American Muslim Council
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The following article apears in the current issue
of The New Yorker.
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LUNCH WITH THE CHAIRMAN
by SEYMOUR M. HERSH
Why was Richard Perle meeting with Adnan Khashoggi?
Issue of 2003-03-17 (The New Yorker)
Posted 2003-03-10
At the peak of his deal-making activities, in the
nineteen-seventies, the Saudi-born businessman Adnan
Khashoggi brokered billions of dollars in arms and
aircraft sales for the Saudi royal family, earning
hundreds of millions in commissions and fees. Though
never convicted of wrongdoing, he was repeatedly
involved in disputes with federal prosecutors and with
the Securities and Exchange Commission, and in recent
years he has been in litigation in Thailand and Los
Angeles, among other places, concerning allegations
of stock manipulation and fraud. During the Reagan
Administration, Khashoggi was one of the middlemen
between Oliver North, in the White House, and the
mullahs in Iran in what became known as the Iran-Contra
scandal. Khashoggi subsequently claimed that he lost
ten million dollars that he had put up to obtain
embargoed weapons for Iran which were to be bartered
(with Presidential approval) for American hostages.
The scandals of those times seemed to feed off each
other: a congressional investigation revealed that
Khashoggi had borrowed much of the money for the weapons
from the Bank of Credit and Commerce International
(B.C.C.I.), whose collapse, in 1991, defrauded thousands
of depositors and led to years of inquiry and litigation.

Khashoggi is still brokering. In January of this
year, he arranged a private lunch, in France, to
bring together Harb Saleh al-Zuhair, a Saudi
industrialist whose family fortune includes extensive
holdings in construction, electronics, and engineering
companies throughout the Middle East, and
Richard N. Perle, the chairman of the Defense Policy
Board, who is one of the most outspoken and influential
American advocates of war with Iraq.

The Defense Policy Board is a Defense Department advisory
group composed primarily of highly respected former
government officials, retired military officers, and
academics. Its members, who serve without pay, include
former national-security advisers, Secretaries of Defense,
and heads of the C.I.A. The board meets several times a
year at the Pentagon to review and assess the country’s
strategic defense policies.

Perle is also a managing partner in a venture-capital
company called Trireme Partners L.P., which was
registered in November, 2001, in Delaware. Trireme’s
main business, according to a two-page letter that one
of its representatives sent to Khashoggi last November,
is to invest in companies dealing in technology, goods,
and services that are of value to homeland security and
defense. The letter argued that the fear of terrorism
would increase the demand for such products in Europe
and in countries like Saudi Arabia and Singapore.

The letter mentioned the firm’s government connections
prominently: “Three of Trireme’s Management Group members
currently advise the U.S. Secretary of Defense by serving
on the U.S. Defense Policy Board, and one of Trireme’s
principals, Richard Perle, is chairman of that Board.”
The two other policy-board members associated with Trireme
are Henry Kissinger, the former Secretary of State
(who is, in fact, only a member of Trireme’s advisory
group and is not involved in its management), and
Gerald Hillman, an investor and a close business
associate of Perle’s who handles matters in Trireme’s
New York office. The letter said that forty-five million
dollars had already been raised, including twenty million
dollars from Boeing; the purpose, clearly, was to attract
more investors, such as Khashoggi and Zuhair.



Perle served as a foreign-policy adviser in George W.
Bush’s Presidential campaign—he had been an Assistant
Secretary of Defense under Ronald Reagan—but he chose
not to take a senior position in the Administration. In
mid-2001, however, he accepted an offer from Secretary of
Defense Donald Rumsfeld to chair the Defense Policy Board,
a then obscure group that had been created by the Defense
Department in 1985. Its members (there are around thirty
of them) may be outside the government, but they have
access to classified information and to senior policymakers,
and give advice not only on strategic policy but also on
such matters as weapons procurement. Most of the board’s
proceedings are confidential.

As chairman of the board, Perle is considered to be a
special government employee and therefore subject to a
federal Code of Conduct. Those rules bar a special
employee from participating in an official capacity in
any matter in which he has a financial interest. “One of
the general rules is that you don’t take advantage of your
federal position to help yourself financially in any way,”
a former government attorney who helped formulate the Code
of Conduct told me. The point, the attorney added, is to
“protect government processes from actual or apparent
conflicts.”

Advisory groups like the Defense Policy Board enable
knowledgeable people outside government to bring their
skills and expertise to bear, in confidence, on key policy
issues. Because such experts are often tied to the defense
industry, however, there are inevitable conflicts. One
board member told me that most members are active in finance
and business, and on at least one occasion a member has
left a meeting when a military or an intelligence product
in which he has an active interest has come under discussion.

Four members of the Defense Policy Board told me that the
board, which met most recently on February 27th and 28th,
had not been informed of Perle’s involvement in Trireme.
One board member, upon being told of Trireme and Perle’s
meeting with Khashoggi, exclaimed, “Oh, get out of here.
He’s the chairman! If you had a story about me setting up
a company for homeland security, and I’ve put people on the
board with whom I’m doing that business, I’d be had”—a
reference to Gerald Hillman, who had almost no senior policy
or military experience in government before being offered a
post on the policy board. “Seems to me this is at the edge
of or off the ethical charts. I think it would stink to high
heaven.”

Hillman, a former McKinsey consultant, stunned at least
one board member at the February meeting when he raised
questions about the validity of Iraq’s existing oil contracts.
“Hillman said the old contracts are bad news; he said we
should kick out the Russians and the French,” the board member
told me. “This was a serious conversation. We’d become the
brokers. Then we’d be selling futures in the Iraqi oil company.
I said to myself, ‘Oh, man. Don’t go down that road.’” Hillman
denies making such statements at the meeting.

Larry Noble, the executive director of the Washington-based
Center for Responsive Politics, a nonprofit research
organization, said of Perle’s Trireme involvement, “It’s not
illegal, but it presents an appearance of a conflict. It’s
enough to raise questions about the advice he’s giving to the
Pentagon and why people in business are dealing with him.”
Noble added, “The question is whether he’s trading off his
advisory-committee relationship. If it’s a selling point for
the firm he’s involved with, that means he’s a closer—the guy
you bring in who doesn’t have to talk about money, but he’s
the reason you’re doing the deal.”

Perle’s association with Trireme was not his first exposure
to the link between high finance and high-level politics. He
was born in New York City, graduated from the University of
Southern California in 1964, and spent a decade in
Senate-staff jobs before leaving government in 1980, to work
for a military-consulting firm. The next year, he was back
in government, as Assistant Secretary of Defense. In 1983,
he was the subject of a New York Times investigation into an
allegation that he recommended that the Army buy weapons from
an Israeli company from whose owners he had, two years earlier,
accepted a fifty-thousand-dollar fee. Perle later acknowledged
that he had accepted the fee, but vigorously denied any
wrongdoing. He had not recused himself in the matter, he
explained, because the fee was for work he had done before he
took the Defense Department job. He added, “The ultimate issue,
of course, was a question of procurement, and I am not a
procurement officer.” He was never officially accused of any
ethical violations in the matter. Perle served in the Pentagon
until 1987 and then became deeply involved in the lobbying
and business worlds. Among other corporate commitments, he
now serves as a director of a company doing business with the
federal government: the Autonomy Corporation, a British firm
that recently won a major federal contract in homeland security.
When I asked him about that contract, Perle told me that there
was no possible conflict, because the contract was obtained
through competitive bidding, and “I never talked to anybody
about it.”



Under Perle’s leadership, the policy board has become
increasingly influential. He has used it as a bully pulpit,
from which to advocate the overthrow of Saddam Hussein and
the use of preëmptive military action to combat terrorism.
Perle had many allies for this approach, such as Paul Wolfowitz,
the Deputy Secretary of Defense, but there was intense resistance
throughout the bureaucracy—most notably at the State Department.
Preëmption has since emerged as the overriding idea behind the
Administration’s foreign policy. One former high-level
intelligence official spoke with awe of Perle’s ability to
“radically change government policy” even though he is a private
citizen. “It’s an impressive achievement that an outsider can
have so much influence, and has even been given an institutional
base for his influence.”

Perle’s authority in the Bush Administration is buttressed by
close association, politically and personally, with many
important Administration figures, including Wolfowitz and
Douglas Feith, the Under-Secretary of Defense for Policy, who
is the Pentagon’s third-ranking civilian official. In 1989,
Feith created International Advisors Incorporated, a lobbying
firm whose main client was the government of Turkey. The firm
retained Perle as an adviser between 1989 and 1994. Feith got
his current position, according to a former high-level Defense
Department official, only after Perle personally intervened
with Rumsfeld, who was skeptical about him. Feith was directly
involved in the strategic planning and conduct of the military
operations against the Taliban in Afghanistan; he now runs
various aspects of the planning of the Iraqi war and its aftermath.
He and Perle share the same views on many foreign-policy issues.
Both have been calling for Saddam Hussein’s removal for years,
long before September 11th. They also worked together, in 1996,
to prepare a list of policy initiatives for Benjamin Netanyahu,
shortly after his election as the Israeli Prime Minister. The
suggestions included working toward regime change in Iraq. Feith
and Perle were energetic supporters of Ahmad Chalabi, the
controversial leader of the anti-Saddam Iraqi National Congress,
and have struggled with officials at the State Department and
the C.I.A. about the future of Iraq.

Perle has also been an outspoken critic of the Saudi government,
and Americans who are in its pay. He has often publicly rebuked
former American government officials who are connected to
research centers and foundations that are funded by the Saudis,
and told the National Review last summer, “I think it’s a
disgrace. They’re the people who appear on television, they
write op-ed pieces. The Saudis are a major source of the problem
we face with terrorism. That would be far more obvious to
people if it weren’t for this community of former diplomats
effectively working for this foreign government.” In August,
the Saudi government was dismayed when the Washington Post
revealed that the Defense Policy Board had received a briefing
on July 10th from a Rand Corporation analyst named Laurent
Murawiec, who depicted Saudi Arabia as an enemy of the United
States, and recommended that the Bush Administration give the
Saudi government an ultimatum to stop backing terrorism or face
seizure of its financial assets in the United States and its
oil fields. Murawiec, it was later found, is a former editor
of the Executive Intelligence Review, a magazine controlled by
Lyndon H. LaRouche, Jr., the perennial Presidential candidate,
conspiracy theorist, and felon. According to Time, it was Perle
himself who had invited Murawiec to make his presentation.



Perle’s hostility to the politics of the Saudi government did
not stop him from meeting with potential Saudi investors for
Trireme. Khashoggi and Zuhair told me that they understood that
one of Trireme’s objectives was to seek the help of influential
Saudis to win homeland-security contracts with the Saudi royal
family for the businesses it financed. The profits for such
contracts could be substantial. Saudi Arabia has spent nearly
a billion dollars to survey and demarcate its
eight-hundred-and-fifty-mile border with Yemen, and the second
stage of that process will require billions more. Trireme
apparently turned to Adnan Khashoggi for help.

Last month, I spoke with Khashoggi, who is sixty-seven and is
recovering from open-heart surgery, at his penthouse apartment,
overlooking the Mediterranean in Cannes. “I was the intermediary,”
he said. According to Khashoggi, he was first approached by a
Trireme official named Christopher Harriman. Khashoggi said that
Harriman, an American businessman whom he knew from his jet-set
days, when both men were fixtures on the European social scene,
sent him the Trireme pitch letter. (Harriman has not answered
my calls.) Khashoggi explained that before Christmas he and Harb
Zuhair, the Saudi industrialist, had met with Harriman and
Gerald Hillman in Paris and had discussed the possibility of a
large investment in Trireme.

Zuhair was interested in more than the financial side; he also
wanted to share his views on war and peace with someone who had
influence with the Bush Administration. Though a Saudi, he had
been born in Iraq, and he hoped that a negotiated, “step by step”
solution could be found to avoid war. Zuhair recalls telling
Harriman and Hillman, “If we have peace, it would be easy to
raise a hundred million. We will bring development to the region.”
Zuhair’s hope, Khashoggi told me, was to combine opportunities
for peace with opportunities for investment. According to Khashoggi,
Hillman and Harriman said that such a meeting could be arranged.
Perle emerged, by virtue of his position on the policy board, as
a natural catch; he was “the hook,” Khashoggi said, for obtaining
the investment from Zuhair. Khashoggi said that he agreed to try
to assemble potential investors for a private lunch with Perle.



The lunch took place on January 3rd at a seaside restaurant in
Marseilles. (Perle has a vacation home in the South of France.)
Those who attended the lunch differ about its purpose. According
to both Khashoggi and Zuhair, there were two items on the agenda.
The first was to give Zuhair a chance to propose a peaceful
alternative to war with Iraq; Khashoggi said that he and Perle
knew that such an alternative was far-fetched, but Zuhair had
recently returned from a visit to Baghdad, and was eager to talk
about it. The second, more important item, according to Khashoggi
and Zuhair, was to pave the way for Zuhair to put together a
group of ten Saudi businessmen who would invest ten million
dollars each in Trireme.

“It was normal for us to see Perle,” Khashoggi told me. “We in
the Middle East are accustomed to politicians who use their
offices for whatever business they want. I organized the lunch
for the purpose of Harb Zuhair to put his language to Perle.
Perle politely listened, and the lunch was over.” Zuhair, in a
telephone conversation with me, recalled that Perle had made it
clear at the lunch that “he was above the money. He said he was
more involved in politics, and the business is through the
company”—Trireme. Perle, throughout the lunch, “stuck to his
idea that ‘we have to get rid of Saddam,’” Zuhair said. As of
early March, to the knowledge of Zuhair, no Saudi money had yet
been invested in Trireme.

In my first telephone conversation with Gerald Hillman, in
mid-February, before I knew of the involvement of Khashoggi and
Zuhair, he assured me that Trireme had “nothing to do” with the
Saudis. “I don’t know what you can do with them,” he said. “What
we saw on September 11th was a grotesque manifestation of their
ideology. Americans believe that the Saudis are supporting
terrorism. We have no investment from them, or with them.”
(Last week, he acknowledged that he had met with Khashoggi and
Zuhair, but said that the meeting had been arranged by Harriman
and that he hadn’t known that Zuhair would be there.) Perle,
he insisted in February, “is not a financial creature. He doesn’t
have any desire for financial gain.”

Perle, in a series of telephone interviews, acknowledged that
he had met with two Saudis at the lunch in Marseilles, but he
did not divulge their identities. (At that time, I still didn’t
know who they were.) “There were two Saudis there,” he said.
“But there was no discussion of Trireme. It was never mentioned
and never discussed.” He firmly stated, “The lunch was not about
money. It just would never have occurred to me to discuss
investments, given the circumstances.” Perle added that one of
the Saudis had information that Saddam was ready to surrender.
“His message was a plea to negotiate with Saddam.”

When I asked Perle whether the Saudi businessmen at the lunch
were being considered as possible investors in Trireme, he
replied, “I don’t want Saudis as such, but the fund is open to
any investor, and our European partners said that, through
investment banks, they had had Saudis as investors.” Both Perle
and Hillman stated categorically that there were currently no
Saudi investments.


Khashoggi professes to be amused by the activities of Perle
and Hillman as members of the policy board. As Khashoggi saw
it, Trireme’s business potential depended on a war in Iraq
taking place. “If there is no war,” he told me, “why is there a
need for security? If there is a war, of course, billions of
dollars will have to be spent.” He commented, “You Americans
blind yourself with your high integrity and your democratic
morality against peddling influence, but they were peddling
influence.”



When Perle’s lunch with Khashoggi and Zuhair, and his
connection to Trireme, became known to a few ranking members
of the Saudi royal family, they reacted with anger and
astonishment. The meeting in Marseilles left Perle, one of the
kingdom’s most vehement critics, exposed to a ferocious
counterattack.

Prince Bandar bin Sultan, who has served as the Saudi Ambassador
to the United States for twenty years, told me that he had got
wind of Perle’s involvement with Trireme and the lunch in
Marseilles. Bandar, who is in his early fifties, is a prominent
member of the royal family (his father is the defense minister).
He said that he was told that the contacts between Perle and
Trireme and the Saudis were purely business, on all sides. After
the 1991 Gulf War, Bandar told me, Perle had been involved in
an unsuccessful attempt to sell security systems to the Saudi
government, “and this company does security systems.” (Perle
confirmed that he had been on the board of a company that
attempted to make such a sale but said he was not directly
involved in the project.)

“There is a split personality to Perle,” Bandar said. “Here
he is, on the one hand, trying to make a hundred-million-dollar
deal, and, on the other hand, there were elements of the
appearance of blackmail—‘If we get in business, he’ll back off
on Saudi Arabia’—as I have been informed by participants in
the meeting.”

As for Perle’s meeting with Khashoggi and Zuhair, and the
assertion that its purpose was to discuss politics, Bandar said,
“There has to be deniability, and a cover story—a possible peace
initiative in Iraq—is needed. I believe the Iraqi events are
irrelevant. A business meeting took place.”



Zuhair, however, was apparently convinced that, thanks to his
discussions with Trireme, he would have a chance to enter into
a serious discussion with Perle about peace. A few days after
the meeting in Paris, Hillman had sent Khashoggi a twelve-point
memorandum, dated December 26, 2002, setting the conditions
that Iraq would have to meet. “It is my belief,” the memorandum
stated, “that if the United States obtained the following
results it would not go to war against Iraq.” Saddam would have
to admit that “Iraq has developed, and possesses, weapons of
mass destruction.” He then would be allowed to resign and leave
Iraq immediately, with his sons and some of his ministers.

Hillman sent Khashoggi a second memorandum a week later, the
day before the lunch with Perle in Marseilles. “Following our
recent discussions,” it said, “we have been thinking about an
immediate test to ascertain that Iraq is sincere in its desire
to surrender.” Five more steps were outlined, and an ambitious
final request was made: that Khashoggi and Zuhair arrange a
meeting with Prince Nawaf Abdul Aziz, the Saudi intelligence
chief, “so that we can assist in Washington.”

Both Khashoggi and Zuhair were skeptical of the memorandums.
Zuhair found them “absurd,” and Khashoggi told me that he thought
they were amusing, and almost silly. “This was their thinking?”
he recalled asking himself. “There was nothing to react to. While
Harb was lobbying for Iraq, they were lobbying for Perle.”

In my initial conversation with Hillman, he said, “Richard had
nothing to do with the writing of those letters. I informed him
of it afterward, and he never said one word, even after I sent
them to him. I thought my ideas were pretty clear, but I didn’t
think Saddam would resign and I didn’t think he’d go into exile.
I’m positive Richard does not believe that any of those things
would happen.” Hillman said that he had drafted the memorandums
with the help of his daughter, a college student. Perle, for his
part, told me, “I didn’t write them and didn’t supply any content
to them. I didn’t know about them until after they were drafted.”

The views set forth in the memorandums were, indeed, very
different from those held by Perle, who has said publicly that
Saddam will leave office only if he is forced out, and from
those of his fellow hard-liners in the Bush Administration. Given
Perle’s importance in American decision-making, and the risks of
relying on a deal-maker with Adnan Khashoggi’s history, questions
remain about Hillman’s drafting of such an amateurish peace
proposal for Zuhair. Prince Bandar’s assertion—that the talk of
peace was merely a pretext for some hard selling—is difficult to
dismiss.

Hillman’s proposals, meanwhile, took on an unlikely life of their
own. A month after the lunch, the proposals made their way to Al
Hayat, a Saudi-owned newspaper published in London. If Perle had
ever intended to dissociate himself from them, he did not succeed.
The newspaper, in a dispatch headlined “washington offers to avert
war in return for an international agreement to exile saddam,”
characterized Hillman’s memorandums as “American” documents and said
that the new proposals bore Perle’s imprimatur. The paper said that
Perle and others had attended a series of “secret meetings” in an
effort to avoid the pending war with Iraq, and “a scenario was
discussed whereby Saddam Hussein would personally admit that his
country was attempting to acquire weapons of mass destruction and
he would agree to stop trying to acquire these weapons while he
awaits exile.”

A few days later, the Beirut daily Al Safir published Arabic
translations of the memorandums themselves, attributing them
to Richard Perle. The proposals were said to have been submitted
by Perle, and to “outline Washington’s future visions of Iraq.”
Perle’s lunch with two Saudi businessmen was now elevated by Al
Safir to a series of “recent American-Saudi negotiations” in
which “the American side was represented by Richard Perle.” The
newspaper added, “Publishing these documents is important because
they shed light on the story of how war could have been avoided.”
The documents, of course, did nothing of the kind.

When Perle was asked whether his dealings with Trireme might
present the appearance of a conflict of interest, he said that
anyone who saw such a conflict would be thinking “maliciously.”
But Perle, in crisscrossing between the public and the private
sectors, has put himself in a difficult position—one not uncommon
to public men. He is credited with being the intellectual force
behind a war that not everyone wants and that many suspect, however
unfairly, of being driven by American business interests. There is
no question that Perle believes that removing Saddam from power is
the right thing to do. At the same time, he has set up a company
that may gain from a war. In doing so, he has given ammunition not
only to the Saudis but to his other ideological opponents as well.
http://www.newyorker.com/fact/content/?030317fa_fact

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