Global Policy Forum

By Stephen Labaton

Richard N. Perle resigned today as chairman of an influential Pentagon advisory board in the wake of disclosures that his business dealings included a recent meeting with a Saudi arms dealer and a contract to advise a communications company that is seeking permission from the Defense Department to be sold to Chinese investors.

The departure, announced by the administration, came after growing criticism of Mr. Perle's business ties while he was serving as chairman of the Defense Policy Board, a collection of experts and former government officials who have access to classified information and are unpaid advisers to the defense secretary on military issues. The Pentagon said Mr. Perle, who has many friends in the senior ranks of the administration and was appointed to the chairman's post in 2001 by Defense Secretary Donald H. Rumsfeld, would remain on the board. The communications company, Global Crossing, also announced that Mr. Perle had decided to sever his ties with it.

Earlier this week, Representative John Conyers Jr. of Michigan, the ranking Democrat on the Judiciary Committee, asked the Pentagon to conduct an examination of Mr. Perle's business dealings. And on Wednesday, Senator Carl Levin of Michigan, the senior Democrat on the Armed Services Committee, wrote a letter to Mr. Rumsfeld urging him to force Mr. Perle to choose between his job on the Defense Policy Board and his business.

In a letter to Mr. Rumsfeld dated Wednesday, Mr. Perle said he was "dismayed" that criticism of his business ties was distracting Pentagon officials while they were grappling with the war in Iraq. "I have seen controversies like this before, and I know that this one will inevitably distract from the urgent challenge in which you are now engaged," Mr. Perle wrote. "I would not wish to cause even a moment's distraction from that challenge. As I cannot quickly or easily quell criticism of me based on errors of fact concerning my activities, the least I can do under these circumstances is to ask you to accept my resignation as chairman of the Defense Policy Board."

Last week, Mr. Perle defended the appropriateness of his fee arrangement with Global Crossing, which had agreed to pay him $600,000 on top of his $125,000 retainer if the Pentagon and other government agencies approved its sale. But in his letter, Mr. Perle reversed himself and said he would not accept any compensation resulting from completion of the deal. He also said that "any fee for past service would be donated to the families of American forces killed or injured in Iraq."

In a brief phone conversation this afternoon before the Pentagon's announcement, Mr. Perle sounded angry. Asked whether he had resigned, he replied: "Let me just tell you something. If I had, you'd be the last person in the world I'd want to talk to." He then slammed down the phone.

Mr. Rumsfeld issued a statement tonight praising Mr. Perle's service and his "willingness to continue to serve" as a member of the board. "Richard Perle has a deep understanding of our national security process and an abiding interest in preserving America's strength and freedom," Mr. Rumsfeld said. "He has been an excellent chairman and has led the Defense Policy Board during an important time in our history."

Other senior officials at the Pentagon were relieved about the decision. For months, some senior Defense Department officials have expressed discomfort with Mr. Perle's public statements on foreign policy and military affairs, especially Iraq, because they appeared to carry the implication they had Mr. Rumsfeld's sanction when in fact they may not have. Mr. Perle's statements were often far more hawkish than the Bush administration's public line.

But his recent troubles emerged from disclosures this month about his business dealings. They began with an article in The New Yorker by Seymour M. Hersh that disclosed that Mr. Perle had lunch earlier this year with the arms dealer Adnan Khashoggi. Mr. Perle responded to the article by calling Mr. Hersh a terrorist and threatening to sue him in a British court for libel.

Last week, Mr. Perle and lawyers involved in Global Crossing's bankruptcy disclosed that he had been retained to advise the company on how to overcome Defense Department objections to its sale to an Asian venture led by Hutchison Whampoa, controlled by Li Ka-shing, the Hong Kong billionaire.

Global Crossing is rewriting its proposal for the sale after the Defense Department and the F.B.I. objected, raising national security and law enforcement concerns. Lawyers say the proposal will soon be resubmitted to the Committee on Foreign Investment in the United States, a government group that raised the objections to the deal and includes representatives from the Defense Department, the F.B.I. and other agencies.

In an affidavit that he signed but that was never filed in the bankruptcy proceeding, Mr. Perle said he was retained by Global Crossing to gain the approval of the transaction by the committee because of his former job as an assistant defense secretary in the Reagan administration and his current position on the Defense Policy Board. "As the chairman of the Defense Policy Board, I have a unique perspective on and intimate knowledge of the national defense and security issues that will be raised by the C.F.I.U.S. review process that is not and could not be available to the other C.F.I.U.S. professionals," he said, referring to the committee. Mr. Perle said that he had not read the affidavit carefully before he signed it and that the reference in the affidavit to the Defense Policy Board had been "a clerical error" that should have been deleted.

In recent days, criticism began to rise from Democratic lawmakers. Mr. Conyers asked the inspector general at the Pentagon to examine Mr. Perle's business dealings. And Senator Levin sent a letter to Mr. Rumsfeld expressing "deep concern" about the reports of Mr. Perle's business relationships. "I believe that Mr. Perle should be asked to make a choice," Mr. Levin wrote, "between stepping down from the Defense Policy Board or making a commitment not to have any further contact with D.O.D. officials on behalf of a client, not to allow his name to be used in connection with any such contact, and not to accept any fee that is contingent upon an action of the Department of Defense."

Through a senior aide, Mr. Conyers said today that Mr. Perle's decision "is a step in the right direction, but it doesn't eliminate the problem" until he leaves the board.

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