SignOnSanDiego.com > News > Politics -- Cunningham case a view into political pork process

By Marcus Stern and Jerry Kammer
August 31, 2005

WASHINGTON – When Rep. Randy "Duke" Cunningham first responded to questions about his dealings with defense contractor Mitchell Wade, he stressed that his position on the House defense appropriations subcommittee did not enable him to secure contracts for Wade's company, MZM Inc.

"I do not have the authority or ability to award a contract to Mr. Wade's company and no single member of Congress, no matter how influential, can dictate to the armed services who will be awarded contracts," the Rancho Santa Fe Republican said during a June 23 news conference.

While Cunningham's claim is technically correct under the government's doctrine of separation of powers, it doesn't reflect the reality that many members of Congress, especially members of appropriations committees, have a great deal of say over how funds are allocated.

A federal grand jury in San Diego is probing Cunningham's dealings with Wade after disclosures that Wade bought and sold Cunningham's Del Mar home at a $700,000 loss and allowed Cunningham to live aboard his yacht in Washington. Wade has since resigned as head of MZM, and the company is in the process of being sold to a New York-based equity firm.

Since receiving its first federal contract in 2002, Washington-based MZM has collected more than $163 million in government contracts.

Cunningham's dealings with another defense contractor – Brent Wilkes, president of Poway-based ADCS Inc. – have also come under scrutiny. On Aug. 16, agents from the FBI, Internal Revenue Service and Defense Department raided the company's headquarters. Agents were seeking records pertaining to government contracts secured by ADCS, particularly deals related to the House defense appropriations subcommittee, according to sources familiar with the investigation.

The raid came seven weeks after a similar raid on MZM.

Like MZM, ADCS won millions of dollars of government contracts while making significant campaign donations to Cunningham and other members of the House defense appropriations subcommittee. The subcommittee repeatedly penciled in funding for projects involving the company, even though the Pentagon had not requested the money.

Cunningham's possible abuse of his clout has opened a window on the congressional appropriations process, giving the public a rare glimpse at the growing premium that contractors place on obtaining influence on Capitol Hill.

Cunningham's seats on the defense appropriations subcommittee and the House Permanent Select Committee on Intelligence give him influence over the kinds of military-intelligence contracts MZM has been seeking, said Nathan Facey, a former aide to Rep. Marcy Kaptur, D-Ohio, a senior member of the House Appropriations Committee.

"It's one-stop shopping," Facey said of Cunningham's potential usefulness to Wade. "He can get an earmark lined up in the intelligence committee, and then he can walk it over to appropriations and say, 'It's classified, so I can't talk about it, but it's a good program.' "

Earmarks are relatively small provisions that members of Congress insert into a bill to fund specific programs that often benefit their districts or supporters. They typically write them cryptically to obscure the lawmaker and the beneficiary.

Wade poured $272,426 into the political process in the past five years, with the help of political action committees, employees and friends, according to data provided by the Center for Responsive Politics. Wilkes orchestrated $499,200 in contributions during the same period, according to the center's data.

"They know the process," Rep. Jeff Flake, R-Ariz., said of contractors. "They come in and say, 'This is what we need, so can you ask for this? Can you write a letter to the appropriators?' It's really pernicious because once you get an earmark in a bill, you're going to support the bill, or your earmark is removed. . . . Members are getting hooked on earmarks quickly. They are led to believe that that is the way you get re-elected."

News accounts contribute to the problem, said Jacques Gansler, former undersecretary of defense for acquisition, technology and logistics.

"The problem with pork is that in the local press it's always viewed as a plus. It's 'Congressman Jones just got us a $20 million project and isn't that wonderful' – even though the executive branch didn't ask for it and it's not necessarily a priority in terms of the nation's interest."

Pork-barreling has always been a feature of the federal budget process, but as the budget has expanded in recent decades, so has the pork. The mounting pressure on lawmakers to raise large sums of money for campaigns has further accelerated the trend. In the past decade, the process has become more ingrained and efficiently managed, and has spread to parts of the budget previously untouched.

In 1998, the 2,000 earmarks in all 13 appropriations bills had an overall value of $10.6 billion, said Keith Ashdown of Taxpayers for Common Sense. By 2004, the numbers had reached 15,584 earmarks worth $32.7 billion.

Rep. Virgil Goode, R-Va., a member of the House Appropriations Committee, has been another target of Wade's political contributions. MZM has given $87,476 to Goode, mostly in the form of individual contributions from employees.

Goode was instrumental in getting funding beginning this year for a new program awarded to MZM – the Foreign Supplier Assessment Center.

The program, created to monitor the participation of foreign companies in U.S. defense programs, is based in Martinsville, Va., which is in Goode's district. When MZM increased its presence there, Goode touted the jobs the move would bring to the rural community in southern Virginia.

Goode grew testy in an interview when asked why he sought the provision even though the Pentagon didn't want it.

"I've probably put in 30 or 35 requests over the last five or six years," he said, including some affecting other agencies. "And the Defense Department hasn't come by on a single one and asked me to put it in."

In March, Wade hosted a fundraiser for Goode at MZM's headquarters. Employees queued up to hand over more than $50,000 in contributions.

"It was just like any other fundraiser," Goode said. "Stuff to eat, stuff to drink. They had hors d'oeuvres. I made a talk about the importance of our military and having them supplied with good information. It was a pro-defense talk."

Asked if he thought Wade intended the contributions as a reward for Goode's support in pushing through the Foreign Supplier Assessment Center over Pentagon objections, Goode said, "I can't read his mind. But my support for MZM stems from the fact that they had a large presence in the district."

Winslow Wheeler, a former Senate staff member and frequent critic of the appropriations process, looks ruefully at the proliferation of pork.

"In the mid-'70s, a defense appropriations bill, conference report and the statement of managers would be 30 pages and the bill 30 pages, so the entire document was about 60 pages," he said. "Each pork item would get about a paragraph and there might be 100 or 150 of those items.

"Today, you're talking about a document that is 200 to 250 pages." You find so many earmarks that "if they did a paragraph on each one, we'd be talking about a real tree killer."

Cunningham's suggestion that he could not significantly influence the outcome of relatively small military-intelligence contracts worth a few million dollars, doesn't square with reality, Wheeler said.

"If he did line-items in committee reports or conference reports for MZM, he understands perfectly well that he required the Department of Defense to do exactly that or there would be hell to pay," Wheeler said.

The kind of payback a spurned lawmaker can deal the military was amply illustrated by former Rep. Charlie Wilson, D-Texas, who used his position on the defense appropriations subcommittee during the 1980s to steer billions of defense dollars covertly to help Afghan fighters dislodge Soviet forces from Afghanistan.

"We would have never won the war if it hadn't been for earmarking because the (CIA) would have never spent the money the way we wanted it to," Wilson said in a recent interview. "There are three branches of the government and you have to explain that to the executive branch every once in a while and earmarking is the best way to do that."

He recalled one such lesson from the 1980s.

Wilson had talked his girlfriend out of a trip to Paris to accompany him to Pakistan. A U.S. spy plane was supposed to fly them from one end of Pakistan to the other.

However, an Air Force colonel working for the Defense Intelligence Agency refused to transport Wilson's girlfriend on the spy plane, saying it was against the rules. Wilson got even with the Defense Intelligence Agency in the next appropriations bill.

"I just removed two planes from their inventory," he said. "The Louisiana National Guard was very glad to get them."

Cunningham now says he won't release payment records North County Times - North San Diego and Southwest Riverside County News

By: MARK WALKER - Staff Writer

U.S. Rep. Randy "Duke" Cunningham no longer plans the immediate release of financial records the congressman said would prove he paid more than $13,000 to stay aboard a defense contractor's boat for more than a year.

In a June 23 statement, Cunningham wrote that his attorneys were assembling the payment information for his time on contractor Mitchell Wade's boat, the "Duke-Stir," and would release it once compiled.

The U.S. Attorney's office is leading a grand jury investigation into the relationship between the congressman and the contractor. Last week, the government unsealed a civil suit alleging that Cunningham "demanded and received" a bribe from Wade in a 2003 real estate transaction unrelated to Cunningham's liveaboard arrangement.

In his June statement, Cunningham, R-Escondido, wrote that he had paid "well over" $8,000 in dock fees and "well over" $5,000 for service and maintenance in lieu of traditional rent during the 14 months he lived on the 42-foot vessel.

The promise to make those records public in a timely manner is included in a "Personal Statement from Congressman Cunningham" that has remained posted on his congressional Web site since it was issued.

Attorney K. Lee Blalack said this week that while the 50th Congressional District lawmaker still intended to disclose the payment information, it will be kept under wraps for now.

"The congressman will release those records at the conclusion of the grand jury investigation, which we hope will be soon," Blalack said. "At the time he issued the statement, we were not, to the best of our knowledge, the subject of a grand jury investigation and that weighs heavily."

In the June statement, however, Cunningham did know he was the subject of some kind of investigation, writing he was aware "there is now a legal inquiry under way."

Last week, the U.S. attorney's office in San Diego leading the grand jury investigation unsealed a real estate forfeiture suit filed against Cunningham that contains the criminal bribery allegation.

The civil suit seeks to stop Cunningham from selling a Rancho Santa Fe estate-style home that he and his wife, Nancy Cunningham, purchased for $2.5 million following the sale of the Del Mar Heights residence. That home is now for sale for $3.5 million.

The suit contends Cunningham bought the Rancho Santa Fe property with funds obtained from Wade in violation of federal bribery statutes.

In late 2003, Wade purchased the lawmaker's Del Mar Heights home for a price that was $700,000 more than Wade sold it for less than a year later, without ever having lived in or used the home.

According to the government's civil suit, Wade paid "an amount far greater than its true fair market value," a payment allegedly made in return for Cunningham's "being influenced in the performance of his official duties."

Cunningham is a member of the House Appropriations Committee and its Defense Subcommittee.

Wade is the founder and former sole owner of MZM Inc., a Washington, D.C., defense firm that since 2002 has seen the value of its Pentagon contracts swell to more than $160 million. MZM was recently sold to a New York investment firm, which plans to transform the company into a new defense firm.

Cunningham has described Wade as a personal friend. In his June statement, he wrote that he started staying aboard Wade's boat April 2004, using the vessel as his residence when he was in Washington.

He wrote that he and Wade agreed that rather than paying rent, Cunningham would be responsible for monthly dock fees and boat maintenance costs.

The 63-old-lawmaker, who announced in July he would not seek re-election next year, stopped living aboard the boat following the first published report of his real estate dealings with Wade.

Cunningham has denied any wrongdoing, writing in June that he "welcomed any and all appropriate investigations" and predicted the outcome would "confirm that I have acted honestly."

A hearing on the civil suit is set for Sept. 9 before U.S. District Judge Dana Sabraw in San Diego. The original complaint seeking forfeiture of the property to the government was filed July 21. It had been kept secret under court order until U.S. attorneys voluntarily unsealed it last week.