Ex-SBA Chief Tells of Grant to Wedtech : $5-Million Aid to Bronx Firm Came Amid Lobbying by Nofziger

The former head of the Small Business Administration testified Thursday that, in the midst of lobbying by former White House aide Lyn Nofziger, he committed $5 million in federal aid to a Nofziger client 10 days before it was formally requested.

James C. Sanders said at Nofziger’s trial for illegal lobbying that he acted in 1982 after a deputy to then-presidential counselor Edwin Meese III had shown keen interest in the matter.

Earlier, Nofziger and his business partner, Mark A. Bragg, had lobbied Meese, Sanders and the Meese deputy, James E. Jenkins, on the issue.

Seeks Army Contract

Nofziger’s client, Welbilt Electronic Die Corp.--later renamed Wedtech--needed the $5 million in SBA grants and loans to help qualify for a $32-million, no-bid engine contract that it eventually won from the Army.

Nofziger, President Reagan’s former political director, is charged with breaking a federal ethics law that restricts lobbying by former high government officials at their old agencies. Bragg is accused of aiding and abetting the alleged illegal lobbying.

Under questioning by independent counsel James C. McKay, Sanders testified that he first heard from the White House on the Welbilt contract in April, 1982, shortly after Nofziger wrote Meese that failure to help the minority-owned firm would be “a blunder.”

In a letter to Sanders, Jenkins said that Meese had asked him “to look into the Welbilt problem.” Jenkins wrote that a meeting of SBA, Army and other officials was needed at the White House.

Accepts Invitation

Then in early May, Sanders said, he accepted an invitation to have lunch with Nofziger and Bragg at their lobbying firm. Asked by McKay if “the importance of the contract to the Administration” had been discussed, Sanders at first insisted that he could not recall, but then agreed that he had given such testimony to a grand jury last April.

At a subsequent meeting with Jenkins, Sanders said, “he wanted me to understand the importance to the White House of this project in the South Bronx.”

Welbilt was a Bronx-based firm that hoped to create hundreds of jobs with the contract, helping to fulfill a 1980 Reagan campaign pledge to revitalize the blighted area.

As Welbilt revised its pricing proposal and federal agencies shifted their positions, there was a flurry of letters, including one from Bragg to Sanders and another from Nofziger to Jenkins.

Then on June 18 Sanders wrote the president of Welbilt that SBA was committing $5 million in aid to the firm, a letter described by a former Welbilt official this week as “the most important ever received” by the struggling firm. Ten days later, Welbilt made a formal request for the aid in a reversal of normal procedures.

Has no Answer

Asked by McKay why the commitment had preceded the request, Sanders replied: “I don’t know the answer to that.”

A former Welbilt official has testified that the firm thought it faced a June 21 deadline for obtaining financial aid from the SBA and other sources.

Cross-examined by Nofziger attorney E. Lawrence Barcella, Sanders said that there was “nothing extraordinary” about his luncheon with Nofziger and Bragg. “I would have remembered if there had been any kind of untoward suggestion,” he added.

Similarly, under questioning by Bragg attorney Richard Ben-Veniste, Sanders maintained that Bragg had done nothing improper in his lobbying contacts.

Jenkins, who testified for the second day Thursday, declared that he would have been “heavily criticized” in 1982 if he had not provided vital assistance on the contract being lobbied by Nofziger, a friend of his boss, Meese.