WASHINGTON – During
much of the time that Sen. Dianne Feinstein was a leader
on the Senate subcommittee overseeing the Pentagon's
military construction budget, her husband was heavily
invested in companies holding hundreds of millions of
dollars in contracts generated by the subcommittee's
The California Democrat denied that she helped her
husband's companies in any way with contracts and said the
Senate ethics committee approved the arrangement. But she
declined to discuss the value of the contracts or release
the ethics ruling. Feinstein also declined to be
interviewed on the subject, relying instead on a
These questions arose
in January after freelance investigative reporter Peter
Byrne reported that Feinstein's committee assignments
overlapped with her husband's business interests between
2001 and 2005. Byrne quoted several ethics experts who
described the arrangement as a conflict of interest.
During the five years that Feinstein was either
chairwoman or senior Democrat on the subcommittee, her
husband, financier Richard C. Blum, held substantial
interests in URS Corp. and Perini Corp., whose military
construction contracts during that period were worth a
combined $1.5 billion.
Specifically, URS had $792 million in military
construction and environmental cleanup contracts, and
Perini had contracts worth $759 million. The figures came
from Eagle Eye Publishers, a commercial provider of
federal procurement data. Feinstein and Blum have not
disputed the figures.
However, the military construction earnings accounted
for a fraction of the two companies' earnings during those
years. In 2005, Perini reported revenues of $1.7 billion
and URS reported almost $4 billion.
Nonetheless, the disclosure in January of the couple's
overlapping interests set off a furor on conservative
blogs and radio talk shows. They compared Feinstein's
activities to those of former Rep. Randy “Duke” Cunningham
– who was sent to federal prison after admitting taking
$2.4 million in bribes – and wondered why newspapers and
TV news programs weren't reporting what they saw as a
comparable Democratic scandal.
A Copley News Service review found no evidence that
Feinstein had intervened in any clearly meaningful way on
behalf of the two companies.
But it also found that the Senate appropriations and
military procurement processes are so opaque there is
little the public can do but trust Feinstein when she
denies helping her husband's companies. Secrecy and a lack
of documentation make independent confirmation impossible.
This year, Feinstein moved from the appropriations
subcommittee that funds military construction to the one
that funds interior and environmental programs.
In 2005, Blum's investment firm sold its stake in the
two companies. Feinstein's 2005 financial-disclosure
report shows that the couple realized between $500,000 and
$5 million in capital gains from the sale of their URS and
Perini stock. The couple's net worth is said to be $40
million, making Feinstein one of Congress' richest
While a review of the public record turned up no
evidence that the senator used her legislative leverage to
direct projects to her husband's companies, ethics experts
expressed concern about the propriety of a lawmaker making
spending decisions in a contracting arena where her spouse
is heavily invested.
“You get into complicated issues any time you have a
spouse who is in a business that deals with government
contracts and a government official,” said Melanie Sloan,
executive director of the nonpartisan Citizens for Ethics
and Responsibility in Washington, D.C. “That always raises
complicated issues that I think can be troubling, and it
is imperative for government officials to avoid even the
appearance of impropriety in those kinds of situations.”
Jennifer Gore, a spokeswoman for the Project on
Government Oversight, observed, “There are a lot of shades
of gray on this one.”
The potential for abuse is compounded by the fact that
the subcommittee does not make its spending decisions
openly. Instead, the decisions are made through informal
brokering generally handled by staff without any paper
trail or other public record, according to students of the
process and subcommittee aides.
“It seems to me that all of these kinds of decisions
that are about public money being spent and about actions
of Congress should be on the public record,” Sloan said.
“There ought to be transcripts.”
Scott Gerber, Feinstein's director of communications,
said the senator had nothing to do with contracts when she
was on the military construction subcommittee. The panel
approves money for programs, and the Pentagon chooses
contractors and manages contracts.
As Cunningham's case illustrates, the wall of
separation between Congress' appropriations process and
the Pentagon's procurement process is not without holes.
An investigation found that the Rancho Santa Fe Republican
bullied, threatened and badgered Pentagon officials to
steer contracts to defense firms that had bribed him.
Bill Frenzel, a Republican who represented a suburban
Minneapolis House district, recalled that during his years
in Congress, staffers routinely contacted Pentagon
officials in an effort to influence procurement decisions.
“Nobody knows about the telephone calls and little
whispers in the hallway,” said Frenzel, who retired from
Congress 16 years ago.
Gerber maintained that Feinstein and her staff have
never communicated with any military officials to
influence any contract.
“Senator Feinstein never sought to influence which
entities were awarded any military construction
contracts,” he said. “Neither she nor her staff ever
wrote, spoke to or influenced in any way Defense
Department officials in charge of determining which
entities were awarded any military construction contract.”
This is not the first time Feinstein has had to juggle
difficult questions involving the meshing of her husband's
commercial interests with her political responsibilities.
In 1980 Feinstein, then mayor of San Francisco, failed
to report on a financial-disclosure statement that Blum
had an investment in the Marriott Corp. when the hotel
chain was successfully bidding for a piece of the $3
billion city redevelopment contract. Blum acknowledged the
oversight but blamed it on bad advice from a member of
Blum's investments in China also grew after Feinstein
entered the Senate in 1992. He accompanied Feinstein on
her travels to the country both in her capacity as mayor
and later as senator. Her stature assured him access to
One of his investment vehicles was Newbridge Capital, a
$105 million joint venture formed in 1994 with the Texas
Pacific Group targeting mainland China.
With critics raising conflict-of-interest claims, Blum
liquidated his Chinese investments in 1999 and formed a
charity to funnel the profits to Tibet and Nepal.
Marcus Stern can be
email@example.com and Finlay Lewis can be