Earlier Allegations About Paisley Told : Fellow Boeing Workers Accused Him in 1978 of Bribing Military Officials

Melvyn R. Paisley, a former assistant Navy secretary who is a central figure in the sweeping Pentagon fraud scandal, was accused a decade ago by his own fellow executives of bribing military officials and bugging the offices of competitors when he worked for the Boeing Co., according to retired Boeing officials and documents obtained by The Times.

Two executives became so alarmed that in 1978, shortly after leaving the company, they went to Boeing management to express concern about Paisley’s conduct, officials said in lengthy interviews. At the special management briefing they also complained that Paisley charged fees for prostitutes to his expense account, according to an agenda of the session made available to The Times.

“Usually every major company has one guy who does the dirty business,” former Boeing executive James Durst said in an interview at his home. “He was the guy.”

Ex-Fighter Pilot

The disclosures about Paisley are the latest in an emerging picture of a high-flying ex-fighter pilot with a penchant for testing the boundaries of the rules. His reputation for driving hard and living fast contributed to a career marked by allegations of questionable conduct.

The revelations also raise questions about how Paisley was able to be confirmed to one of the most powerful positions in the Defense Department, particularly after the FBI was told during a 1981 background check that he had taken gratuities including cash and a sewing machine.

During his employment at Boeing, where Paisley spent most of his defense industry career, he is believed to have built a network of individuals whom he used to further his personal business. It was these associations, not necessarily linked to the company itself, that Paisley later allegedly relied on to improperly obtain information in schemes outlined by government sources familiar with the current investigation.

Deputy Now Suspected

One association was with James E. Gaines, whom Paisley hired at Boeing and who later joined him at the Pentagon as his deputy. After Paisley left the Defense Department, Gaines stayed with the Navy and is now suspected of being a major supplier of classified and proprietary material to Paisley, according to sources and documents in the investigation.

Another former Boeing official who also worked at the Pentagon during Paisley’s tenure said: “Boeing didn’t pay bribes, but Paisley did.

“He’s dishonest. Everything he did, there was something devious about it,” said this official, who spoke on the condition that he not be identified. He added that he believed Paisley acted on his own in his questionable practices.

Paisley’s wife, Vicki A. Paisley, would not accept calls. She said her husband “would have no comment” and referred inquiries to the couple’s lawyer, Lawrence E. Barcella, who was not available.

One longtime Seattle friend of Paisley who requested anonymity characterized him as a dashing and adventuresome personality, saying: “There isn’t anything Mel hasn’t done.” But, the friend added, “he’s a real survivor. I’m sure he’ll survive this--in his own way.”

In his 27 years at Boeing, which included a high-level position as a manager of international marketing, Paisley openly bragged about his exploits, former company officials said.

Paisley was known as a “hard-drinking, two-fisted man’s man” who would stop at nothing to get his way, Durst said. “He loved to talk, he loved to brag. Mel had certain priorities: women, money and business--particularly women,” he said.

“In a drab company, he was a colorful figure.”

Durst also said that Paisley told colleagues about bugging a competitor for a military contract in 1970, about bribing U.S. military officers overseas and about hiding payoffs and wild parties with prostitutes on his military-contract expense reports.

Doubted He’d Last

Indeed, when Paisley went to Washington to work for Navy Secretary John F. Lehman Jr., former colleagues made a bet on how long he would last.

“People used to laugh and say he won’t last six months,” Durst said. “As soon as they do a security check, he’ll be out. I guess they never did. We never thought he’d last.”

In Spokane, Mildred R. McGetrick, one of Paisley’s three ex-wives, said she told the FBI that Paisley was “dishonest with money.” She said she also told federal agents that Paisley took gratuities including cash and gifts.

Her sister, Mickey Pierson, said she sent a letter to then-Sen. John Tower (R-Tex.), chairman of the Armed Services Committee, which was considering Paisley’s appointment in November, 1981, saying that “Mr. Paisley has been known to take bribes” that included a Singer sewing machine from a company doing business with Boeing.

‘It Puzzles Me’

“Nobody listened. To this day it puzzles me how Paisley won confirmation for such a sensitive job, McGetrick said.

Sue Schnitzer, an FBI spokeswoman, said the bureau’s background report was turned over to the White House “without comment or recommendation” on Sept. 29, 1981. She would not discuss details of the report. Attempts to reach Tower were not successful.

Paisley, who joined Boeing in 1954, developed a keen interest in Washington after the 1980 elections when it became apparent that Lehman would be the new Reagan Administration’s choice to head the Navy Department. Earlier, Paisley had hired Lehman to work as a consultant for Boeing and the two had become good friends. In 1981, Lehman asked Paisley to be one of his top assistants. He ultimately assumed considerable control over Navy procurement.

Ultra-Sensitive Technologies

As assistant secretary in charge of research and development, Paisley would preside over work on such ultra-sensitive technologies as submarine listening and quieting devices, stealth aircraft and missiles, satellite reconnaissance projects and electronic jammers. Not only did the job require Senate confirmation, but Paisley would have to pass a detailed FBI background check for security clearances.

Durst, who has not seen Paisley since he left the company in 1977, spent five years trying to get Boeing to fire Paisley, and then trying to warn the Defense Department, President Reagan’s aides and the FBI that Paisley was a security risk.

“He told executives that he had bribed MAGs,” Durst said, a reference to U.S. military advisory groups abroad. He said Paisley used a New York-based shipping company to “launder the cash.” Paisley was never charged.

Another former Boeing executive said he too tried to undermine Paisley’s move into the Navy Department.

“We tried to tell people--we went to people in the Pentagon to tell them that Paisley was no good,” said the retired executive, adding that he did not know Durst very well and had pursued his efforts against Paisley independently.

He said he and his closest colleagues believed they had to try to prevent Paisley from getting the Pentagon appointment “for the good of our government.”

Australian Complaint

At one point, Durst said, a prominent Boeing consultant in Australia, Sir Edwin Hicks, complained that Paisley was so blatant in his offers of payoffs there that Paisley was made persona non grata in Australia.

“He was red-faced,” Durst recalled about his meeting with a furious Hicks, who, he said, died two years ago. “He said Paisley had tried to buy people, pay under the table.”

In May, 1978, Durst and a colleague decided that corruption was so rampant at Boeing that they asked for a meeting with Benjamin T. Plymale, then vice president at Boeing Aerospace and Paisley’s direct boss.

Over lunch at the Hyatt House at the Sea-Tac Airport, Durst used a 16-page typewritten “white paper” he had prepared to make the case for a thorough house-cleaning. Durst said he and his colleague had already left Boeing and were hoping to win a consulting contract.

Page by page, the paper outlined poor morale, loose organization, incompetent management, poor professionalism and other management problems. But the list on Page 7 was explosive--it was titled: “Deeply embedded corruption.”

Durst’s original dog-eared copy of the memo shows that Paisley’s name, as well as those of several other Boeing employees, was penciled in beside allegations of “prostitution on expense account” and “using expense accounts to cover illegal activities.”

Paisley’s name also is penciled in beside the heading “industrial espionage,” specifically, “wire-tapping and snooping illegally on competitor’s facilities.”

“I went through all this,” Durst said Saturday, showing the memo to a reporter. “The bugging, the bribery, the hookers. And Ben looked at me and said: ‘Every goddamn word of it is true.’ And he said he’d get back to us. He never did. That’s when we found out that he and Paisley were best friends.”

Reported to FBI

Durst said he repeatedly requested a meeting with Boeing Co. President Mel Stamper but was refused. He said he reported the information to the FBI in 1983.

Boeing officials could not be reached Saturday. A switchboard operator said the firm’s spokesmen would not accept calls “on matters of this nature” on the weekend.

Plymale, a former deputy assistant secretary of defense for strategic and space systems, and five other Boeing employees lost their top-secret security clearance when the Defense Department found they had mishandled classified information on the proposed MX strategic missile in March, 1979.

Investigators said an aide in Washington, D.C., had transmitted a summary of a top-secret memo intended for President Jimmy Carter to Plymale’s office in Seattle over open telephone lines. Pentagon officials said Soviet agents routinely monitor telephone lines to and from U.S. defense contractors.

No Formal Charges

Plymale and another Boeing vice president also were investigated for destroying evidence. No formal charges were brought, however, and Plymale later served on Ronald Reagan’s 1981 transition team along with Lehman.

In August, 1981, Plymale died, reportedly of a heart attack, during a fishing trip with Paisley and Lehman.

Durst, now 54, said he and Paisley worked in close proximity for six years, sharing the same secretary, after Durst moved to Boeing’s Kent, Wash., headquarters in 1971. Paisley was then director of planning for Boeing Aerospace. Durst was assistant to the vice president of requirements and marketing.

Early Assignment

One of Durst’s first assignments, he said, was to go to New Hampshire to campaign for then-presidential hopeful Henry M. (Scoop) Jackson and later put the costs of the trip on his expense account. Jackson, a Democratic senator from Washington state, was known for his advocacy of a strong defense program.

“Two or three weeks later, Jack Anderson writes a scoop about how Boeing was paying for political support for Scoop Jackson,” Durst said. “Hell, I didn’t know it was illegal.

“I was sullied, I had the stamp on me. So Paisley came over because he had heard of it. He was laughing. He said: ‘Hey, I’ll tell you a good marketing story.’ ”

According to Durst, Paisley told him he had found a new way to get the low bid on an Air Force contract for housekeeping at Patrick Air Force Base at Cape Canaveral in Florida.

‘Mr. Squeaky Clean’

Paisley said he had sent an aide to put a bug in a Pan Am office to get their bidding figures.

“Here I am, honest all my life, Mr. Squeaky Clean,” Durst said. “And here is a senior man in the company bragging about bugging on a military project. He was very flippant about it.”

“When he told me about bugging Pan Am, I was an accessory,” Durst recalled. “I was scared to death. But he was very open about it.”

Later, Durst said, he needed an aide who spoke Portuguese and Spanish to help on a trade mission to Brazil, and one was provided. “Three days later, I ran into Mel in the men’s room, and he was laughing. He said: ‘That’s the guy who did the bugging,’ ” referring to the aide.

Durst said he fired the man from his department after the trip for cheating on his expense account.

“Information is the essence of the business,” Durst said. “There are good ways to do it and bad ways. Mel, unfortunately, always used the bad ways.”

Staff writers Dan Morain in Seattle and William C. Rempel, Robert Gillette, Melissa Healy, Doug Jehl and Jim Schachter in Washington contributed to this story.