McDonnell Douglas Ends Ties to Fraud Probe Figure Paisley

McDonnell Douglas Corp. on Friday severed its business relationship with Melvyn R. Paisley, the defense industry consultant believed to be a central figure in the Pentagon weapons contract scandal that is under investigation by federal agents, a company spokesman said.

“It was mutually agreed between us and Mr. Paisley to terminate his contract,” McDonnell Douglas spokesman Jim Reed said.

He said he “can’t really say” why the defense firm broke its contract with Paisley, who has worked as a marketing consultant for the company since April, 1987, less than a month after he left his job as assistant secretary of the Navy for research, engineering and systems.

Reed refused to describe Paisley’s duties or how much the company paid him.

According to a search warrant served last month on McDonnell Douglas, federal investigators believe that Paisley funneled confidential or classified bidding documents to the company after he left the Defense Department and went to work as a consultant.

McDonnell Douglas acted a day after the Unisys Corp. confirmed that it was laying off virtually all of the defense consultants it employed to help it obtain contracts from the Pentagon. A source close to the company said he understood that contracts with at least 60 marketing and technical consultants were being terminated.

Other defense contractors linked to the investigation have said that they are reviewing their deals with consultants but so far have not terminated any agreements.