US: Deputy SecDef could earn $500K lobbying Pentagon

The man nominated to be the Pentagon's second-in-command could make at least a half-million dollars next month with vested stock he earned as a lobbyist for military contractor Raytheon.

William J. Lynn has said he will sell his Raytheon stock. Lynn was tapped to be deputy defense secretary despite an Obama administration order against "revolving door" lobbyists who become public officials.

Financial disclosure documents obtained Tuesday by The Associated Press show Lynn owns Raytheon "incentive" stock valued between $500,001 and $1 million. That stock is set to vest in February, the documents show.

Additionally, Lynn owns Raytheon "unvested restricted stock" valued between $250,001 and $500,000, the documents show.

As a Raytheon lobbyist, Lynn worked on matters with far reach across the Pentagon, including contracting policy, the military's use of space, missile defense, munitions and artillery, sensors and radars, and advanced technology programs.

Raytheon is one of the military's top contractors, with $18.3 billion in U.S. government business in 2007.

The documents show Raytheon also gave Lynn a 2008 cash bonus of between $100,001 and $250,000 to be paid in March of this year. Lynn received a salary of $369,615 last year as a senior vice president at Raytheon, where he began working in August 2002.

Initially, Senate Democrats and Republicans alike balked at Lynn's nomination, citing concerns about a potential conflict of interest in running the massive department he lobbied for six years.

Shortly after taking office, President Barack Obama issued ethics requirements prohibiting individuals from working for government agencies they have lobbied in the past two years.

But last week, the Obama administration gave the Senate Armed Services Committee a waiver exempting Lynn from two specific sections: a two-year prohibition on employees from participating in decisions related to their former employers and a more specific section banning individuals from taking jobs in the agencies they recently lobbied.

Instead, Lynn's dealings at the Defense Department will be subject to ethics reviews for one year.

The exemption appeared to satisfy Senate Armed Services Chairman Sen. Carl Levin, D-Mich., who said he would support Lynn's nomination. However, Sen. John McCain of Arizona, the top Republican on the panel, signaled he would wait before backing Lynn, saying he was disappointed that a recently employed lobbyist had been nominated to the No. 2 position at the Pentagon.

Lynn's nomination is expected to move forward.

Testifying before the Senate panel Tuesday, Defense Secretary Robert Gates said stringent ethics rules are a major reason it is difficult to fill top posts at the Pentagon.

Gates said he understands the impulse to apply the most rigorous ethics scrutiny, but added it was time to ensure we are not "cutting off our nose to spite our face."

Gates sought Lynn as his deputy and did not want him to have to recuse himself outright from all decisions involving Raytheon because it would severely limit his ability to do his job.

Lynn also served as a board member of the Center for New American Security, a Washington think tank, and the Electronic Industries Alliance, a trade association for high-tech firms and manufacturers.

Meanwhile, financial disclosures for another top Pentagon pick also shows ties to military contractors.

Michele Flournoy, Obama's nominee for the Pentagon's No. 3 job, undersecretary of defense for policy, is partner with her husband in a consulting firm whose clients include major defense contractors Lockheed Martin and BAE Systems North America, her financial disclosure report shows. She said the firm will be dormant during her time at the Pentagon.

Flournoy disclosed receiving $60,000 in consulting fees from the firm, AVA Partners, and a salary of $254,820 from her role as president and co-founder of the Center for a New American Security.

Jeh Johnson, nominated to be the Pentagon's top lawyer, owns stock valued at $1,001 to $15,000 in a number of defense contractors, including Alliant Techsystems, Lockheed Martin, L3 Communications and General Electric, according to his disclosure report.

The documents also show Johnson will be giving up a seven-figure salary as a private-sector attorney. He earned just over $2.6 million as a partner at Paul, Weiss, Rifkind, Wharton and Garrison, an international law firm.

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