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Wire Taps, Big Waste, Wild Trips

June 26, 1988|James Bamford | James Bamford is the author of "The Puzzle Palace" (Houghton Mifflin), an analysis of the National Security Agency

WASHINGTON — It might easily have been a Mafia bust. For nearly two years the Federal Bureau of Investigation targeted a group of well-organized criminals. From a soundproof room in downtown Washington, the agents monitored dozens of wiretaps, 24 hours a day, eventually recording more than 4,000 conversations. Pen registers, devices that record what numbers are dialed, were secretly placed on other phones. Informants were wired with hidden transmitters and tape recorders, while agents listened from cars parked nearby.

Although the techniques were old, the criminals are new. In place of guns, they hold top-secret clearances and prefer mugging the U.S. taxpayer on the Pentagon's plush E-Ring to rolling winos in back alleys. Dubbed "Operation Ill Wind," the FBI's continuing investigation into bribery and information selling within the defense community casts long-overdue light on the Pentagon at its worst and the FBI at its best.

While the counterintelligence side of the bureau remains mired in the 1960s, searching library checkout slips for potential communists, the white-collar side has demonstrated a new aggressiveness in going after public corruption.

One FBI agent, at a field office, used to spend most of his time investigating bank frauds and arresting stock swindlers. Now almost 100% of his time is spent investigating corrupt defense contractors.

In the current case, the FBI and Navy investigators got their first tip when a former Navy employee working for a defense contractor blew the whistle on a consultant offering to sell inside information. The former Navy employee then allowed federal investigators to monitor his phone calls with the consultant. That provided the leverage investigators needed to convince the contractor to cooperate with the government.

In addition to uncovering those involved in the bribery scandal, the probe also offers the opportunity to overhaul much of the Pentagon's sloppy accounting systems. One of those areas, according to one investigator, involves the Defense Contract Administration Service, which is supposed to act as the government watchdog over Pentagon contractors.

In many cases, however, according to the investigator, "The companies wine and dine all these people and eventually they hire almost all of them away." Referring to inspectors, "They're a joke, first of all," he said. "They don't do what they're supposed to do. It's too easy to get around them. And secondly, they're easily corrupted."

One area that may be beyond the FBI is the Pentagon's endless array of "black" programs which, in large part, do not even officially exist. These include such super-secret programs as the Stealth aircraft and reconnaissance satellites. The more secret the program, the less accountable the money--the way many in the Pentagon and defense companies like it.

Further into the black, accounting takes on an even more stealth-like quality. A few years ago, the Army set up an ultra-secret security and counterintelligence organization, "Yellow Fruit." With a $6-million budget and virtually no restraints on how to spend it, senior officers took off on first-class vacation trips to Europe with their wives in what amounted to an orgy of fast spending. "The Army chose this extraordinary means to circumvent accountability for money," said a federal judge in a subsequent criminal trial. "And it did (so) for a reason: Specifically, to cut off the ability to find the source of the money . . . (the Army) chose to risk losing money."

Now, a new message is at last getting out through the tangle of wiretaps: If the Pentagon refuses to police itself, others will.

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