DAR AL HARB - U.S.A.: DIANE FEINSTEIN, D-CA, CONFLIC OF INTEREST, SENATE APPROPRIATIONS COMMITEE & MILCON (MILITARY CONSTRUCTION)

Feinstein Conflict Allegations 'Aren't Going Away,' Watchdogs Say
By Fred Lucas
CNSNews.com Staff Writer

Sen. Dianne Feinstein may have had as much of a financial interest in two defense contractors as her husband who controlled them, according to California law. The state's "community property law" could be relevant at a time when the senior Democratic senator from California is facing allegations of a conflict of interest and growing calls for an inquiry.

Feinstein stepped down late last year from the Senate Appropriations Committee's subcommittee on military construction (MILCON) after five years on the panel. The subcommittee was charged with reviewing construction projects, some of which were awarded to the Perini and URS firms owned by Feinstein's husband, Richard Blum.

Feinstein spokesman Scott Gerber said earlier that she left the subcommittee not out of conflict but to be chair of the interior appropriations subcommittee.

The "community property" law in force in California says that any income earned, assets obtained or debts incurred by either partner during a marriage belongs to both partners. The law is typically applied during a divorce, explained family attorney Tilden Moschetti of San Francisco. "A business started during the marriage would definitely be community property," Moschetti told Cybercast News Service. "If not [started] during the marriage, there would still be some community interest, but not 50-50."

Moschetti said he would need more details before he could assess the Feinstein case regarding Blum's companies, but he said she "quite possibly" would be regarded as an owner.

It would be a tough sell to argue otherwise, said Jerry Maly, a certified financial planner and certified public accountant in Houston, Texas, one of nine states that have the law.

"Every penny that belongs to one party belongs to the other party," Maly told Cybercast News Service. "She gets 50 percent of all the contracts. It flows into her own pocket. She might say it's her husband's company. But it's community property assets."

Feinstein spokesman Gerber said none of this was relevant, because Feinstein took no action while serving on the committee for financial gain.

"Neither Sen. Feinstein, nor her office sought to award contracts," Gerber told Cybercast News Service. He added that Congress does not award military construction contracts - the Pentagon does. MILCON is just one review that a project gets before it is approved, he said.

Feinstein also was not privy to extra information on military project via her membership on the subcommittee, Gerber stated. "There was no insider information, it was public information," he said.

'We're keeping track'

But government ethics groups like Judicial Watch counter that Congress often knows what companies are in the best position to bid on a project. Thus, deciding what projects to fund - a powerful role of budget appropriators - can be an indirect way to boost a project.

"I don't think this issue is going away for Sen. Feinstein," Judicial Watch President Tom Fitton told Cybercast News Service. "She was involved in the decision-making process that involved her family's finances."

In the age of earmarks, it's not enough to claim Congress doesn't award contracts, said Tom Schatz, president of Citizens Against Government Waste (CAGW), a taxpayer watchdog group critical of both parties' spending.

"That's what Duke Cunningham said, not to make the comparison," Schatz told Cybercast News Service, referring to the California House member now in federal prison for accepting bribes. "Members know where an earmark is going ... We are keeping track of this."

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Pertinent Links:

1) Feinstein Conflict Allegations 'Aren't Going Away,' Watchdogs Say