President Ronald Reagan condoned fiscal irresponsibility and political corruption and this allowed a revolving door effect between government and industry.[1] Reagan was surrounded by government employees who dedicated their allegiance to the business industry. Individuals with a genuine dedication to public service were typically excluded from Reagan’s political circle.[2] The Reagan Administration represented a period when the president viewed the government as trite, and those government employees with a penchant for greed and a lack of ethics profited well under this administration.[3] The Wedtech scandal, a scandal that involved military contracts to the armed services of the United States, is an example of the hands-off approach to fiscal responsibility within the White House during the Reagan Administration.[4]

            Ronald Reagan was not surrounded by people who held the federal government or public service in high regard.[5] An attitude of contempt towards government and the public sector was a common viewpoint held within the Reagan Administration.[6] Several of Reagan’s top government officials, such as Attorney General Edwin Meese and Reagan’s political director Lyn Nofziger, were engaged in political corruption that included influence peddling, fraud, bribery and conspiracy.[7] Such a violation of ethics by Meese and Nofzinger allowed a once struggling machine shop in Bronx, New York, to receive U.S. Pentagon no-bid contracts that totaled $250 million.[8]

            The Wedtech Corporation, formerly known as the Welbilt Electronic Die Corporation, was a struggling minority business during 1981.[9] By the end of 1981, the machine shop accumulated a net loss of $1 million.[10] The business was trying, albeit unsuccessfully, to win a five-year defense contract to produce small gasoline engines for the Army.[11] The machine shop did not win such contract because its bid was deemed too high. The Army wanted to pay $19.5 million for the engines, but the machine shop placed their bid at $39 million.[12]

            During January 1982, Lyn Nofziger left the White House and became a public relations consultant in Washington.[13] The Wedtech Corporation was a new client of Nofzinger.[14] The former political director maintained his White House connections and used such connections to help Wedtech negotiate contracts with the government.[15] In April 1982, Nofziger met with Meese and asked for help securing Army contracts for Wedtech.[16] Despite potential ethical problems between the White House counsel and the Reagan Administration, Meese contacted his top deputy, James Jenkins, in the Justice Department during May 1982. Meese arranged for a White House meeting between James Sanders, who was the head of the Small Business Administration (SBA), the Army and between the representatives of Wedtech. The SBA was responsible for awarding contracts to small businesses, and Jenkins made it very clear during the meeting that he would not tolerate any “foot dragging” from either the Army or from the SBA on awarding the Army contract to Wedtech.[17]

            The Army agreed to pay the Wedtech Corporation $27.7 million for their engines.[18] The SBA further awarded Wedtech a $2 million loan and a $3 million grant; such a grant award was a third of all such grants awarded by the SBA during 1982.[19] The SBA had a policy that limited grants to $100,000.[20] James Sanders approved the request for a $3 million grant to Wedtech because Jenkins urged Sanders for such grant approval.[21] Shortly thereafter, Jenkins left the Justice Department and became a consultant for Wedtech.[22] James Sanders also left his position in government and rented office space from his friend, Lyn Nofziger.[23] During the spring of 1985, Meese’s lawyer, W. Franklin Chinn, also became a consultant for Wedtech.[24] Chinn wanted to introduce Wedtech to additional sources of funding, and within a month of Chinn becoming a Wedtech consultant, Meese donated $60,000 in a “limited blind partnership” with Chinn.[25]

            Four years after Wedtech accumulated a net loss of $1 million, the corporation was a successful business due to their high-level political friends who were eager to lobby on Wedtech’s behalf.[26] The Wedtech Corporation was not limited to just Army contracts. Wedtech was awarded $135 million for the construction of pontoon boats for the Navy, despite delivering the boats two-years after their allotted deadline.[27] During the 1984 election campaign, Ronald Reagan referred to Wedtech’s founder, John Mariotta, as “a hero for the eighties.”[28]

            Those individuals who helped make Wedtech a success benefited handsomely from their efforts.[29] From 1982-1986, the Wedtech Corporation paid their “insiders” and consultants close to $11.6 million in salaries, fees, bonuses, stocks and other incentives.[30] According to Gary Edwards, a former director of the Ethics Resource Center in Washington DC, “Politics and economics rely on public trust and confidence. If it erodes, nothing gets done.”[31]

            Perhaps, Reagan can’t receive blame for all the problems of his administration.[32] “Cashing in had become a way of life in Washington.”[33] A career in government was not a prime motivator for some individuals, such as Lyn Nofzinger. Many individuals inside the Reagan Administration viewed government service as “a means of attaining credentials and contacts that would be more salable when they changed from public to private sector and then sought to profit by dealing with the government they just served.”[34] During the Reagan Administration, the opportunity for corruption was increased because there was so much money to make for personal gain and the ethical environment was extremely relaxed.[35] Ronald Reagan contributed to such greed and corruption. Reagan “came to Washington with a basic contempt for the process of government and those institutional rules that governed it.”[36] According to former United States President James Madison, a president is “responsible for the conduct of the person he has nominated and appointed.”[37] Judged by Madison’s statement, Ronald Reagan was responsible for the ethical misconduct, political corruption and financial irresponsibility that occurred during his eight years as President of the United States.[38]

 

 

 

 



[1] Johnson, Haynes, Sleepwalking Through History: America in the Reagan Years (New York: Doubleday, 1992) pgs.   172-173

[2] Ibid Pgs. 88-89

[3] Ibid Pgs. 88-89, 174

[4] Ibid Pgs. 175-176

[5] Ibid Pgs. 88-89

[6] Ibid

[7] Ibid Pgs. 173-174, 184-185

[8] Ibid Pgs. 173, 175

[9] Ibid Pg. 173

[10] Ibid

[11] Ibid

[12] Ibid

[13] Ibid Pgs. 174

[14] Ibid

[15] Ibid

[16] Ibid

[17] Ibid

[18] Ibid

[19] Ibid Pgs. 174-175

[20] Ibid Pg. 175

[21] Ibid

[22] Ibid Pg. 175

[23] Ibid

[24] Ibid

[25] Ibid

[26] Ibid Pgs. 173, 175

[27] Ibid Pgs. 175

[28] Ibid

[29] Ibid

[30] Ibid

[31] Ibid Pgs. 236, 238

[32] Ibid Pg. 187

[33] Ibid

[34] Ibid

[35] Ibid pgs 187, 173

[36] Ibid Pg. 186

[37] Ibid Pg. 184

[38] Ibid