US defense consultants benefit foreign contractors. Investigators ignore evidence of sensitive data going overseas

Pentagon probers may be overlooking a critical area in their investigation, say former Defense Department investigators, congressional sources, and others involved in the defense procurement process. For nearly two years, investigators have been gathering evidence suggesting that defense consultants obtain sensitive information from Pentagon officials and pass it on to their clients, American defense contractors.

What investigators are ignoring is the international flip side, some critics say, in which consultants may have passed sensitive information about United States defense plans, budgets, or weaponry specifications to foreign clients or countries.

Search warrants and affidavits that have been released show that consultants had contact with foreign embassies and clients. For example, when Federal Bureau of Investigation agents searched the office of defense consultant Melvyn Paisley on June 14, one of the many items they sought was documentation relating to Mr. Paisley and an Israeli company called Mazlat. The Israeli company has a contract to supply the Navy with an unmanned surveillance aircraft. In other searches as well, agents were specifically seeking documents relating to foreign embassies and officials.

Justice Department sources have told the Monitor that the international aspect is ``not a major factor'' in the probe.

The reason, say congressional and Justice sources who have knowledge of the probe, is not because there is no evidence of international information-passing, but because the domestic side of the probe is so big that investigators have had to winnow down their case.

Consequently, prosecutors are concentrating on two forms of possible corruption: whether consultants bribed Pentagon officials to get information for US companies, and whether they bribed congressmen to get favorable treatment on Capitol Hill.

But in narrowing their focus to the alleged domestic corruption, investigators may be closing avenues that impinge most directly on national security, congressional and defense sources say.

``The kind of information-passing evident in this investigation has totally broken down all the controls the government has instituted to insure that sensitive, highly classified information does not fall into foreign hands,'' says a former Pentagon investigator. ``Nobody knows what damage has been done. That's what worries me most.''

The former Pentagon investigator worries that the government will let evidence of international information-passing disappear into a black hole - a replay of a similar case he investigated in the early 1980s.

History repeating itself?

In that case, which was eventually filed in 1985, defense consultant Bernie Zettl was charged with passing classified budget documents to a defense contractor, GTE Government Systems. GTE pleaded guilty to receiving the documents. Mr. Zettl's case is ongoing.

``We knew that many consultants - not just Zettl - were meeting with members of foreign governments,'' the investigator says. ``And we had very solid evidence that information was passed,'' including taped conversations.

He alleges that Zettl met with Belgian officials ``all the time,'' as well as members of an Asian government, which the investigator would not specify. That evidence was turned over to the Defense Procurement Fraud Unit, a special arm of the Justice Department.

The evidence was never made part of the GTE case. Whether that was because of prosecutorial apathy on the part of the Justice Department, or because the evidence was not strong enough to make a case, is a matter of quiet dispute among Pentagon and Justice investigators.

The international aspect may become more important as foreign companies increase their now-tiny share of the US defense contract business.

``Foreign firms need an intermediary even more than American firms, since they almost never have a guy in the company who used to work for the [US] government,'' says a defense consultant. ``So they get the hired gun.''

This consultant recalls a recent contract by the Defense Mapping Agency to update its computer systems. A leading Korean electronics manufacturer wanted to supply, through a subcontract with an American contractor, the desktop computers to the Mapping Agency.

To have their computers meet the agency's specifications, the Korean company needed access to ``highly sensitive data'' involving defense software, the consultant says. So the company hired him as an intermediary.

``There were many instances where I felt uneasy because we were pushing the edge of what I thought the Mapping Agency would tell me if they knew I was working for a Korean firm,'' he says.

Other consultants, such as Samuel Ginder, say that sharing information across borders is a necessary part of the procurement process. ``If a foreign company wants to bid on submarine technology, they should know the performance specs,'' he says. ``Those are legitimate concerns, and they ought not to be classified'' or withheld, he says.

Catching Congress's eye

If probe investigators are not focusing on consultants' ties to foreign clients, Congress is. The Senate Committee on Governmental Affairs is looking into possible ``conflicts of interest'' among several large consultants that have business abroad, according to committee aides.

The committee is looking into BDM International, a company that has contracts with the Egyptian Air Force and Ministry of Defense, the Royal Saudi Air Force, and Japan, and advised a European company on a contract bid.

At the same time, BDM board members, officers, and consultants to BDM's board hold or have held recent positions on the Defense Science Board, the Naval Research Advisory Committee, and the Army Science Board - groups involved in the research of future weapon systems.

``They can't help but know what the next generation of missile is, and that has got to be of great interest to their foreign clients,'' says a Senate aide.

BDM would not comment directly. The company's lawyer, Robert Bennett, noted that ``a defense contractor cannot provide any information to a foreign company or country without getting the green light from the appropriate agency.''

Still, members of Congress worry there are not enough safeguards to prevent or at least monitor the flow of US defense information abroad. That may change, however: Recently Sen. David Pryor (D) of Arkansas introduced an amendment to the defense appropriations bill requiring all consultants to register who their clients are, both domestic and foreign.