Homeland Security Pick Gen. John Kelly Fails to Disclose Ties to Defense Contractors

Last week, we reported that Kelly didn't disclose he was vice chairman at the Spectrum Group. Now we've found him listed on the boards of two defense contractors he didn't disclose either.

General John Kelly, USMC (Ret.), listens to questions as he testifies at the Senate Homeland Security and Governmental Affairs Committee hearing on his nomination to be Secretary of the Department of Homeland Security, on Capitol Hill on January 10, 2017, in Washington, DC.   / AFP / MOLLY RILEY        (Photo credit should read MOLLY RILEY/AFP/Getty Images)
General John Kelly, USMC (Ret.), listens to questions as he testifies at the Senate Homeland Security and Governmental Affairs Committee hearing on his nomination to be Secretary of the Department of Homeland Security, on Capitol Hill on January 10, 2017, in Washington, DC. / AFP / MOLLY RILEY (Photo credit should read MOLLY RILEY/AFP/Getty Images) Photo: Molly Riley/AFP/Getty Images

The Intercept revealed last week that Donald Trump’s nominee to lead the the Department of Homeland Security, retired Marine Corps Gen. John F. Kelly, did not disclose on his ethics form that he was listed as a vice chairman at the Spectrum Group, a defense contractor lobbying firm.

Now, it appears that Kelly failed to list two other positions as well: board memberships with Michael Baker International and Sallyport Global, two defense contractors that do business with the U.S. government.

Federal law requires Senate-confirmed nominees to list all positions at outside organizations on ethics forms that are vetted by the Office of Government Ethics and released to both the public and lawmakers. But the board memberships, like the Spectrum Group vice chairmanship, were not listed on Kelly’s federal ethics disclosure form nor his letter to the Homeland Security Department’s designated ethics official.

Kelly’s professional biography has been wiped from the Michael Baker International website. But Brian Peiritsch, the firm’s director of corporate communications, told The Intercept that Kelly joined the board, “I would say 2016, that’s about how specific I can be right now.” Peiritsch declined to comment further.

After The Intercept contacted Sallyport Global asking for a comment, Kelly’s name was also wiped from its website. A screenshot of the page is below:

Screenshot from the leadership page of Sallyport Global.

Kelly’s disclosure currently shows that he received $37,500 from DC Capital Partners, a position he has held since April 2016. The payments are described as “fees, member of board of directors” on the form.

DC Capital Partners is the controlling shareholder of the Spectrum Group, and lists Michael Baker International and Sallyport Global as portfolio companies. DC Capital Partners, using a subsidiary, took control of Sallyport Global in 2011, and purchased Michael Baker International in 2013. A press release notes that Sallyport Global is now a subsidiary of Michael Baker International.

T. Gail Dady, a partner at DC Capital Partners, confirmed that Kelly joined the board of Michael Baker International. Dady did not respond to multiple requests for further comment. Online records appear to show that Kelly was added to Michael Baker International’s website in July 2016.

Michael Baker International provides a range of government clients with managing consulting. The firm announced last year that it won a $500 million contract to provide environmental consulting for the Air Force and a contract with the Department of Homeland Security to develop guidelines for first responders.

Sallyport Global, which directed questions about the firm to DC Capital Partners, has a long, scandal-plagued history as a contractor to the military. Thomas Charron, Sallyport Global’s founder, launched the company then partnered with John DeBlasio, a former adviser to the Coalition Provisional Authority. The company was awarded lucrative contracts, transporting Iraqi police trainees to Jordan, building secure compounds, and doing other security work in Iraq and Afghanistan.

In 2006, insurgents boarded a bus and killed 17 Iraqi-born translators working for Sallyport in Basrah, then scattered their bodies around the city.

Sallyport was providing security for General Dynamics when three of that company’s contractors were kidnapped in Baghdad a year ago and held for 31 days.

Reporter Tim Shorrock, writing for The Nation, noted last year that DC Capital Partners, have employed a “star-studded list of former Pentagon, intelligence, and State Department officials who should know something about security.”

Despite questions about their security record, the firm continued to win contracts. In January 2016, the firm was awarded a $271 million contract to manage upgrades at the Balad Air Base in Iraq.

As The Intercept previously reported, the Spectrum Group widely advertised Kelly’s role with the company, claiming that he worked on multiple client teams, that he was among the people at the firm who could help guide clients with information about the Trump transition, and that he specializes in helping clients with border and infrastructure security issues.

Asked about Kelly’s two undisclosed board memberships, an official from the Trump transition team guiding Kelly’s nomination said he did not have permission to speak on the record, but released the following statement: “General Kelly had no knowledge that he was listed on any of these websites and we are actively looking into the matter with close coordination with the Office of Government Ethics and the Homeland Security and Government Affairs Committee.”

The statement continued: “His understanding and the advice he received, which was disclosed and certified by OGE, was that he was on the Board of DC Capital Partners, had no contractual affiliation with any of their portfolio companies, and the disclosure of DC Capitol Partners on his paperwork covered all the work he did with the firm.”

The same Trump transition official had previously acknowledged that Kelly maintained a relationship with Spectrum Group, however; last week, he told The Intercept that Kelly had mentioned his relationship with Spectrum to Senate staffers during a meeting.

Ethics experts say the failure to disclose Kelly’s listed board memberships violate ethics guidelines. “One of the purposes of the financial disclosure requirement is for OGE and the public to identify an official’s potential conflicts of interest,” said Brendan Fischer, an attorney with the Campaign Legal Center.

“If Gen. Kelly only identifies his relationship with the parent private equity firm, and not his relationship with specific subsidiaries engaged in lobbying or other activities, OGE and the public are left guessing as to which clients of which subsidiaries might pose a potential conflict,” Fischer added, noting that OGE guidelines do require even non-compensated positions to be disclosed.

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