Eric Schmidt, Co-Founder, Schmidt Futures, speaks in the course of the Milken Institute Global Conference on May 2, 2022 in Beverly Hills, California.
Patrick T. Fallon | AFP | Getty Images
Sen. Elizabeth Warren on Tuesday pressed Defense Secretary Lloyd Austin about his agency’s enforcement of conflict-of-interest rules for federal advisory boards, zeroing in on former Google CEO Eric Schmidt after CNBC reported on his past involvement on influential panels in an industry where he was an investor.
“Federal advisory boards can provide beneficial advice and insights to federal agencies, but without strong oversight and clear guardrails they may also provide their board members an unfair competitive advantage in winning government contracts and influencing agency policy,” Warren wrote in a letter to the DOD head.
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Warren said she was concerned about reports alleging Schmidt leveraged his positions on two federal advisory committees “to further his own personal financial interests.” Those reports could suggest the Defense Department didn’t adequately apply federal conflict of interest rules “and due to this fact didn’t protect the general public interest” in Schmidt’s case, wrote the Massachusetts Democrat.
Warren, who sits on the Senate Armed Services Committee and leads congressional subcommittees on economic policy and monetary responsibility, asked Austin to detail the Pentagon’s conflict-of-interest policy for advisory board members and answer multiple questions on Schmidt’s service on the panels.
Schmidt made greater than 50 direct personal or indirect corporate investments in AI corporations while he was serving because the chairman of the National Security Commission on Artificial Intelligence, or NSCAI, she said, citing a CNBC article from October. The group, established in 2018, advised the Pentagon and White House on AI policy — even crafting legislative language that later passed word for word — and helped steer billions of dollars in spending toward the AI industry. The group wound down in 2021.
Walter Shaub, a senior ethics fellow on the Project on Government Oversight, told CNBC on the time that Schmidt’s investments “absolutely” posed a conflict of interest. There was no indication that Schmidt broke any ethics rules or did anything illegal while chairing the commission.
Warren’s letter referenced Schmidt’s work on the NSCAI and the Defense Innovation Board. Each advisory boards are subject to conflict-of-interest rules under the Federal Advisory Committee Act.
“These boards can exert significant influence in shaping government research and procurement priorities, making it essential that agencies prevent and mitigate conflicts of interest,” the senator wrote. “I’m concerned by press reports indicating the Department may not have adequately followed FACA conflict of interest rules and due to this fact didn’t protect the general public interest.”
The NSCAI under Schmidt advocated for a serious boost in government spending on AI. “But Mr. Schmidt has a transparent conflict of interest on this issue: the NSCAI recommendations could direct funds to Mr. Schmidt and his business partners, who’ve invested greater than $2 billion in corporations focused on artificial intelligence,” Warren wrote, citing reporting from Protocol.
“Mr. Schmidt’s investment activities, and the dearth of public disclosure, create the looks that these boards are yet one more tool for influence-peddling and profiteering at DoD, raising concerns in regards to the ethics of their members and the utility of their recommendations,” Warren wrote.
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