On January 22nd, Lloyd Austin assumed office as the 28th Secretary of Defense of the United States. The West Point graduate had an illustrious career in the armed forces, including being promoted to the Commanding General of U.S. Forces in Iraq in 2010, and later going on to being the commander of United States Central Command in 2013. The promotions coming during consecutive Obama Administrations. His nomination seemed like a natural continuation of the Obama era under a new Biden presidency. While his confirmation was nearly unanimous, achieving 93 Yes votes in the Senate, there was a looming controversy for Austin going into the vote – his ties to American Defense giant, Raytheon Technologies.
The Raytheon Controversy
Throughout Austin’s nomination process, questions were raised about the propriety of confirming a nominee who had just served on the board of a defense contractor and still maintained a financial connection through stocks. Fox News noted that Austin “earned more than $350,000 last year as a member of military contractor Raytheon’s board of directors, according to company filings.” But his stock options prove to be even more lucrative upon his departure for civilian government. US News & World Report reported that Austin “stands to collect as much as $1.7 million connected with leaving Raytheon Technologies Corp, an ethics disclosure showed…” While it is not unusual for appointees to civilian government positions to be picked from corporate positions of power and influence, many feared Austin’s position leading the military while holding stocks in a defense contractor would create an inevitable conflict of interest before he divested from the company.
And those fears may have been justified. In the run-up to being confirmed, Austin acknowledged these concerns with a promise: “Austin had pledged to liquidate his Raytheon holdings ‘as soon as practicable but not later than 90 days after my confirmation,’” according to Big League Politics. But by February, Austin was not yet divested and Raytheon scored a big contract from the Pentagon. Big League noted, “A new $49 million contract was awarded to Raytheon last week, just weeks after the company’s former board member Lloyd Austin was confirmed as the new Secretary of Defense. The contract is for engines for VTOL (vertical take-off and landing) aircraft.” Austin did pledge to recuse himself from any involvement on contracts or potential contracts related to Raytheon. However, it is noteworthy that he may ultimately realize a higher profit on his stock holdings by divesting after this positive catalyst was announced for the company.
Intersection of Big Business and Government
Lloyd Austin honorably served his country for many years and the appearance of impropriety or potential conflict of interest does not mean that it is so. Austin should not be penalized for leveraging his skills and experience into lucrative private sector positions. However, his decision to not divest before his confirmation or immediately after his confirmation is reminiscent of the controversy surrounding former President Trump. The questions surrounding Secretary Austin’s affiliation with Raytheon is a reminder that at the intersection of Big Business and government, the appearance of self-dealing is never far behind.
Image Credit: Photo by U.S. Secretary of Defense Attribution 2.0 Generic (CC BY 2.0) on Flickr
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