Pentagon Probe Indictments Likely Soon

WASHINGTON —  The first indictments in the Pentagon procurement fraud investigation will be issued within a month, according to the chief prosecutor in the case.

“I’m optimistic you’ll see indictments by the end of the month or early November,” Henry E. Hudson--the U.S. attorney handling the broad inquiry into corruption in the weapons-buying system--said in an interview.

Hudson and other sources indicated that the first charges will result from plea bargains with several of the lesser figures in the investigation.

Deal by Official Told

A source said that one mid-level Pentagon official, suspected of providing confidential military contract data to outside consultants, has agreed to plead guilty and give testimony against more important figures in exchange for a light sentence.

A second source, an attorney defending one of the suspects in the case, said that federal investigators have told him they have two low-level consultants “dead” with incriminating statements overheard on wiretaps.

Federal authorities are said to be confronting suspects with recorded conversations in the hope of inducing them to plead guilty and testify against higher-ups.

Hudson would not comment on plea bargains or cooperation by suspects. But he said that he expects to seek a second wave of indictments, including those of some central figures in the inquiry, before the end of the year.

Leaks of Data Involved

The inquiry, said to be the widest investigation of Pentagon procurement fraud in history, centers on the payment of money to Pentagon purchasing officers in exchange for critical bidding information on military contracts. Six current or former Pentagon officials have been named as possible sources of such data, much of which was classified or proprietary.

In addition, an estimated 85 federal lawyers and investigators, armed with hundreds of hours of wiretap transcripts, videotapes and 500,000 pages of seized documents, are investigating more than a dozen consultants who allegedly bought Pentagon data and sold it to major defense contractors for large fees.

Hudson disputed reports that the huge case had bogged down and is unlikely to produce the sweeping indictments promised when the investigation broke in June with the serving of search warrants on more than 40 consultants, Pentagon officials and defense contractors.

“We’re in the process right now of continuing to review documents, conducting follow-up interviews with witnesses who can shed light on the documents we have,” Hudson said. “There is weekly grand jury activity; we’re busy transcribing tapes . . . .

“These are major cases, and they take time. I’m not going to indict someone until the evidence is firm and clear and supported by the documents,” he added.

Evidence of Small Gifts

Early reports from investigators indicated that telephone taps, room bugs and videotapes had yielded evidence of substantial cash payoffs to Pentagon officials for secret contract data. But a source said that the recordings actually provide evidence of consultants giving relatively inexpensive gifts and promises of jobs to public officials.

“I don’t think the incentive on this was white envelopes (full of cash) for most of those involved,” he said. “It’s more that these fellows were going to retire from their government jobs and they could get a good deal when they did.”

Although primary responsibility for the investigation has been assigned to Hudson’s office in Alexandria, Va., the sensitive case is under extremely close scrutiny at the Justice Department in Washington, sources said.

“It’s in Hudson’s office, but he has to pass everything through Dennis’ office,” said one federal investigative source, referring to Edward S. G. Dennis Jr., assistant attorney general in charge of the criminal division.

“There is more than normal policing from . . . Justice. The operational level is in Henry’s office; but all policy decisions--grants of immunity, deals, etc.--will be approved by Dennis,” the source said.

No Charges Against Firms

Another source close to the case said that Hudson’s team had not added any new names to the list of targets and is not pursuing charges against any of the major defense contracting companies named in search warrants.

“I have heard they are going to return some indictments prior to the election,” said the source.