conflicts of interest, you risk spending taxpayer dollars on wasteful DoD contracts that enrich wealthy contractors but fail to enhance Americans’ national security.”
Warren, who sits on the Senate Armed Services Committee, writes that Obadal’s stock holdings “will compromise your ability to serve with integrity, raising a cloud of suspicion over your contracting and operational decision.”
“By attempting to serve in this role with conflicts of interest, you risk spending taxpayer dollars on wasteful DoD contracts that enrich wealthy contractors but fail to enhance Americans’ national security,” Warren writes.
A more detailed financial disclosure form obtained by The Intercept shows Anduril is not the full extent of Obadal’s military investments. According to this document, a retirement investment account belonging to Obadal holds stock in both General Dynamics, which does billions of dollars of business with the Army, and Howmet Aerospace, a smaller firm. While nominees are not required to list the precise value of such investments, Obadal says his holdings in General Dynamics and Howmet are worth between $2,000 and $30,000.
Don Fox, former acting director of the U.S. Office of Government Ethics, told The Intercept that neither stock should be exempt from conflict of interest considerations under federal law. “The fact that they are within either a traditional or Roth IRA doesn’t impact the conflict of interest analysis,” he said. “Not sure why he would be allowed to keep those.”
“A DoD contractor is a DoD contractor,” said Fox. “The degree of their business with DoD or what they do isn’t material. A lot of people were surprised for example that Disney was/is a DoD contractor. For a Senate confirmation position they would have had to divest.”
In addition to these defense contractors, Obadal holds stock in other corporations that do business with the Pentagon, including Microsoft, Amazon, Thermo Fisher Scientific, and Cummins, which manufactures diesel engines for the Army’s Bradley Fighting Vehicle. None of these companies are mentioned in Obadal’s ethics letter detailing which assets he will and won’t dispose of if confirmed. In his more detailed disclosure document, known as a Form 278, Obadal explicitly notes he will be able to exercise his shares in Anduril “if there is an equity event such as the sale of the company, or the company becoming a publicly-traded entity,” potentially netting him a large payout. Anduril was most recently reported to be valued by private investors at over $28 billion.
In addition to divesting from Anduril, Warren’s letter asks Obadal to get rid of the stocks in these other firms, commit to recusing himself entirely from any Anduril-related matters at the Army, and pledge to avoid working for or lobbying on behalf of the defense sector for a period of four years after leaving the Department of Defense. “By making these commitments, you would increase Americans’ trust in your ability to serve the public interest during your time at the Army,” Warren writes, “rather than the special interests of large DoD contractors.”
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This post was originally published on The Intercept.