Sen. James Inhofe of Oklahoma, the Republican chairman of the Senate Armed Services Committee, bought tens of thousands of dollars of stock in the defense contractor Raytheon after pushing for record military spending, The Daily Beast has reported.
Inhofe, who took over the committee after the death of Sen. John McCain in August, has repeatedly pushed for President Donald Trump to increase military spending.
Last week, Trump suggested that he wanted to scale back some of the increases to the Pentagon budget, which he called “crazy” despite having pushed to increase it previously. But Trump apparently had a change of heart after meeting with Inhofe and the administration said it would instead call for a record $750 billion in funds for the next fiscal year. The Pentagon’s current annual budget is at around $717 billion.
The announcement from the administration came Sunday. Two days later, Inhofe’s financial adviser purchased between $50,001 and $100,000 in Raytheon stock, according to a financial disclosure form.
On Wednesday, Inhofe’s office said that the senator was unaware of the stock purchase and dumped the stock once he learned about it.
“All of Senator Inhofe’s financial transactions are handled by a third-party advisor,” Inhofe spokeswoman Leacy Burke told The Daily Beast. “The senator has had no involvement in and has not been consulted about his stock transactions.”
“The Senator has called his financial advisor and they reversed, or busted, the transaction,” Burke added. “This means that the transaction was canceled before it was settled; the Senator never took ownership of it.”
Burke also provided the outlet with a letter Inhofe wrote to his adviser instructing him not to purchase any defense or aerospace stock. The letter, The Daily Beast reported, was created less than 20 minutes after the outlet tried to reach the office for comment, according to the metadata.
"Because of my new position as chairman of the Senate Armed Services Committee, it is important for me to not own or trade any defense or aerospace companies," the letter said.
While federal lawmakers are barred from buying or selling stock based on information that has not been released to the pubic, Inhofe’s purchase did not violate the rules since it came after the Pentagon announcement was reported. But ethics experts say the trade shows that inherent potential conflicts of interest come with allowing lawmakers to own stock in industries they oversee.
“We have no way of knowing what kind of relationship Inhofe has with whoever is managing his money/trust and it's wild to take it on good faith that he has some kind of puritanical self-imposed barrier in place that prevents him from communicating in any way with his broker about his trades,” Alex Baumgart of the Center for Responsive Politics told The Daily Beast.
“The requested defense budget increase was no longer ‘nonpublic’ because it had already been publicized,” added Brendan Fischer of the Campaign Legal Center. “But Inhofe likely has other nonpublic inside information, such as insight into what the final budget will look like and which industries stand to benefit.”
Inhofe previously bought stock in Fluor, another defense contractor, but he sold his shares before taking over the Armed Services Committee.
He previously owned stock in energy companies Continental Resources and Newfield Exploration while he chaired the Senate Environment and Public Works Committee. The stock was held in the same trust as the Raytheon stock he briefly purchased this week.
Earlier this year, Rep. Chris Collins of New York, a Republican, was charged with insider trading related to shares in Australian biotechnology firm Innate Immunotherapeutics Ltd., which he sold with insider knowledge gained while attending an event at the White House.
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