Warren says Trump's deputy defense secretary nominee has 'clear conflict of interest'

Sen. Elizabeth Warren is calling out what she sees as a clear conflict of interest in President Trump’s deputy defense secretary nominee Stephen Feinberg, pointing to his ties to a communications company involved in a lawsuit with the federal government.

In a letter released this week, Ms. Warren, Massachusetts Democrat, urged Mr. Feinberg to recuse himself from all Department of Defense “interactions with and decisions” concerning Ligado Networks. The company is involved in a $39 billion lawsuit against the U.S. government over 5G use and property rights. Ligado is also undergoing bankruptcy proceedings.

Ms. Warren argues that since Mr. Feinberg’s private equity company Cerberus Capital Management owns 14% of Ligado’s debt and 24% of its preferred stock, he, his company and his family stand to benefit from a preferable outcome in the lawsuit.

The senator, citing Mr. Feinberg’s previous testimony before Congress, argued he could use his power as deputy defense secretary to secure a preferable settlement for Ligado.

“As the second in command at the Pentagon, you would have the power to influence the DoD’s posture towards the Ligado lawsuit,” Sen. Warren wrote. “If the government loses or settles the case, Cerberus could profit as it ‘would most likely receive some portion of the settlement proceeds.’”

Mr. Feinberg could use his position inside the Pentagon to deliver substantial gifts to his family members, Ms. Warren wrote. Mr. Feinberg has offered to divest his interest in Cerberus through a gift to one of the irrevocable trusts established for his adult children. 

“This is a clear conflict of interest, as you could deal your former company — and your adult children — a multibillion-dollar windfall at the expense of American taxpayers,” Ms. Warren wrote.

The letter calls on Mr. Feinberg to divest his interest in Ligado and promise to recuse himself from any DOD business involving Ligado if confirmed. Ms. Warren also attached questions to the end of the letter that she asked Mr. Feinberg to answer by March 24. 

The senator expressed similar concerns last month. In a Feb. 17 letter, she wrote that Cerberus’ defense investments and Mr. Feinberg’s  Cerberus holdings could constitute a conflict of interest if Mr. Feinberg didn’t divest fully from the company. 

Mr. Feinberg responded the next day with an ethics document, asserting that he would divest fully from Cerberus before joining the DOD.