Paisley Talked to Boeing Despite His Pledge, Panel Says

Times Staff Writer

Former Asst. Navy Secretary Melvyn R. Paisley, a central figure in the Pentagon procurement scandal, was in frequent contact with his previous employer, Boeing Co., during periods of his Pentagon service when he had foresworn such contacts to avoid conflicts of interest, according to congressional investigators.

During one such period, Paisley met with the president of Boeing’s helicopter unit and a few days later urged government officials to accelerate development of a tilt-rotor helicopter project on which Boeing eventually was the winning bidder, investigators said Friday.

The disclosures stem from a review by the staff of the Senate government oversight subcommittee of the records of a 1983 criminal investigation of possible conflicts of interest in Paisley’s dealings with Boeing.

The subcommittee--which questioned Pentagon lawyers about the Paisley-Boeing contacts in an unpublicized hearing last week--made the records available to The Times.


According to the records, Paisley, for a time the Navy’s most powerful procurement official, also recommended several top Boeing executives for positions on sensitive Pentagon advisory boards during times he had disqualified himself from dealings with the firm.

Among them was James E. Gaines, a close friend of Paisley’s who later became a deputy assistant Navy secretary. Federal agents say Gaines, like Paisley, is under investigation in Operation Ill Wind, the far-ranging probe of Pentagon procurement that is expected to result in indictments within a month.

Paisley’s attorney in Washington, E. Lawrence Barcella Jr., disputed the notion that Paisley had violated conflict-of-interest requirements and in fact was careful to abide by so-called “recusal” notices that required him to avoid potentially improper activities.

“Mr. Paisley was extremely sensitive to the recusal issue, and except when asked specifically by superiors in the Navy to get involved in programs, acted always consistently with those recusals,” Barcella said Friday.


Agents in the Ill Wind probe are investigating whether Paisley, a 27-year Boeing employee before he joined the Pentagon in 1981, received payments from defense contractors while he was assistant Navy secretary and whether he improperly obtained confidential Pentagon data after he quit to become a defense consultant in 1987.

No Criminal Charges

The central issue of the 1983 criminal investigation was whether Paisley had broken federal law by accepting $183,000 in severance payments from the Seattle aerospace firm after he joined the Reagan Administration.

The Justice Department decided against pressing criminal charges in the case. Instead, it filed a civil lawsuit in 1986 against Boeing, Paisley and four other former Boeing executives charging that they had violated conflict-of-interest statutes by accepting such payments. The case is pending.

Sen. Carl M. Levin (D-Mich.), chairman of the oversight subcommittee, told Pentagon lawyers that he was “deeply disturbed” by the disclosures of Paisley’s dealings with his former employer, according to a transcript of the Sept. 29 hearing. He questioned whether the Defense Department was failing to police conflict-of-interest issues.

Violating a disqualification notice in itself is not illegal, according to Donald Campbell, deputy director of the federal Office of Government Ethics, but engaging in conflicts of interest can result in criminal or administrative sanctions.

According to the records of the criminal investigation, Paisley, during periods when he had disqualified himself from dealings with Boeing:

- Had “a lot of contact” with Joseph Mallen, then-president of Boeing’s helicopter unit, including a personal meeting 10 days before Paisley recommended the speeded-up development of the V-22 Osprey tilt-rotor helicopter. Paisley later was instrumental in the teaming of Boeing and Bell Helicopter for the $1.7-billion project.


- Recommended that Gaines be named to a Defense Science Board study group on U.S.-NATO collaboration.

- Wrote to then-Boeing Chairman T. A. Wilson seeking clearance to nominate Mark K. Miller, a top executive of Boeing Aerospace, to the Naval Research Advisory Committee. Paisley later nominated Miller.

Barcella said it was appropriate for Paisley to have recommended Boeing officials for service as Pentagon advisers.

“The fact he had previously been employed by Boeing certainly should not prohibit one of the country’s major defense contractors from participating in naval advisory boards,” Barcella said.

A Boeing spokesman said Friday the firm had no comment on its dealings with Paisley.