U.S. Probe Ruined Rival of Wedtech : Army’s Criticisms of Firm Parallel Complaints Wallach Sent to Meese
A major competitor of the scandal-torn Wedtech Corp. was subjected to a highly unusual federal investigation after Wedtech consultant E. Robert Wallach wrote a series of memos to his close friend Edwin Meese III that strongly denounced the competing defense contractor.
Documents obtained by The Times show that allegations contained in Wallach’s memos to Meese bear a striking parallel to language contained in a later report by Army investigators that was highly critical of the Wedtech competitor, Garcia Ordnance Corp. of Houston.
The government investigation was undertaken by the Army’s Criminal Investigation Division despite highly favorable reports about the company by military procurement officers who were familiar with the firm’s work.
Firm’s Officers Acquitted
The five-year inquiry resulted in the indictment of a dozen officers of Garcia Ordnance, but 11 of them were acquitted last year in a case that the presiding judge said never should have been brought to criminal court. The troubles eventually caused the once-profitable company to close its doors.
It could not be determined whether Meese, who was counselor to the President at the time, passed along any of Wallach’s memos to Army investigators or used any influence to instigate the Garcia investigation. Nor could it be learned whether efforts by Wallach directly led to the extraordinary investigation.
In interviews and court testimony, however, figures in the current Wedtech corruption trial in New York and at least one Army procurement officer involved in the Garcia case have referred to pressure from Washington to investigate competitors of Wedtech.
Mario Moreno, a former Wedtech executive, testified recently in the Manhattan trial that “we asked to have” competing defense contractors “investigated for any skeletons in the closet.”
Although he was not asked about Garcia Ordnance specifically, Moreno said that sources close to the White House, including then-Meese deputy James E. Jenkins, informed him of imminent investigations or indictments of competitors.
The office of independent counsel James C. McKay, who is investigating Meese, is known to be aware of the Garcia matter but refused to comment on it. If there is evidence that Wallach’s memos instigated the Army inquiry, it would raise serious questions about whether his close ties to Meese allowed him to use the criminal justice system for private gain.
Meese attorney James E. Rocap said that his client did not pass along any of Wallach’s memos and “never passed on any memoranda to any person for sending to any other agency.” He denied that the attorney general “had anything to do” with the Garcia case, although many of the Wallach memos were sent to Meese’s home in suburban Virginia, as well as to his White House office.
Jenkins, reached at his home in Carmichael, Calif., said that he does not remember hearing of Garcia Ordnance or receiving any memos from Wallach, although some of them were addressed to him and found in White House files. As Meese’s deputy at the White House, Jenkins had access to virtually all of Meese’s documents.
Army Won’t Comment
Wallach’s lawyer, George W. Walker, said that his client “has no idea” whether his memos to Meese instigated the Army CID inquiry, adding that Wallach never contacted any Army investigators. Army officials repeatedly have refused to answer questions about the Garcia investigation or how it originated.
But military documents show that much of the criticism of Garcia made in parts of an Army Criminal Investigation Division report dated June 1, 1983, were highly critical of the company along lines that closely paralleled arguments made by Wallach in memos written to Meese in 1981 and 1982.
In another example of the many unusual elements of the Army investigation, the documents show that Garcia Ordnance received exceptionally harsh criticism from Army investigators at a time when Army contracting officers who had worked with the company on a daily basis were reporting that the small firm was competent and professional.
For instance, after charges by Wallach that Garcia Ordnance had insufficient resources to produce engines and that the firm’s founder had “no experience in this field,” the Army CID’s 1983 report contained similar criticisms, characterizing Garcia as an inexperienced firm that lacked sufficient resources.
Firm Called Qualified
At the same time, however, Garcia was being highly praised by Army engine specialists at Ft. Belvoir, Va., in a 1982 report that said the firm was “uniquely qualified” for engine work, despite the fact that it was only 2 years old.
The Army CID report said also that the company’s founder “appears to have no background or capability related to the MSE (military standard engine)”--a charge that conflicted with the view of other military specialists--and that the firm “has only 5,000 square feet of space, little or no direct production capability and few production personnel.”
This assessment was made only a month after another positive Army procurement report, dated May, 1983, said that Garcia was nearing completion of a new plant near Edinburg, Tex., and already had “an excellent plant facility at Houston with 5,000 square feet of space.”
Further conflicting with the CID charges, the 1982 Ft. Belvoir report said that “Garcia Ordnance, because of its experience, is the only company which could respond within the critical time frame to incorporate production method and technique improvements . . . and produce the overall cost reduction of these engines while preserving performance and reliability.”
After listing additional high marks for Garcia, the February, 1982, report concluded: “At this point, no other contractor has this uniqueness.”
The company’s expertise was attributed largely to its president, Ronald J. Bolden, whose father had helped develop the basic military standard engine, a device used by soldiers in the field to power generators, pump water and produce light.
Special Favors Charged
Wallach charged in his memos that Garcia seemed to be getting special favors from the Army because of what he described as a longtime close relationship between Bolden and Thomas Keenan, procurement director of the Army’s St. Louis division in charge of engine contracts.
In reflecting this same charge in their report, which was dated several months after the allegation appeared in Wallach’s memos, the Army investigators termed Keenan’s award of an engine development contract to Garcia “highly questionable.”
Later, the investigators reported that Bernard Ehrlich, an attorney for Wedtech and a general in the New York Army National Guard, believed that there was a “collusive relationship” between Keenan and some executives of Garcia Ordnance.
No “collusive relationship” between Keenan and Garcia Ordnance ever was proven.
Still, the Army CID report said: “It is difficult for us to understand how such a company could secure a sole-source contract to redesign the MSE family of engines, and presumably be in line for a multimillion-dollar . . . production contract.” The report declared that Wedtech could have performed the same work.
But in their positive assessment only a month before this severely critical report, Army procurement officers praised Garcia Ordnance, saying that the company “has or will obtain all the competent personnel with expertise to satisfactorily perform the proposed work (and) has demonstrated an in-depth knowledge of the most technical aspects” of engine production.
Contracts on Schedule
Garcia had 33 separate government contracts, “of which 30 are on schedule or ahead of schedule,” according to this report, known as a pre-award survey. The May, 1983, report noted that Garcia “has been furnishing parts for military engines to the government since the company was established.”
Officials of the Army Criminal Investigation Division rejected requests to provide a full copy of its negative June, 1983, report on Garcia and refused to comment on its apparent discrepancies with the assessments by Army procurement officers. Nor would Army CID officials comment when asked whether Wallach’s memos had helped to initiate their inquiry.
Keenan and other procurement officers said in interviews that Army investigators had never questioned them about the allegations raised in the CID report. In fact, they said that they did not even know the report existed until contacted by The Times.
In separate interviews, Keenan and Bolden denied that they were ever “in collusion” and said they were never even close friends, as Wallach and Army investigators suggested.
Bolden was convicted last year on a lesser charge that he submitted five false documents to the Army but was cleared of far more serious allegations that he had conspired to defraud the government.
The presiding judge, in denouncing the entire trial as a waste of time and government resources, sentenced Bolden to four months’ probation. The 11 other Garcia officers indicted in the case were acquitted on all charges, which stemmed from a central allegation that Garcia had engaged in fraud in its production of Army engine crankshafts.
Keenan, who left the Army before the fraud investigation, and Garcia executives believe that the crankshaft issue never would have arisen if the CID had not opened its initial inquiry, which apparently had nothing to do with the fraud case. What did lead to that case, they believe, is the intense scrutiny that resulted from the initial inquiry.
In 1985, two years after the CID’s report, Army investigators received a tip that some engine crankshafts produced by the company had been made of iron rather than steel, contrary to Army specifications. It was this finding that caused Army investigators, working with the FBI and a Justice Department prosecutor, to seek and obtain criminal charges that top officers of Garcia had conspired to defraud the Army.
Probe Called Unusual
One Pentagon official in the Defense Criminal Investigative Agency, speaking on the condition that he not be identified, said it was unusual for the CID to undertake an inquiry involving a defense contractor like Garcia Ordnance.
The official said that his own investigative unit normally looks into contractor fraud cases involving the Army, Navy and Air Force, adding that the Army CID mainly performs background checks on prospective Army appointees and investigates “general crimes.”
“This should have been our case,” said the official, who did not know why it was handled by the Army.
The Army kept such close watch over the company’s work, acquitted Garcia executive Bill Parker said, that officers had even begun to criticize such things as paint jobs on parts of Garcia-produced engines.
“The mood out there (at the Army procurement offices in St. Louis) turned hostile. The model contractor in December was a bum in January,” Parker said, referring to what he described as a seemingly overnight change in the Army’s attitude toward Garcia in one month from 1983 to 1984. “Why? Because we were jumping up as a competitor to Wedtech.”
Garcia became a serious Wedtech competitor on Dec. 16, 1983, when it was notified that it had been certified as a minority-operated firm eleigble for special government contracts.
Bolden, in a recent interview, blamed Wedtech and Meese for having inspired the case against Garcia Ordnance. He said that, when dealing with Army procurement officials in St. Louis in 1982 and 1983, he was told that “Meese was behind Wedtech and didn’t want Garcia to get any more contracts.” He said that the source of this information was either James H. Beckham, an Army contract officer, or one of his aides, Tom Cygan.
Beckham and Cygan, in separate interviews, denied that they had ever mentioned Meese’s name to Bolden, saying they never heard that Meese had any involvement with the matter.
Armando A. Garcia, the company’s founder and chairman, also did not recall any mention of Meese’s name, but he said Bolden reported to him at the time that “Wedtech is going to get the (engine) contract because the White House is involved.”
Wallach has been indicted on charges that he accepted hundreds of thousands of dollars from Wedtech in an improper attempt to influence Meese, although Garcia Ordnance is not mentioned in the indictment. Wallach is scheduled to be tried with two associates later this year.
Wedtech Got Contract
Wedtech received a no-bid $32-million Army engine contract in 1982 with strong backing from Meese aide Jenkins, according to testimony in federal court earlier this year and at Senate hearings last fall conducted by Sen. Carl Levin (D-Mich.), whose Senate Governmental Affairs subcommittee on government oversight released nine Wallach memos to Meese numbering 25 pages.
A transcript of the little-noticed trial of Garcia executives in Texas last year shows that Beckham, the Army contract officer, testified that Wedtech was concerned that Garcia might eventually be awarded some of its Army engine work but added: “There was no pressure on me to knock them (Garcia executives) out.”
Nevertheless, Beckham testified that he had heard Garcia might lose its Army engine work in an atmosphere rife with “political maneuvering . . . and pressure.”
When asked to elaborate in a recent interview, he said that the office of the Army secretary in Washington often would pass on questions to him about the qualifications of defense contractors. He said that the questions often originated from Congress or “other politicians,” perhaps at the White House, although he did not recall Meese’s name being mentioned.
Although he did not cite Garcia during his testimony in the New York trial, former Wedtech executive Moreno did mention two other competitors that he had been told would be investigated or indicted. But these firms, Bay City Marine of San Diego, Calif., and Medley Tool & Model Co. of Philadelphia, denied that they were investigated or indicted at the time.
Firm Lost U.S. Contracts
Despite the fact that many of the allegations by Wallach and Army investigators were never proven, Garcia Ordnance and its executives were promptly barred from doing business with the government, even before the trial. Because the government was the firm’s sole customer, company officers said, this forced Garcia to close its doors in 1985.
Expressing disgust with the weakness of the case and the large number of persons who had been indicted, U.S. District Judge Ricardo Hinojosa told the prosecutor in the trial, Assistant U.S. Atty. Harry Lee Hall, that the case never should have come to trial.
Staff writers William C. Rempel in Washington, Eileen V. Quigley in New York, Dan Morain in San Francisco and Jane Fritsch in San Diego contributed to this story.
