Audit connects Mattis DOD and a consultant linked to Amazon


A closer look Pentagon audit last year shows Sally Donnelly was senior advisor to former Defense Secretary James Mattis when she received more than $ 1 million in payments for her part from a consulting firm Amazon from UK financier André Pienaar – and not from a US investor, as previously reported. One of those payments came in the same month, Pienaar and his partner, former Amazon executive Teresa Carlson, attended a dinner party with Donnelly and Mattis as the Pentagon developed a $ 10 billion contract for them. cloud computing services that Amazon was looking for.

The Joint Enterprise Defense Infrastructure, or JEDI, contract has been the subject of numerous investigations and lawsuits regarding the alleged preferential treatment accorded by the Pentagon to Amazon during the drafting of the solicitation and the surprise decision to award the award of $ 10 billion to Microsoft in October 2019. Potential bidders like Oracle were outraged that the terms of the solicitation were supposed to favor Amazon, while Amazon argued that former President Donald Trump’s contempt for Jeff Bezos and the alleged intervention in the program tipped the scales in Microsoft’s favor. The Bezos-owned company is currently challenging the JEDI contract in the United States Federal Claims Court, delaying the program so significantly that the military has started pursuing their own cloud service agreements with Amazon, Microsoft and others. . The Ministry of Defense can now decide to abandon the JEDI program altogether.

Earlier reports suggested that Donnelly’s share had been bought by a US investor. The revelation that Pienaar was the real buyer of Donnelly’s 80 percent stake in the consulting firm, SBD Advisors, was buried in an audit released last year by the Pentagon Inspector General on alleged ethical misconduct in JEDI supply. The audit has received little public attention despite adding a new twist to the myriad of ethical concerns surrounding the contract and a military-industrial complex that has been made even more powerful by the pipeline of defense officials from the Trump era to Donnelly’s new venture, Pallas Advisors.

Pallas Advisors, which Donnelly founded in 2018 with Tony DeMartino, a former deputy chief of staff at Mattis, who also worked as managing director of SBD Advisors, has become a haven for Defense Department officials of the era. Trump. Former Secretary of the Navy Richard Spencer, Director of Cost and Program Evaluation Bob Daigle, Senior Deputy Director of Information Essye Miller and Senior Deputy Director of National Intelligence Sue Gordon all do part of the company’s staff or advisory board. Separately, Senate-confirmed Under Secretary of Defense for Intelligence and Security to President Joe Biden, Ron Moultrie is a former member of the board of directors of Pallas Advisors.

Pallas Advisors did not respond to a request for communication with Donnelly regarding the Inspector General’s report on JEDI procurement.

Donnelly sold his majority stake in SBD Advisors, which helped educate Amazon and other clients about the inner workings of the Pentagon, in January 2017, before joining Mattis in the Department of Defense. (Donnelly had intimate knowledge of the Department of Defense due to his work in the early 2010s as head of the Washington bureau for Mattis, then chief of the United States Central Command.) It was only there. In the summer of 2018, shortly after Donnelly left the Pentagon to launch Pallas Advisors, a possible conflict of interest involving the payments for the sale arose.

Donnelly had sold her 80% stake in SBD Advisors and received $ 390,000 in January 2017 before joining the Department of Defense, which she disclosed in her mandatory financial disclosure form in May of that year. What the form did not reveal, the Daily reported call, was that Donnelly had received an additional $ 390,000 in March, over dinner with Carlson and Mattis, and that he would continue to receive two more payments while working for the Pentagon. Donnelly did not report the payments until she filed a new financial statement when she left the Department of Defense.

It was not until the summer of 2018 that a possible conflict of interest regarding the payments for the sale emerged.

SBD Advisors spokesperson Price Floyd told the Daily Caller that Donnelly sold his stake to a group of investors led by Win Sheridan, a US venture capitalist with little or no experience in the investment industry. defense. Pienaar was not mentioned.

It was a glaring omission. The Pentagon audit does not mention any involvement of Sheridan in the purchase by Donnelly; he only names Pienaar, the head of British investment firm C5 Capital, a client of SBD Advisors who has done business with Amazon. Pienaar was also dating, and is now married to, then-Amazon executive Carlson when they attended a dinner in London in March 2017 with Mattis and Donnelly. This is the same month that Donnelly received one of Pienaar’s payments of $ 390,000 for the sale of SBD Advisors that she omitted from her financial disclosure form.

Amazon has refuted the allegations of wrongdoing due to its relationship with C5 Capital. After an apparent campaign during the JEDI bidding process to smear Amazon over C5 Capital’s alleged ties to a Russian oligarch, the Bezos-owned company publicly denied in December 2018 that its work with Pienaar’s company had something to do with the Department of Defense cloud services. program.

Nevertheless, the Wall Street Journal reported that Mattis and Carlson met at the London dinner. An organizer of the dinner said cloud computing was not discussed, according to the Journal, although the dinner supposedly laid the groundwork for a future meeting between Mattis and Bezos. ProPublica reported that the two met again in January 2018, as the Pentagon was finalizing a draft solicitation for the JEDI contract. An Amazon spokesperson denied that the meeting had anything to do with the cloud services program.

The Pentagon is quick to admit that it has adopted a deliberate strategy in recent years to strengthen relationships with contractors.

Regardless, the Pentagon does not hesitate to admit that it has adopted a deliberate strategy in recent years to strengthen relationships with contractors so that defense officials can better understand the industry’s offerings and that suppliers can better understand the needs of the military. The goal is to improve on the Defense Department’s notoriously slow and opaque acquisition process that only large, traditional defense firms are able to navigate – ironic given the delays that investigations into the ethical faults surrounding relationships also have. narrow have caused the JEDI program. The Defense Ministry did not immediately respond to a request for comment.

Despite no indication that the Inspector General of the Department of Defense questioned Pienaar during the review of the purchase of cloud services, the auditor found that Donnelly did not violate ethical obligations regarding its financial disclosures nor granted preferential treatment to Amazon. That did not allay the concerns of Sen. Mike Lee, R-Utah, and Rep. Ken Buck, R-Colo., Ranking members of the Senate and Judiciary Chamber antitrust subcommittees, respectively, who requested the Last month the Department of Justice conducted an antitrust investigation into Amazon’s behavior and wrote a letter to the Pentagon claiming Donnelly’s conduct indicated “the laws had been broken.”

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