Ex-Dole Aide Was Paid Large Fees by Firms That Won Army Contracts

David C. Owen, until recently national finance director of Sen. Bob Dole’s presidential campaign, received large consulting fees from two Kansas businessmen after Dole’s office joined Owen in helping the businessmen win big Army contracts, The Times has learned.

Owen, who resigned 10 days ago from the campaign post after controversy over his close ties to the so-called “blind trust” of the senator’s wife, Elizabeth Hanford Dole, helped in 1985 to establish EDP Enterprises of Overland Park, Kan., a firm that has received a $26-million no-bid contract to provide food services for the Army. EDP is headed by John Palmer, a friend of Owen’s who, like Owen, has had political ties to Dole. Palmer was the Kansas senator’s field representative from 1980 to 1982.

The U.S. Small Business Administration is investigating allegations that Palmer, a black businessman who obtained the contract on grounds he headed a minority-owned company, may have been fronting for Owen, who is white.

But there have been no allegations that the senator or his wife have acted improperly in regard to any of the business dealings.

Second Contract

The second contract involving Owen as a consultant, for $1.4 million, was awarded last year by the Army to Darol Rodrock, a Leavenworth, Kan., apartment owner, to house military officers at the sprawling Ft. Leavenworth Army base.

The Washington Post reported Sunday that Palmer has paid $4,500 a month to Owen since the beginning of his three-year Army contract in February, 1986. Additionally, The Times learned that Owen has a $7,000-a-month consulting agreement with Rodrock.

When asked Sunday in Washington about the new Owen revelations, Dole said: “I’m disappointed in David Owen, I can say that. He’s out of the campaign. He’ll never be in the campaign again or anything else that Bob Dole has anything to do with.”

In response to inquiries last week, Dole’s Washington office acknowledged that it had contacted the SBA on behalf of Palmer and the Army on behalf of Rodrock to support their efforts to win the separate contracts. But aides insisted that Dole, the Senate minority leader who has strong influence with the Reagan Administration, simply wanted to ensure that the contracts were awarded fairly.

Dole said he believed Palmer was well-qualified to receive a minority business contract.

Owen told the Kansas City Times that he helped lobby Army officials to obtain the contract for Rodrock. But Owen said no political influence was needed to get it. Army officials last week denied a request by The Times to examine their files on both the EDP and Rodrock contracts, citing the confidentiality of such records. Owen, through a spokesman, declined to be interviewed, and attempts to reach Rodrock were unsuccessful. Palmer did not return phone messages left at EDP headquarters.

Listed as Sole Owner

Palmer is listed as the sole owner of EDP and thus was seemingly qualified to receive a no-bid Army contract under the program for minority businessmen sponsored by the SBA, according to public records in the secretary of state’s office in Topeka, the state capital.

However, William Powell, the SBA regional administrator here, said his office is cooperating with officials in Washington in reviewing Palmer’s qualifications, in the light of allegations that EDP actually may have been a front for the interests of Owen. The House Small Business Committee, headed by Rep. John J. LaFalce (D-N.Y.), has launched a similar inquiry.

Lending some support to these allegations is the fact that most of the officers and directors of EDP are identical to those of Owen’s principal company, Owen & Associates, a consulting and real estate investment firm. They include Sara Cedarholm, a longtime Dole campaign assistant, who is treasurer of both companies.

Public records show that these same people serve as officers and directors of Eagle Distributors Inc., a company formed by Owen in March, 1986, one month after EDP won its Army food service contract.

Eagle was formed to become the principal subcontractor to EDP, providing wholesale food containers and paper products to help EDP supply food to mess halls at the Ft. Leonard Wood Army base in Missouri. Owen’s Eagle firm has received $160,000 from Palmer’s EDP.

Besides their interlocking officers and business interests, all three companies--EDP, Eagle and Owen & Associates--list the same office suite in Overland Park as their headquarters.

The SBA said on Jan. 12 that a preliminary investigation had found no evidence that Dole had exercised “undue influence” on the SBA in its selection of EDP.

Four days later, in revealing records of the Elizabeth Dole trust as well as their joint income tax returns, Sen. Dole also issued a statement denying any impropriety in his efforts to help Palmer win the Army contract. Dole’s statement did not address consulting fees for Owen, which were not publicly known at the time.

‘His Own Efforts’

Dole said that “a review of the John Palmer file shows that while we did help him establish contact with the SBA, as we would do for any constituent, he later secured the contract through his own efforts as a subcontractor.”

Dole said his efforts to help Palmer dated back to November, 1983, about a year after Palmer had left Dole’s Kansas staff. Palmer at that time was seeking a food service contract with the Ft. Sill Army base in Oklahoma.

After failing in that effort, Palmer turned his attention to the Ft. Leonard Wood business when the food service contractor there “encountered some difficulties,” Dole said. Palmer moved in as a subcontractor and “demonstrated his competence” for taking over the business when the contract came up for renewal in 1986, according to the senator’s statement.

Dole noted that the SBA minority enterprise program “is designed to benefit fledgling minority businesses such as EDP.”

Owen, although declining to discuss his business affairs in detail, issued a two-page statement late last week denying he had violated any legal or ethical constraints. But he acknowledged that “I should have been more careful with the appearance of some activities.”

Owen, who served a two-year term as lieutenant governor of Kansas from 1973 to 1975, obtained a position as financial adviser to the Elizabeth Dole blind trust despite the fact that he has had longtime financial and political ties to the Doles. For example, Owen had managed Dole’s 1974 Senate campaign as well as Dole’s 1980 bid for the Republican nomination for President. In 1984, about a year before the Elizabeth Dole trust was established, Owen borrowed $250,000 from Mrs. Dole to help finance Golfun Productions, a company he set up to produce a television movie on golf.

The Doles have expressed dismay at Owen’s connection with the trust, saying they knew nothing about it because the trust was blind to protect Mrs. Dole from any potential conflict of interest while she served as Reagan’s secretary of transportation from 1985 until late last year.

In such instances, the trustee is empowered to buy or sell stocks, real estate or other assets of the trust without consulting or even informing the Cabinet member, such as Mrs. Dole. The trustee also is empowered to hire financial advisers.

Washington Attorney

The trustee who handled Mrs. Dole’s affairs is Mark McConaghy, a Washington attorney. He has so far declined to explain the situation. Sen. Dole, in forcing Owen to leave the campaign on Jan. 14, said of the situation: “That’s not my problem. That’s Dave Owen’s problem.”

Trust records show that the office building that houses the business interests of Owen and Palmer was purchased by the Dole trust for $1.3 million in January, 1986, partly with a $1-million loan from a Kansas insurance company on whose board Owen subsequently took a seat.

Later that same year, the building was sold for $1.6 million to a partnership in which the Dole trust and Palmer’s EDP firm each assumed one-half interest, the records show. The Dole trust lent EDP $279,000 to help it purchase its half-interest in the building, and Owen reportedly realized a $139,000 commission on the sale.

In his statement, Owen insisted that “in my advisory capacity with the Dole trust, the blindness of the trust was respected. At no time did I discuss the transactions of the trust with either the Senator or Mrs. Dole.”

Owen added that “any and all loans made by the Elizabeth Dole trust to enterprises with which I was involved were repaid in full with interest.”

Staff Writer Frank Clifford contributed to this story from Washington.