Traveled on QE2, Concorde : Paisley Took Luxury Trips With Defense Consultant

Melvyn R. Paisley, in a period of less than a year while he was assistant secretary of the Navy, took a luxurious transatlantic cruise and a Virgin Islands trip with defense consultant William M. Galvin, according to sources and records obtained by The Times.

The Defense Department’s “standards of conduct” regulations then in force prohibited officials from accepting gifts with a value greater than $5 and explicitly barred activities and “affiliations” that posed even the appearance of a conflict of interest.

Paisley and his wife, Vicki, traveled by Lear jet, the Queen Elizabeth 2 ocean liner and the Concorde supersonic airliner on the trips. On their 1986 voyage from Europe aboard the Queen Elizabeth, eight months after the 1985 Caribbean trip, they stayed in an “ultra deluxe” cabin featuring three portholes, a queen-size bed, convertible sofa, video recorder and wet bar.

Both trips were arranged by Galvin, a consultant for several defense contractors doing business with the Navy. Paisley, suspected by federal investigators of taking bribes for inside information while in the Pentagon, was the Navy’s chief purchasing official during that period. Both men are key figures in the current investigation of Pentagon contract fraud.

Attorneys for Paisley said he reimbursed Galvin for the European trip but they refused to comment on the Caribbean vacation. Galvin’s attorneys have refused to comment on the investigation.

But a Defense Department ethics lawyer, who asked not to be identified, said the circumstances of Paisley’s travels would violate the Pentagon’s conflict-of-interest regulations and ordinarily would justify a criminal investigation on suspicion of bribery.

According to regulations in force at the time, Pentagon employees and their families were prohibited from accepting “any gratuity for themselves, members of their families or others” from any source doing business with the Defense Department or whose interests were “substantially affected” by the department.

Trip to Virgin Islands

In December, 1985, the Paisleys joined Galvin and his wife, Evelyn, in the Virgin Islands, traveling on a Lear jet chartered by Galvin that accumulated $18,800 in flight time. Documents show that the Paisleys were aboard the plane at least on the return leg of the trip, from St. Thomas to Washington, which cost $9,400.

Paisley offered a partial and belated reimbursement for the trip after federal investigators began looking into Galvin’s relations with Pentagon officials--and three months after it had taken place, according to a source who handled the payment.

In March, 1986, at a time when federal investigators had begun probing Galvin’s relations with Pentagon officials, Paisley mailed a personal check for $902 to a small California aviation firm that had paid the charter bill on Galvin’s behalf, the source said. The source added that the check, which Paisley sent to the firm in March but which was dated Dec. 13, apparently was intended as reimbursement for his share of the air charter bill.

One of Paisley’s attorneys, E. Lawrence Barcella Jr., without acknowledging that the Virgin Islands trip took place, said the $902 payment may have been based on commercial air fares at the time. As for an appearance of conflict of interest, Barcella said such regulations are “discretionary and interpretive” and maintained that “there are as many explanations consistent with complete innocence as some untoward interpretations.”

Eight months after the Virgin Islands trip, on Aug. 29, 1986, Paisley and his wife flew to England aboard the Concorde supersonic airliner and returned with the Galvins aboard the Queen Elizabeth 2, according to Paisley’s Navy expense records and passenger lists of Cunard Lines. The Paisleys’ tickets for the Concorde and the ocean liner were booked by Galvin’s office, although Paisley’s attorneys contend that he paid for his share of the trip.

The trips to England and in the Virgin Islands occurred at a time when Paisley held authority over the awarding of billions of dollars in contracts for advanced Navy systems and Galvin had a reputation as one of Washington’s most successful defense consultants while working for firms competing for those contracts.

Close Social Relationship

Their travels, moreover, form part of an emerging picture of close and extensive social and business relations between the two couples, both during and after Paisley’s service as the Navy’s chief purchasing official from November, 1981, to April, 1987.

Search warrants released by two federal district courts, and FBI affidavits filed in support of the warrants, show that investigators believe that Paisley accepted money and gifts for steering contracts to Galvin’s clients, among others.

When they searched Paisley’s home last month, federal agents said in a warrant, they were looking for any documents relating to his “involvement” as assistant Navy secretary in helping General Dynamics Corp. and McDonnell Douglas Corp. obtain major contracts. Agents said also that they were searching for any evidence of gifts or payments from those companies to Paisley and his wife. In addition, the warrant sought records on his financial relations with Galvin.

Neither Paisley nor Galvin has been indicted, but federal investigators consider both men central to a two-year investigation of alleged Pentagon bid-rigging and contract fraud. They were among nearly 40 past and current Defense Department officials, consultants and industry officials whose homes and offices were searched by FBI agents last month.

Tour Company Unlisted

A receipt attached to Paisley’s Navy expense report for the European trip with the Galvins in 1986 shows that the Concorde and ocean liner tickets were booked by an agency called Athena Tours of Washington. There is no telephone listing for Athena Tours, but the telephone number on the receipt is the same as Galvin’s Washington consulting firm, Athena Associates. A receptionist answered the number given for Athena Tours as “Mr. Galvin’s office” but, when queried about the tour company, refused to say whether it existed.

Because Paisley said on his expense report that the purpose of the trip--to attend a biannual air show at Farnborough, England--was related to his job, the government paid $1,349 of the $8,768 cost of the air and sea tickets. It is unclear, however, whether Paisley paid the full difference of $7,419.

Barcella, his attorney, said Paisley reimbursed Galvin out of his own pocket and thus did not accept an illegal gift from Galvin’s firm. But Barcella, who said the government has seized all of Paisley’s records, gave no figure or date for the reimbursement. He said only that it was “contemporaneous with the event.”

Between the two trips, Galvin formed a defense consulting company for Vicki Paisley, VAMO Inc., The Times has reported. Also between those travels, Paisley abruptly revised bidding rules in June, 1986, on a multibillion-dollar contract for the Navy’s Aegis fleet defense system in a way that benefited a principal client of Galvin, the Unisys Corp.

Competitors Eliminated

The change in bidding rules effectively eliminated all other competitors for a major role in one of the Navy’s most important weapons systems. One of the losing competitors, ITT Corp., protested the change strongly but futilely to the Navy and to the congressional General Accounting Office.

On Sept. 7, 1986, about two months after rendering the Aegis decision, Paisley and his wife embarked from Southampton, England, aboard the Queen Elizabeth 2 with the Galvins and a Unisys executive. The Paisleys traveled in first-class quarters that gave them access to the ship’s finest restaurants and exclusive decks and parlors.

The Unisys executive traveling with them, according to Cunard Line records, was Charles F. Gardner, a vice president of the company and a partner in Galvin’s consulting firm of Sapphire Systems Inc., in Vienna, Va. Unisys disclosed this week that Gardner had been forced to retire last March after a company investigation that reportedly centered on his ties to Galvin.

The relationship of Paisley, Galvin and Gardner is a key focus of the federal fraud investigation. At the time of Paisley’s decision on the Aegis program in mid-1986, Gardner was general manager of the Unisys unit at Great Neck, N. Y., responsible for the company’s work on the Aegis program.

Six months before Paisley changed the Aegis bidding rules to the advantage of Unisys, Galvin, the company’s consultant on the Navy program, made arrangements to charter the private jet for a trip to the Virgin Islands and back, according to a former employee of the firm that arranged the charter and paid the final bill on Galvin’s behalf.

Free Air Service

The employee, who asked not to be identified, said his firm, American Aviation Industries in Van Nuys, had agreed in mid-1985 to provide Galvin with $50,000 of free air-charter service as a commission for arranging a $7-million contract with the Singer Co., in Stamford, Conn., to refurbish a corporate aircraft.

A spokesman for Singer, Thomas Elliott, confirmed that the company had signed such a contract with American Aviation Industries but refused to disclose its value. The spokesman noted that Singer was unaware of any role Galvin may have played in arranging the contract and that Singer had in any case canceled it in 1986. The aviation firm has since gone out of business.

Between August and October of 1985, the firm’s records show, Galvin had used $24,300 of air charter time on the company’s planes in trips to 12 cities in nine states and Washington, D.C.

In December, 1985, according to the former employee of the aviation firm, Galvin asked for the use of a plane over a period of about 10 days, beginning Dec. 20, for a trip to St. Thomas in the U.S. Virgin Islands. American Aviation Industries was unable to release one of its own planes for so long, but it booked a Lear 35 at $1,000 an hour from the Northeast Jet Co., in Allentown, Pa.

The final bill, a copy of which was made available to The Times, was $18,800 for a trip that extended from Dec. 20 to Dec. 31. The American Aviation Industries source said Galvin did not describe the purpose of the Virgin Islands trip but later told him that it included Paisley.

Flight records obtained by The Times show that on Dec. 31, 1985, an eight-passenger Lear 35 operated by Northeast Jet flew from St. Thomas to San Juan, Puerto Rico, and on to Dulles Airport outside Washington. Its passengers included the Paisleys, the Galvins and the Galvins’ daughter Kelly.

The next March, according to the American Aviation Industries employee, Paisley sent the company a check for $902, apparently as reimbursement for his share of the charter jet fee. The payment was made one week before two federal investigators questioned company officers about Galvin’s activities, this source said.

Check Backdated

Without explanation, Paisley had backdated the check to Dec. 13, 1985, indicating that he had paid for the trip beforehand, the source added. It could not be determined whether Paisley was aware that a federal investigation was under way at the time.

The Defense Department ethics lawyer interviewed by The Times said that any Pentagon official’s apparent acceptance of a gift in the form of transportation would justify suspicion of bribery if the official had significant contracting authority and if the source of the gift stands to gain from decisions made by the official.

“If these facts (about Paisley’s travels) had come to my attention, I would have referred it for criminal investigation,” said the lawyer, who agreed to comment on the circumstances of the trips without discussing the individuals involved.

“The bribery standard is so strict,” the attorney noted, “that we tell our people, when you go to a cocktail party attended by contractors, don’t just throw a dollar in the bucket. Pay your share.”

Robert Gillette reported from Washington and Gregory Crouch from Los Angeles. Staff writers Douglas Jehl, William C. Rempel, Paul Houston and Robert W. Stewart in Washington contributed to this story.