1. Archive

Searching for a moral in the Wedtech case

The great moral drama of the Wedtech trials has dissipated on appeal. First, Lyn Nofziger, President Ronald Reagan's political mechanic, had his conviction for violating the Ethics in Government Act overturned. Then Rep. Robert Garcia and his wife Jane were awarded a new trial after a jury had found them guilty of extortion. And last week the Second Circuit Court of Appeals overturned the racketeering convictions of E. Robert Wallach, Frank Chinn and Rusty Kent London.

Remember Wedtech? It was the mid-Reagan-era scandal involving a minority-owned defense contractor in the South Bronx. The company was lauded by the president himself, but its success turned out to be built on bribery and political muscle.

Politicians, public officials, lawyers, accountants and bankers played a key part in Wedtech's vast deceit. But with trials, as with history, the victor gets to do the spin control. Thus, Wallach interpreted the appeals verdict as a vindication of his claim that "the system has become skewed by a set of circumstances that elevated politics and ambition to heights that caused the system to malfunction."

What Wallach meant was that he was a victim of a campaign to get his friend, Attorney General Ed Meese, and thus to discredit the Reagan administration.

Though it's virtually a convention for white-collar defendants to invoke martyrdom after their convictions have been reversed, a faction on the right has joined in making much the same point. For them, Wedtech is the story of a handful of lowlifes who bamboozled respectable citizens and then of ambitious, politically motivated prosecutors who went after the victims rather than the predators.

The fact is, Wallach didn't get an altogether fair trial. He has argued rightly that the use of the RICO statute branded him a "racketeer" although the government conceded he was ignorant of Wedtech's ongoing criminal enterprise. He also drew an extraordinarily unsympathetic trial judge.

The appeals court may have taken these facts into account, though they overturned the convictions because the key witness perjured himself on the stand and because the perjury was not disclosed to the jury.

Wallach has thus presented himself as a victim not only of a get-Meese campaign but of the reckless tactics of the former U.S. Attorney Rudolph Giuliani.

To prosecutors in the Southern District, on the other hand, the reversal proves their contention that appeals judges regard white-collar defendants with tender solicitude.

"They never would have reversed a narcotics charge based on the perjury," one said recently.

There's your choice of Wedtech morals: Either the prosecutors who brought home convictions were biased or the judges who reversed them were.

There's also a third possibility: The scandal resembles the Iran-Contra episode in that much of what was worst was not criminal.

Thus, the special prosecutor who looked into Meese's relationship with Wallach found no criminal nexus of favors and rewards but instead a stupefying willingness on the part of the nation's highest legal official to allow his office to be used for private gain.

Similarly, while Wedtech actually bribed some of its friendly politicians, to others, including Sen. Alfonse D'Amato, it gave only lavish, and apparently legal, campaign contributions.

And though the company's principals corrupted several auditors to conceal cooked books, they later discovered that "consulting" contracts achieved much the same end.

What mattered was that there was a coin in which everyone could be paid. Wallach and others stood in line with the rest, palms up. They didn't say "no;" nobody said "no."

That's the real story of Wedtech.

James Traub is author of Too Good to Be True: The Outlandish Story of Wedtech.