Violations Seen in Dole Aide’s Pact : House Panel Probe of No-Bid Contract Sent to Justice Dept.

The Democratic chairman of the House Small Business Committee charged Tuesday that “criminal laws may have been violated” in the government’s award of a $30-million minority business contract two years ago to a Kansas firm with political ties to Sen. Bob Dole (R-Kan.), a presidential contender.

Democratic Rep. John J. LaFalce of New York said a preliminary investigation by his committee staff into the contract is being referred to the inspector general of the Small Business Administration and to the Justice Department for possible prosecution.

However, LaFalce said on the House floor, “I have found nothing that suggests Bob Dole was personally involved in any questionable event or occurrence” related to the contract, which was awarded to EDP Enterprises of Overland Park, Kan.

SBA Officials Criticized

LaFalce strongly criticized SBA officials and two former Dole campaign aides, David C. Owen and John E. Palmer. Owen was also a paid consultant to Palmer, whose firm, EDP, obtained the no-bid food service contract from the Army. Owen resigned last month as Dole’s national finance director.

Owen stepped down after a Kansas newspaper disclosed that he had had many dealings with the so-called blind trust established by Dole’s wife, Elizabeth, who had placed her assets with an independent trustee while she served as secretary of transportation from 1985 to last fall.

The committee’s staff report, made public by LaFalce, said EDP apparently got “preferential treatment” from the SBA for the no-bid Army contract after contacts by Owen and Mitchell Pettit, Dole’s former administrative assistant.

About 18 months before EDP received the contract, Owen wrote then-SBA Administrator James C. Sanders to urge him to help Palmer for political reasons, the report said.

“He can be a real asset to the Republican Party, and I know Sen. Dole is supportive of his endeavors,” Owen’s letter said, referring to Palmer, a former field representative for Dole.

Committee attorneys said it is a federal violation to promise or award a government contract “for any political activity or for the support of or in opposition to any candidate or any political party.”

Had Negative Net Worth

At the time it received the minority business contract on a recommendation by the SBA, the committee noted, EDP was poorly qualified financially, having a negative net worth.

In addition, the report cited evidence that EDP--although nominally owned by Palmer, a black businessman--may have been an illegal “front company” for the interests of Owen, who is white. As reported earlier by The Times, Owen helped incorporate EDP with a loan from a Kansas bank he controlled and became a paid consultant to EDP for $5,000 to $7,000 a month after the firm got its contract, the committee said.

EDP listed as its headquarters the same office suite housing Owen & Associates, Owen’s principal company, and shared most of the same officers and directors.

Owen said through a spokesman Tuesday that he would withhold any detailed comment until he had read the report. But he said he remains “unperturbed, in my view, that in no way did I do anything improper or certainly illegal.”

Palmer could not be reached for comment. The SBA said it had no comment, noting that the report was being forwarded to its inspector general for review.

Dole Angry at Aide

Dole himself has expressed anger at Owen’s business activities. Despite their longtime political association, the senator recently told reporters: “He’ll never be in the campaign again or anything else that Bob Dole has anything to do with.”

In his floor speech, LaFalce said the case is reminiscent of a so-called “minority set-aside” contract worth $32 million that was awarded by the Army in 1982 to Wedtech Corp. of New York. It has since been determined that Wedtech, now the center of a mushrooming influence-buying scandal, had fraudulently posed as a minority-owned company even though John Mariotta, the Latino businessman who founded it, no longer held a controlling interest.

“That program is intended to help disadvantaged minority businesses to develop and enter the mainstream of the American economy,” LaFalce said. “Instead . . . the program has been mismanaged, misdirected and abused.”