Senators ban investments for appointees, not themselves

WASHINGTON — Gordon England's appointment to a top Pentagon post in 2006 came at a high price. The Senate committee overseeing his confirmation demanded that he give up lucrative stocks and options he held in companies that do business with the military.

England said he took a big hit on his taxes and lost out on more than $1 million in potential profits that year when he divested himself of interests in companies that included General Dynamics.

If he had been a senator, he would not have had to sell anything.

The Senate Armed Services Committee prohibits its staff and presidential appointees requiring Senate confirmation from owning stocks or bonds in 48,096 companies that have Defense Department contracts. But the senators who sit on the influential panel are allowed to own any assets they want. And they have owned millions in interests in these firms.

The committee's prohibition is designed to prevent high-ranking Pentagon officials from using inside information to enrich themselves or members of their immediate family.

But panel members have access to much of the same inside information, because they receive classified briefings from high-ranking defense officials about policy, contracts and plans for combat strategies and weapons systems.

"I think Congress should live by the rules they impose on other people," said England, who served as deputy defense secretary under George W. Bush until 2009. "I am frankly surprised they are allowed to have these investments. Every member of this committee has tremendous influence over every major contract at the Pentagon."

Congressional experts say that such a prohibition on lawmakers would deter good candidates for office and that politicians would grow out of touch with their constituents by not sharing in the ebbs and flows of the market. Financial disclosure is supposed to bring transparency to congressional investing.

"There's no question that it's a double standard, but there is another element here," said Calvin Mackenzie, an expert on presidential appointees and the confirmation process. "Senators have to stand for re-election. If their constituents think they are lining their own pockets, they could be challenged."

Nineteen of the 28 senators on the Senate Armed Services Committee held assets in companies that do business with the Pentagon from 2004 to 2009, according to an analysis of financial disclosure forms by The Washington Post. Those holdings were worth a total of $3.8 million to $10.2 million.

Most of the senators who have holdings in Pentagon vendors said they see no reason why they should have to divest. Only Sen. Joe Lieberman, I-Conn., who owned as much as $315,000 in the stocks, said he supports extending the prohibition to members of the Armed Services Committee.