US Secretary of Defence Lloyd Austin. Reuters
US Secretary of Defence Lloyd Austin. Reuters
US Secretary of Defence Lloyd Austin. Reuters
US Secretary of Defence Lloyd Austin. Reuters

Lloyd Austin: Backlash grows after Pentagon kept US defence secretary's surgery a secret


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Questions mounted over the state of US Defence Secretary Lloyd Austin's health on Monday, after the Pentagon failed for days to inform the public about his admission to hospital last week.

Mr Austin, 70, was taken to hospital on January 1 after complications from a recent elective medical procedure.

The Pentagon only told the public on January 5, at the end of a week in which the US conducted a strike in Iraq and tension soared in the Middle East.

“I could have done a better job ensuring the public was appropriately informed. I commit to doing better,” Mr Austin said at the weekend.

National Security Council spokesman John Kirby told reporters on Monday that US President Joe Biden “respects the fact that Secretary Austin took ownership for the lack of transparency”.

“There's an expectation that when a cabinet official becomes hospitalised, that will be notified up the chain of command … Our main focus right now is on Secretary Austin's health and making sure that he gets all the care and support that he needs to to fully recover,” Mr Kirby said.

But the Pentagon on Monday declined to reveal what operation Mr Austin had, only detailing that he was no longer in the intensive care unit.

Pentagon Press Secretary Maj Gen Pat Ryder said Mr Austin was at Walter Reed National Military Medical Centre in good condition.

"He is recovering well and in good spirits," Maj Gen Ryder general said in a statement.

"He is no longer in the intensive care unit and is recovering in a more private area of the hospital. He continues to experience discomfort but his prognosis is good."

Mr Austin's Chief of Staff Kelly Magsamen on Monday directed a formal review of the matter to be completed within 30 days.

In a weekend statement, Roger Wicker, the top Republican on the Senate armed services committee, said the episode “further erodes trust in the Biden administration, which has repeatedly failed to inform the public in a timely fashion about critical events such as the Chinese spy balloon and the withdrawal from Afghanistan”.

The leaders of the House armed services committee, the Congressional group that oversees the Department of Defence, released a bipartisan statement.

“While we wish Secretary Austin a speedy recovery, we are concerned with how the disclosure of the Secretary’s condition was handled,” the statement from Republican Mike Rogers and Democrat Adam Smith read.

“Transparency is vitally important. Secretary Austin must provide these additional details on his health and the decision-making process that occurred in the past week as soon as possible.”

Mr Austin returned to his duties on Friday. He initially had a medical procedure on December 22 but went into intensive care on January 1 after experiencing severe pain.

The White House confirmed that Mr Biden had not been informed. That failure of transparency runs against standard practice with the president and his senior cabinet members.

On Sunday, the Pentagon said Mr Austin remained in hospital at Walter Reed National Military Medical Centre, where he “has full access to required secure communications capabilities and continues to monitor [the Pentagon's] day-to-day operations worldwide”.

The Pentagon Press Association, which represents defence journalists, expressed “outrage” at the Defence Department’s failure to notify the public and the media more quickly about Mr Austin's time in hospital.

And former president Donald Trump, who is likely to clinch the Republican nomination to challenge Mr Biden in the 2024 election, said on Sunday night that Mr Austin should be fired for a "dereliction of duty."

"He has been missing for one week, and nobody, including his boss, Crooked Joe Biden, had a clue as to where he was, or might be," Mr Trump wrote on Truth Social.

Maj Gen Ryder said the National Security Council and Deputy Secretary of Defence Kathleen Hicks were not notified until January 4 that Mr Austin had been in hospital since January 1, AP reported.

Mr Austin has no intention of resigning over the ordeal, Maj Gen Ryder told reporters on Monday, and the White House said there were "no plans for anything other than for Secretary Austin to stay in the job".

President Joe Biden, flanked by Secretary of State Antony Blinken and Secretary of Defence Lloyd Austin, in October 2023. Reuters
President Joe Biden, flanked by Secretary of State Antony Blinken and Secretary of Defence Lloyd Austin, in October 2023. Reuters

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: January 09, 2024, 7:05 AM