Pentagon OKs general's rent-free living courtesy of defense contractor

WASHINGTON — A general fired from the Joint Chiefs of Staff for an extramarital affair will not be sanctioned for living rent-free in the home of the defense contractor because their long-standing friendship allows such gifts, the Pentagon’s Inspector General has decided.

The inspector general found that the free housing Army National Guard Brig. Gen. Michael Bobeck received from an executive of Peduzzi Associates, Ltd., fell “under an exception to the general gift prohibition,” according to a letter sent last week to Sen. Claire McCaskill, the ranking member of the panel on investigations for the Homeland Security and Governmental Affairs Committee.

Hoever, emails obtained by USA TODAY show that Peduzzi officials kept Bobeck informed about the interest of a key client, Sikorsky, maker of the famed Black Hawk helicopter, as the Army and National Guard wrangled over a reorganization plan that had serious ramifications for Sikorsky's bottom line. A draft letter in February that Peduzzi helped craft to key members of Congress on behalf of the National Guard Association requested that the Pentagon spend $367 million more on Black Hawks in 2017.

Bobeck and Peduzzi had also negotiated a post-retirement job, which gave Bobeck a financial interest in Peduzzi's continued success, USA TODAY reported.

McCaskill called on the Pentagon to delve deeper into Bobeck's ties to the contractor.

"While the inspector general may have found this relationship was legally acceptable, it certainly begs a closer look at whether ethics rules adequately guard against conflicts of interest than can arise from the personal relationships between contractors and military officials," McCaskill, the Missouri Democrat, said in a statement to USA TODAY.
The Army has killed the career of another general under similar circumstances. In a case from 2015, the Army fired Maj. Gen. Dana Pittard after determining that he had merely created the “perception of preferential treatment” — not for personally profiting from his relationship with his contractor friends.

Last month, USA TODAY reported that Bobeck had a decades-long relationship with Joe Ferreira, a vice president at Peduzzi, that blended the personal and professional. Before becoming a general, Bobeck had negotiated with Ferreira to work for Peduzzi, for example. Both had served in the New York National Guard and had held leadership positions in its aviation units.

But the emails show that their relationship blurred lines between the professional and personal. In July 2015, when Bobeck was serving on the Joint staff, Ferreira sent him an email thread that included entries from several executives from Sikorsky. At the time, allocation of Sikorsky Black Hawks between the Guard and active-duty Army was a contentious issue.

Ferreira sent Bobeck the email thread from his business account to Bobeck’s personal email address, calling Bobeck’s attention to the emails from Sikorsky executives.

The exchange of information “highlights how easily a long-term friendship can cross the line and present a possible ethics violation,” said Scott Amey, general counsel for the Project on Government Oversight, a non-partisan watchdog group. “It's one thing to be friends, but it's another situation to be friends and trade information for special access or privileges.”

The inspector general may need to review the case again, Amey said.

“Mixing friendship and (Pentagon) business could move the needle from the safe zone to the ethical gray area zone, and that deserves a look,” Amey said.

The Army has had a string of troubling issues with its general officers. Last week, the Army confirmed that Maj. Gen. John Rossi committed suicide in July; in September, the Army yanked the security clearance of Maj. Gen. David Haight after USA TODAY reported that he had carried on an affair for more than a decade and had led a "swinging" lifestyle; also last month, the Army fired one of its division commanders, Maj. Gen. Wayne Grigsby, without giving a reason.

Before being promoted to the Joint Staff, Bobeck held posts with the National Guard Bureau that gave him responsibility for its aviation units across the country and its overseas territories. The bureau oversees its 453,000 soldiers and airmen. Peduzzi, staffed with several former Guardsmen, lobbies for Sikorsky, whose Black Hawk gained fame from conflicts from Somalia, where it was featured in the book and movie, “Black Hawk Down,” to Iraq and Afghanistan. A modified, special operations Black Hawk crashed during the raid that killed Osama bin Laden.

The inspector general found no issue with Bobeck’s private relationship with Ferreira and Peduzzi’s business with the National Guard Bureau, because Bobeck “was not involved in this contract action.” Nor was there a conflict with Bobeck’s work on the Joint Staff, where his portfolio included weapons of mass destruction, and his friendship with Ferriera, the inspector general found. Peduzzi wasn’t doing business with them, according to the letter to McCaskill, a member of the Senate Armed Services Committee.

The Army quietly removed Bobeck from his post on Labor Day.

Last month, Ferreira told USA TODAY that housing Bobeck was simply an act of friendship. He did not respond to a request for comment on this story. Bobeck has denied any wrongdoing and asked for privacy.

Even the perception of a conflict of interest has been enough to end promising military careers. Last year, the Army fired Pittard, who had been commanding American advisory forces in Iraq, was issued a letter of reprimand “for improperly creating the perception of preferential treatment.”

The punishment stemmed from a contract awarded to Pittard’s former West Point classmates. Pittard was not accused of profiting, but for sharing an information paper with them before the contract was awarded. A letter of reprimand effectively forces an officer to retire.

A board will determine the last rank at which Bobeck served satisfactorily. A demotion could cost him thousands of dollars annually in pension. The higher the rank, the higher the payout for military retirees.