Weinberger and Meese Faulted in Defense Case

Atty. Gen. Edwin Meese III and former Defense Secretary Caspar W. Weinberger were warned of extensive fraud, bribery and theft in the military procurement process more than three years ago and failed to act on the information, two lawmakers charged Sunday.

Sen. Charles E. Grassley (R-Iowa) said he learned in April, 1985, of widespread leaking of classified government data from the office of then-Navy Secretary John F. Lehman Jr. and alerted Meese, but the senator said the attorney general showed no interest in the matter.

Similarly, Rep. John D. Dingell (D-Mich.) said he forwarded evidence of numerous possible crimes to Weinberger but that “nothing was done.”

Hearings on Abuses

Dingell noted that the House oversight and investigation subcommittee held more than two dozen hearings starting in 1984 on procurement abuses, including allegations of fraud, theft of government documents and espionage by defense contractors against federal offices.

The lawmakers, interviewed on CBS’ “Face the Nation,” said the Cabinet officers’ inaction contributed to an environment that allowed the alleged abuses to occur. The FBI last week disclosed a massive, two-year bribery and fraud investigation involving at least seven Pentagon officials and more than a dozen major defense contractors.

Weinberger said through an aide that he did not know of the alleged abuses until he was informed by Defense Secretary Frank C. Carlucci last Monday.

Patrick S. Korten, Meese’s chief spokesman, denounced Grassley’s comments as “absolute nonsense,” adding that “defense fraud has been one of Atty. Gen. Meese’s highest priorities since he’s been at the Justice Department.”

Although the investigation is being run out of the U.S. attorney’s office in Alexandria, Va., Korten said the case “could not have happened without the emphasis that Mr. Meese has placed on combatting defense fraud.”

Federal law enforcement sources said they specifically did not tell Meese, Weinberger or Carlucci of the investigation because they did not know how high in government the probe would lead. Meese’s name came up on at least one wiretapped conversation, though officials said the discussion was not incriminating to him.

In other developments Sunday:

--President Reagan said in Toronto, where he was attending the economic summit, that “I’m not going to comment until we have all the information” in response to reports by The Times and the Washington Post that Lehman tipped a key aide, Melvyn R. Paisley, to the fact he was being wiretapped in the fraud investigation. Paisley has been identified by law enforcement sources as a central figure in the probe.

--Sen. Sam Nunn (D-Ga.), chairman of the Senate Armed Services Committee, said on ABC’s “This Week With David Brinkley” that his panel will begin hearings on the allegations shortly.

--Rep. Roy Dyson (D-Md.), one of two congressmen identified by law enforcement sources as a subject of the inquiry, had extensive contacts with a defense industry consultant whose office was searched last week as part of the fraud investigation, according to the Baltimore Sun.

Dyson and Tom Pappas, an aide who apparently committed suicide last month during a contractor-paid visit to New York, met frequently with consultant Charles F. Gardner, who represented Unisys Corp., his former employer and one of the firms searched last week. Gardner and three other consultants named in FBI search warrants each contributed $1,000 to Dyson’s reelection campaign last year, the Sun reported.

Grassley, a member of the Senate Judiciary subcommittee that supervises government contracting, was briefed on the investigation by U.S. Atty. Henry E. Hudson of Alexandria, who is overseeing the probe. He said he had no evidence that Meese or Weinberger were personally involved.

Dingell, a tenacious critic of the Pentagon’s purchasing system, said the huge Reagan Administration arms buildup poured enormous sums of money into the Defense Department, attracting “the worst instincts of people.”

“You have a system where the audit occurs after the payments are made so that the rascality occurs, and then the government’s got to go in and try and retrieve the money,” he said.

Staff writer Ronald J. Ostrow contributed to this story.