More than 200 subpoenas. As many as 100 defense contracts subject to cancellation. Tens of billions of dollars at stake. All last week, the revelations coming out of the FBI and Naval Investigative Service probe code- named Operation Ill Wind continued to mushroom into the biggest and most important Pentagon scandal ever.
At the heart of the mess lies the so-called Iron Triangle, the web of cozy relationships among Pentagon officials, defense consultants and military contractors. The scandal has shed light not only on a few suspected of corruption but on an entire system that seems tailor-made for cheating. It has become common practice for top military men to retire and head straight for consulting companies -- sometimes known as Beltway bandits or rent-a-general firms -- where they sell their expertise and contacts to defense contractors.
Through interviews with consultants and others involved in this network, TIME has pieced together details of one of the deals that is part of the massive investigation. Stuart Berlin, a key civilian contracting officer at the Pentagon, allegedly provided information involving an electronic-testing- device contract worth $100 million to a defense consultant who was a close friend. The information made its way to a Long Island firm that hoped to win the contract. In addition, Justice Department officials told TIME that they have specific, solid evidence that former Secretary of the Navy John Lehman last fall warned Melvyn Paisley, a former subordinate who became a consultant and is now a central figure in the Ill Wind probe, that he was under investigation. Based on what is now known, it is doubtful that Lehman will be prosecuted or that such a tip was even illegal; but the allegation, if proved, might keep Lehman out of any future Republican Cabinet.
The story of the testing-device contract begins with the retirement from the Pentagon of William Parkin about five years ago. He had worked for 20 years as a civilian employee of the Navy, rising to become the chief contracting officer on the cruise-missile program. He had a reputation for being tough on contractors; at his retirement party, McDonnell Douglas presented him with a "cost cutter of the decade" award. But afterward, Parkin decided to go through the "revolving door" between the Pentagon and those who do business with it. He set up a consulting firm in nearby Alexandria, Va., to sell his expertise to military contractors.
In 1986 Hazeltine Corp., a defense electronics company based on Long Island, N.Y., became one of Parkin's clients. Hazeltine was competing for a deal to supply devices to test IFF (identification, friend or foe) equipment used on Navy planes. It agreed to pay Parkin $24,000 a year for any marketing information related to IFF that he could gather.
Parkin turned to Fred Lackner, another consultant. They met about ten years ago, when Parkin was working for the Navy and Lackner for a defense contractor; they grew close enough to become involved in several joint business ventures. Parkin gave Lackner half the fees he was collecting from Hazeltine and proposed to share any bonus he might receive if Hazeltine won the IFF contract.