It started with the bribery indictment of California Rep. Randall "Duke" Cunningham, but before it's over, a sprawling investigation into a Pentagon contractor called MZM could snare some of Washington's most powerful inside players
At the FBI, the CIA, and the Pentagon, senior officials are conducting wide-ranging damage assessments related to the MZM inquiry. The chairman of the House Select Committee on Intelligence, Republican Peter Hoekstra of Michigan, has also asked an independent investigator, Michael Stern, to conduct a separate inquiry into Cunningham's activities while he served on the intelligence committee. Stern, congressional sources say, has found that Cunningham corrupted the awarding of intelligence contracts, much the same way he did military contracts. The leaders of the intelligence committee are now debating whether to subpoena Cunningham to testify. His attorney has said Cunningham would assert his Fifth Amendment right against self-incrimination if he were subpoenaed. One question still unanswered: how the government allowed MZM to operate with so little oversight. "The CIA and DOD [the Department of Defense]," says Martin, the former espionage prosecutor, "are equally responsible for what has gone wrong at MZM as MZM itself."
The fallout from the MZM affair is only just beginning. At the request of deputy under secretary of defense Stephen Cambone, the accounting firm Deloitte & Touche has completed an audit of MZM's contracts at CIFA. Cambone rejected a previous CIFA in-house review, defense sources say. In August, CIFA Director Dave Burtt resigned, citing personal reasons. He did not return a call from U.S. News. That same day, his deputy, Joseph Hefferon, also retired, but his departure, he says, was "totally unrelated" to the MZM inquiry. Hefferon added that neither he nor Burtt had authority over CIFA contracts, which were awarded by a separate agency. "What Wade did with the congressman," says Hefferon, "we had no knowledge of at all."
"For Sale." The rise and fall of Mitchell Wade offers a rare glimpse into the cutthroat world of the billion-dollar defense-contracting industry. Federal prosecutors have described in captivating detail the depth of Wade's business dealings and Cunningham's "naked avarice." The latter, they say, is "starkly framed" in one of Cunningham's office notecards. Under the congressional seal, Cunningham jotted down a "bribe menu," from which Wade "ordered" defense contracts. Some examples: The notation "16 BT 140" meant that a $16 million contract from Cunningham would cost Wade a boat called "Buoy Toy," valued at $140,000; "17 50" meant that a $17 million contract required a $50,000 bribe from Wade. After the first $340,000 in bribes, Cunningham generously offered a discount-just $25,000 for each additional $1 million in bogus earmarks. "For the better part of a decade," said prosecutors in San Diego, "Cunningham, in effect, erected a 'For Sale' sign upon our nation's capital."
And Wade was among the highest bidders. He contributed frequently to Cunningham's political action committees-often just before key votes-gave him an envelope stuffed with $6,500 in cash, and gifts that "ran the gamut," said prosecutors, from the "routine" to the "peculiar," the "audacious," the "self-indulgent," and the "truly astonishing"-including lavish meals, fancy hotel rooms, a Rolls-Royce, a yacht, rare antiques, oriental rugs, and a down payment on a luxury home. "They say money and power can be seductive-well, there was a little mating dance between Wade and Cunningham," says a former MZM executive vice president, Richard Peze. "And it got absolutely out of control and resulted in the worst possible outcome for both these individuals."