US Senator Elizabeth Warren is urging President Trump's nominee for Under Secretary of the Army to sell his ownership in a defense contractor, which experts say would constitute a blatant conflict of interest.

Michael Obadal, nominated for the Army’s second-highest civilian position, disclosed in a federal ethics agreement obtained by The Intercept that he owns between $250,000 and $500,000 in shares of Anduril Industries, where he has served as an executive for the past two years. Despite long-standing ethical norms, Obadal has stated he will not sell his stake.

In a letter sent to The Intercept ahead of Obadal’s Senate confirmation hearing on Thursday, Warren (D-Mass.) urged him to sever ties with Anduril, describing the situation as a “textbook conflict of interest."

Warren, a member of the Senate Armed Services Committee, argued that Obadal's stock holdings "will compromise your ability to serve with integrity, raising a cloud of suspicion over your contracting and operational decision."

"By attempting to serve in this role with conflicts of interest, you risk spending taxpayer dollars on wasteful DoD contracts that enrich wealthy contractors but fail to enhance Americans' national security," according to Warren.

Financial disclosures reveal deeper ties to defense industry

According to a more extensive financial disclosure form acquired by The Intercept, Anduril represents only a portion of Obadal's military interests. The form indicates that Obadal's retirement investment account includes shares in both General Dynamics, which conducts billions of dollars of business with the Army, and Howmet Aerospace, a smaller company. 

While candidates are not required to disclose the exact amount of their interests, Obadal claims his stakes in General Dynamics and Howmet are valued between $2,000 and $30,000.

Don Fox, former acting director of the United States Office of Government Ethics, told The Intercept that neither stock should be excluded from conflict of interest rules under federal law. "The fact that they are within either a traditional or Roth IRA doesn't impact the conflict of interest analysis," he stated, adding that he was "not sure why he would be allowed to keep those."

"A DoD contractor is a DoD contractor," Fox asserted, adding, "The degree of their business with DoD or what they do isn’t material. A lot of people were surprised for example that Disney was/is a DoD contractor. For a Senate confirmation position, they would have had to divest.”

Commitments needed to increase Americans' trust 

Obadal has stock in other companies that do business with the Pentagon, such as Microsoft, Amazon, Thermo Fisher Scientific, and Cummins, which makes diesel engines for the Army's Bradley Fighting Vehicle. None of these firms appear in Obadal's ethics letter, which specifies which assets he will and will not dispose of if confirmed.

In his more extensive disclosure paperwork, known as a Form 278, Obadal specifically states that he will be able to exercise his shares in Anduril "if there is an equity event such as the sale of the company, or the company becoming a publicly-traded entity," which might result in a substantial payout. Private investors reportedly valued Anduril at more than $28 billion.

In addition to divesting from Anduril, Warren's letter requests that Obadal sell his stock in these other companies, commit to recusing himself entirely from any Anduril-related matters at the Army, and pledge to avoid working for or lobbying on behalf of the defense sector for four years after leaving the Department of Defense.

"By making these commitments, you would increase Americans' trust in your ability to serve the public interest during your time at the Army," the senator stated, "rather than the special interests of large DoD contractors."