Pentagon Watchdog Clears Shanahan of Wrongdoing After Probe

(Bloomberg) -- Acting Defense Secretary Patrick Shanahan was cleared by a Pentagon watchdog of allegations that he violated ethics standards, opening the way for President Donald Trump to decide whether to nominate him to stay in the job.

Investigators for Acting Inspector General Glenn Fine interviewed 33 officials and reviewed 7,300 pages of unclassified and classified documents in reviewing at least six sets of anonymous allegations against Shanahan, including assertions that he showed favoritism to his former employer, Boeing Co.

“We did not substantiate any of the allegations,” the inspector general said in the 36-page report released Thursday. “We determined that Mr. Shanahan fully complied with his ethics agreements and his ethical obligations regarding Boeing and its competitors.”

Shanahan, who had been deputy to Defense Secretary Jim Mattis, took over after Mattis abruptly quit in December. Mattis stepped down in protest over Trump’s vow to draw down U.S. troops in Syria. But Trump has yet to say whether he intends to drop the “acting” from Shanahan’s title by nominating him as defense secretary.

In a statement Thursday, Lieutenant Colonel Joe Buccino, Shanahan’s spokesman, said he has “at all times complied with his Ethics Agreement, which screens Boeing matters to another DoD official and ensures no potential for a conflict of interest with Boeing on any matter.”

The Pentagon inspector general’s review was opened after Shanahan told the Senate Armed Services Committee that he’d welcome an inquiry over an assertion by an advocacy group, Citizens for Responsibility and Ethics, that he’d shown bias toward Boeing, where he was an executive before joining the Trump administration.

The group’s complaint was based on reports by Politico and Bloomberg Government, citing sources that weren’t identified. Politico wrote that Shanahan criticized Lockheed Martin Corp.’s performance on its F-35 fighter and said that Boeing -- his former company that lost the 2001 competition to build the plane -- could have done a better job.

Among the other allegations was that Shanahan pressured General Robert Neller, the Marine Corps Commandant, into buying Boeing F/A-18 fighters. Another was that he threatened to cut other Air Force programs unless General David Goldfein, the service’s chief of staff, supported buying Boeing F-15X fighters.

Warren Sent Allegations

In February, Democratic Senator Elizabeth Warren, a member of the Senate Armed Services Committee, forwarded three additional allegations asserting that Shanahan “pressured the military services to purchase Boeing aircraft,” the report said.

“Our investigation specifically sought to determine what Mr. Shanahan said about Boeing or its competitors, whether he made any of the alleged comments, whether he participated in decisions on Boeing products and whether any actions or comments by Mr. Shanahan violated his ethics agreements or his ethical obligations,” according to the report, which concluded that the allegations weren’t merited.

Still, the report showed Shanahan at times offered what others might have interpreted as praise of Boeing, the No. 2 U.S. defense contractor, and put-downs of rival Lockheed, which is No. 1.

The inspector general found, though, that “Mr. Shanahan did not make comments promoting or favoring Boeing. Rather, Mr. Shanahan shared his aircraft industry experience as an industrial engineer and supply chain manager to highlight best practices, decrease costs, and increase performance for the DoD’s benefit, not to promote Boeing or any specific aircraft.”

Knocking the F-35

On Lockheed’s F-35 jet, the costliest U.S. weapons program, the report said that one witness “said that Mr. Shanahan initially called the F-35 aircraft ‘f---ed up’ early in his tenure as Deputy Secretary of Defense, but changed his opinion about the aircraft after meeting with F-35 pilots.”

Because most of the allegations didn’t identify those who supposedly heard Shanahan’s comments, the inspector general’s report said, investigators interviewed “senior officials who regularly dealt with acquisition and budget issues” as well as “a wide range of witnesses who had frequent interaction with Mr. Shanahan.”

While Trump has praised Shanahan, he also has passed up opportunities to endorse him for defense chief, including during trips together last month to a tank factory in Ohio and to the president’s Mar-a-Lago resort in Florida.

Outspoken Loyalty

Unlike the taciturn Mattis, Shanahan has been outspoken in his loyalty to Trump on issues from the border wall to Syria policy. In an interview in February, he said he’s tried to block out political noise over his role and his vocal support for Trump’s policies.

“Let’s not worry about whether he’s a ‘yes man’ or a ‘no man’ but whether he’s a ‘can-do’ man,” Shanahan said of himself. “I just spend all my time getting stuff done.”

Senate Armed Services Chairman James Inhofe of Oklahoma signaled impatience last month with Shanahan’s status as acting secretary.

But this month, asked if Shanahan will become Trump’s nominee, Inhofe said “I think he will” and added, “Indications are now that it’s going to be him.”

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