Feb 4, 1988

CARLUCCI FOR THE DEFENSE | By Jerry Meldon | published in the Boston Phoenix February 4, 1988 Vol 17 Iss 4


Looking for much needed Pentagon reform under the leadership of Frank Carlucci? It may be more a case of the fox guarding the henhouse.

In his oft celebrated farewell address, 27 years ago, President Dwight D. Eisenhower warned us that “in the councils of government, we must guard against the acquisition of unwarranted influence ... by the military industrial complex.... The potential for the disastrous rise of misplaced power,” Eisenhower continued, “exists and will persist.”

Persist it has, and never so perniciously as in the Reagan era. And no one personifies the military, industrial, and intelligence ‘complex more than Reagan’ s new Defense secretary, 57-year-old Frank C, Carlucci Jr. Given his record as assistant secretary of Defense, president of a mysterious Sears Roebuck affiliate involved in the arms trade, and deputy director. of the Central Intelligence Agency, Carlucci qualifies as the, last person one would imagine confronting the Pentagon’s, or the CIA’s, pressing issues: the procedures for awarding weapons contracts, long plagued by cozy relationships between military brass and lobbyists; decisions that favor overpriced and underperforming weapons; the revolving door between government and defense industry offices; rogue and corrupt elements in covert operations and foreign military sales programs, both well represented in the cast of the Iran contra drama.

Frank Carlucci cannot be expected to address these problems for the simple reason that over the past decade he has been one of the bureaucrats most responsible for their persistence.

Thirty-two years ago Carlucci left Harvard Business School after his first year in a two-year MBA program. After a bounce around the salesman circuit, he joined the Foreign Service. His diplomatic career — invariably at hot spot embassies — culminated in 1975 when he was named Ambassador to Portugal. His assignment to Lisbon came on the heels of a coup that ended 50 years of fascist dictatorship. Then secretary of State Henry Kissinger, Carlucci’s: boss, had little use for the leftist military officers who took charge. Some observers credit Carlucci with keeping the ship of US Portuguese relations afloat during difficult times. Others accuse him of carrying out Kissinger’s orders to undermine the young officers. In any event, the leftists were soon voted out of office to be replaced by moderates.

In late 1977 Carlucci was named deputy CIA director under Admiral Stansfield Turner. Spook watchers, who had long suspected Carlucci of having ties to the agency, felt vindicated. Admiral Turner recently told the Phoenix that Carlucci developed an excellent working relationship with CIA career professionals in his time at the agency.

When the Reagan team took over in 1981, .Carlucci slid easily into a Republican administration. He had the strong backing of two Republican stalwarts, Donald Rumsfeld and Caspar Weinberger. Twelve years earlier, during the Nixon administration, Carlucci had interrupted his diplomatic career to take charge of community action programs at the federal Office of Economic Opportunity (OEO). The OEO was in the hands of Rumsfeld, Carlucci’s wrestling teammate at Princeton and a powerful Illinois businessman and politician who became Nixon’s and Gerald Ford’s Defense secretary, as well as Ford’s White House chief of staff. More recently, ‘Rumsfeld flirted briefly with the 1988 Republican presidential nomination.

Carlucci’s association with Weinberger began when the latter was running the Office. of Management and Budget. Nixon appointed Carlucci the office’s associate director in July 1971. Two years later Carlucci rode Weinberger’s coattails to become undersecretary of Health, Education and Welfare.

When Ronald Reagan appointed Weinberger secretary of Defense, Weinberger insisted that Carlucci be his top deputy. The current, unprecedented military spending binge began shortly thereafter. In the words of one undersecretary of Defense, cited by the Boston Globe, when the Reagan administration came to Washington, it discovered defense contractors “sitting out on the Pentagon steps with their money bags open — and we filled them.”

One of the more controversial decisions made by Carlucci and Weinberger was to overturn a Pentagon decision and award Lockheed — earlier the beneficiary of a quarter billion-dollar bankruptcy bailout — a $9.5 billion contract to build C5B supertransports. The plane was designed to supplant Lockheed’s C5A, legendary for its $2 billion cost overrun, $1.5 billion in wing repairs, and Pentagon harassment of the analyst who exposed the boondoggle.

Army and Air Force officials were hardly thrilled with the newer version. They found the C5B expensive to maintain, difficult to maneuver, and prone to breakdown. In late August 1981 the Pentagon declared McDonnell-Douglas and its C17 winners of the supertransport contract. Five months and one high pressure ‘lobbying campaign later, Carlucci and Weinberger overturned the Pentagon’s earlier decision and handed the contract over to Lockheed. A later General Accounting Office investigation found that Carlucci had tolerated the collusion of Lockheed lobbyists and, Pentagon officials on this contract.

Carlucci and Weinberger were merely borrowing a chapter from Donald Rumsfeld’s book. While serving as Ford’s Defense secretary, Rumsfeld similarly bailed out another ailing defense contractor, Chrysler. Chrysler was then competing for the M1 tank contract. Army experts had concluded early on that General Motors offered a better prototype at lower cost. Chrysler's version was driven by an untested turbine engine whose 2000degree exhaust made it impossible for infantrymen to stand behind it. Ten years later, in field trials, the tank would manage only 50 miles between breakdowns. However, back in November 1976 Rumsfeld decided to award the contract to Chrysler. The bonanza, an eventual $20 billion in sales, helped Lee Iacocca turn Chrysler around.

And according to Richard Mendel, author of The Defense Game, it sent the Army “on its way to getting a weapon suited more for a paved interstate than a battlefield.”

Such horror stories stir up more smiles than bile these days. But there may be a more sinister set of skeletons in Frank Carlucci’s closet. For reasons yet unspoken, Carlucci, on several occasions, intervened in behalf of the shadowy network of Pentagon and CIA officials exposed by the Iran contra scandal.

Several of Ollie North’s minions have been connected with former CIA agent Edwin Wilson, now serving 52 years for crimes including the shipping of ex plosives to Libya. A lingering question in the Wilson case is the matter of who the principals were in Egyptian American Transport Service, Inc. (EATSCO). EATSCO was established sometime around 1979 by Wilson’s former CIA superior, Thomas Clines, with a half million-dollar loan from Wilson. Clines knew the Pentagon was about to award a gold mine in shipping contracts in connection with the Carter administration’s promise of $4 billion in arms to Egypt.

Sure enough, EATSCO was awarded $71 million in shipping contracts. The man who authorized them was Erich Von Marbod, deputy director of the Defense Securities Assistance Agency (DSAA). What has made this so interesting to law enforcement officials is Wilson’s claim that, including himself, Thomas Clines had four hidden partners. According to Wilson, one was Erich Von Marbod and the other two were CIA Deputy Director for Clandestine Operations Theodore Shackley (Cline’s boss) and Air Force Major General Richard Secord, who by now needs no introduction. Shackley, Secord, and Von Marbod all deny Wilson's allegation. However, all left the government under clouds of suspicion. To make matters worse, EATSCO was charged with bilking the Pentagon out of $8 million. Clines repaid $3 million and paid a $10,000 fine.

Of course, this did not stop Oliver North from turning to Secord — as well as Clines and Shackley — in the Iran contra operations. By then Secord’s reputation had been more or less restored. The man who salvaged it was Frank Carlucci.

In early 1982 Secord was suspended from his post as deputy assistant secretary of Defense — in charge of arms sales in the Middle East — pending Justice Department investigation of his connections to Wilson, Clines, and EATSCO. As. reported by Jonathan Kwitny in the Wall Street Journal, Carlucci, number two man at the Pentagon, offered Justice officials a deal. Secord would take a lie detector test. If he passed, he would be re-instated. When Justice balked, Carlucci asked for more evidence. When none came, Carlucci reinstated Secord.

In sticking up for Secord, Carlucci may have been repaying the feisty general for his then secret. role in the Iran contra drama. Prior to his suspension, Secord, along with Ollie North, had done the Reagan administration’s legwork in promoting an $8.5 billion sale of AWACS surveillance aircraft to Saudi Arabia. It has since been revealed that the Saudis promised to funnel millions to the contras. The AWACS sale was narrowly approved by Congress in the face of stiff opposition from supporters of Israel. North was awarded a presidential medal for promoting the sale to congressmen; Secord, it appears, was allowed to keep his job.

If that were all, Carlucci might deserve the benefit of the doubt. But there’s more. Following the Secord lie detector incident, Carlucci left the Pentagon, in 1982. His next stop: a new subsidiary of Sears Roebuck known during its short life as Sears World Trade (SWT). Carlucci’s hiring as its president might have had something to do with the fact that his old friend, former secretary of Defense Donald Rumsfeld, is a member of the Sears Roebuck board.

One of SWT’s consulting arms advised clients on how to win Pentagon weapons contracts. Among its consultants, according to an article by Globe reporter Fred Kaplan, was General James Allen. Allen had recently retired as commander-in-chief of the Military Airlift Command (MAC), which was at the center of the supertransport program. Still more interesting was another SWT employee, whom Carlucci’s executive assistant once described as one of the three most influential people in her boss’s life, besides his wife and Donald Rumsfeld. That was none other than Erich Von Marbod, the Pentagon official who had awarded EATSCO $71 million in shipping contracts. Carlucci hired Von Marbod as a $200,00 a year SWT consultant. According to SWT’s former chairman, Roderick Hills, quoted in the Wall Street Journal, “Erich Von Marbod was at least chief of staff for Frank. Erich read all his mail, answered all questions, went to all meetings.”

In October 1986, $60 million in the red, SWT began to fold, and Frank Carlucci began to look for a new job. Two months later President Reagan appointed him national security adviser. How well he cleaned house after Ollie  North and Admiral John Poindexter remains to be seen. However, he does appear to have remained loyal to North's shadow network. Just as Carlucci began occupying the National Security Office — according to a Globe article by Ben Bradlee Jr. — H. Ross Perot, the Texas multi-millionaire and hostage savior, was requesting federal assistance in his investigation of allegations that Richard Armitage had been involved in “narcotics trafficking and weapons smuggling dating to the early 1970s in Vietnam.” As a Navy officer, Armitage had served in Vietnam under Erich Von Marbod. Now, as the Defense Department's assistant secretary for international security affairs, Armitage is in veritable charge of foreign military sales. When Richard Secord officially retired from the Pentagon in 1983, Armitage reportedly persuaded him to stay on as a consultant to the Joint Special Operations Command, a key element in the “counterterrorist’ establishment that spawned the Iran contra affair. In the spring of 1986, according to a report in the Miami Herald, Armitage was placed in charge of Iranian arms shipments. Shortly after Bradlee’s Globe story on Armitage’s alleged narcotics connections appeared, Jack Anderson and Dale Van Atta reported that national security adviser Frank Carlucci had requested Perot to drop his investigation of Armitage.

Carlucci is now at the pinnacle of his career. One item on his agenda as secretary of Defense will be the Foreign Military Sales program — a Pentagon trough at which many of Carlucci’s friends have fed. According to the Chicago weekly In These Times, $600 million is currently unaccounted for in the Foreign Military Sales balance sheet. It will be interesting to see whether Carlucci orders an accounting. Don't hold your breath.




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