Facebook CEO Mark Zuckerberg just welcomed former DARPA head Regina Dugan as chief of Building 8, the company’s new research and development lab, despite her history of violating ethics by appearing to use her position to fill the coffers of a private company she partially owned.
The Defense Advanced Research Projects Agency, during Dugan’s 2009-2012 tenure as director, granted expensive contracts to RedXDefense, which Dugan partly owned along with her family. To make matters more complicated, RedXDefense also owed Dugan $250,000 dollars.
Wired Magazine back in 2011 obtained Dugan’s financial records, which indicated that funds coming out of DARPA may have indirectly circulated right back to her.
The whole incident looks suspiciously like a deep conflict of interest.
At the time, DARPA denied any sort of conflict of interest. Yet, the Project on Government Oversight felt otherwise. POGO director of investigations Nick Schwellenbach said, “Dugan should have known better. She should have divested herself from her financial interest in this company.”
According to Wired’s 2011 report, Dugan’s financial report in 2010 stated that RedXDefense owed her $250,000. She also claimed in the report anywhere between $100,001 and $250,000 from the company. Dugan’s father served as CEO at the time.
Interestingly, about six months prior to filing that report, DARPA issued the company a $400,000 contract.
But in the process of becoming director of the agency in July 2009, Dugan stated, “Effective immediately, I am disqualified from participating personally and substantially” in activities that would affect revenues at RedXDefense. When she made that statement, she had about $15,000 in company stock.
The key is in deciding whether her activities had anything to do with the bottom line at RedXDefense.
DARPA maintains the negative.
“At no time did Dr. Dugan participate in any dealings between the agency and RedXDefense related to the contract,” DARPA spokesman Eric Mazzacone told Wired.
However, the inspector general at the Department of Defense disagreed, finding serious ethics violations in a report released in 2014.
The report stated that Dugan “violated the JER [Joint Ethics Regulation] prohibition against endorsements, and that her actions were inconsistent with the JER’s direction to avoid actions which created the appearance of a violation. In communications with senior DoD officials, she used RedX proprietary and other materials originally developed for and used in RedX sales presentations. She advanced a theory integral to RedX product development, promoted a multi-step process the RedX product suite used to implement the theory, highlighted the results of field trials that used RedX products to demonstrate the efficacy of the theory and process, and featured a RedX sales slogan. She also endorsed the adoption of an effort to put sensors on dogs, an extension of a DARPA project on which RedX performed.”
The report also determined “Dugan implicitly endorsed RedX to DoD officials who were in a position to create business opportunities for RedX.”
Although DARPA claimed she had been totally transparent, the inspector general found she failed to disclose crucial details of her relationship with RedXDefense to ethics officials.
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