The Outlandish Story of Wedtech

By James Traub

Doubleday. 380 pp. $21.95

POLITICAL corruption is an equal opportunity employer. Anyone can play. And anyone can get caught. So, it is not surprising that the executives of the Wedtech Corp., and their friends in high places, eventually got caught when their maze of corporate schemes and lies finally collapsed.

The founders of Wedtech aspired to create the nation's leading minority-run defense parts manufacturer and, indeed, for a while it seemed that they had succeeded. But their company, for all its supposed idealism, was built on a rotted foundation, according to James Traub's insightful chronicle of the Wedtech scandals. Instead of a glorious legacy, the Wedtech founders left behind one more dismal chapter in the saga of corporate and political corruption that stretches across American history like an ugly scar.

Wedtech, for those unfamiliar with the story, was a company in New York City's devastated South Bronx area. One of its founders was John Mariotta, a semi-literate tool-and-die maker who, for all his faults, could keep an audience spellbound with his tales of how he made the desert bloom.

Indeed, Mariotta discovered how effective he could be on a day in January 1982, when he found himself sitting in the White House Cabinet room lecturing President Reagan on the virtues of putting welfare recipients to work in his machine shop. Two years later, Reagan would declare Mariotta "a hero for the '80s" and Wedtech would become what Traub calls the administration's "poster child."

Wedtech, in fact, did train a work force of disadvantaged blacks, Puerto Ricans, Asians and Russian emigres to successfully build parts for Defense Department equipment. But behind the shiny image, Traub tells us, was another Wedtech, one that led a hand-to-mouth existence, forever borrowing from future contracts to pay for the work on earlier jobs, a company that received $250 million in military contracts and $150 million from investors by using lies, bribes, kickbacks and political influence.

Although Mariotta and his partners became wealthy, much of the company's money went to the lawyers and consultants and politicians who formed the powerful support group that was able to rescue Wedtech each time it started to sink.

Eventually, the Wedtech schemes collapsed and the scandal washed over former U.S. Reps. Mario Biaggi and Robert Garcia of New York, former Bronx Borough President Stanley Simon, former Reagan staffer Lyn Nofziger, and even Attorney General Edwin Meese III. Biaggi, Garcia and Simon drew jail terms. Nofziger's conviction was overturned, and Meese, who seemed to have trouble remembering Wedtech, would see his name forever linked with the word "sleaze."

So bizarre were the misdeeds of the Wedtech clan that the cover art of Traub's book, while unusual, seems entirely appropriate. It depicts Abraham Lincoln as he is shown on the Lincoln penny. Only on this penny, Lincoln's hand is covering his eyes.

The Wedtech scandal, like many stories of official and private conniving, came to the attention of the public in bits and pieces from the news media and finally in the episodic reporting of the trials and convictions of many of the principals. Traub has performed a service for readers by collecting, culling, collating and organizing the details of an immensely complicated story, one which seems to have a cast of thousands. Indeed, at times, one wishes that the publisher had included an illustrated scorecard, one that could be used to tell the players apart when the events become confusing.

Traub, who has written for magazines, tells the history of Wedtech in a casual, sometimes tongue-in-cheek style. But, at times, he goes too far, and is prone to speculating on what the characters are thinking or might be doing. Nevertheless, he effectively combines character description with an easy to read anecdotal approach.

During one such moment in the book, Traub describes the early relationship between Ed Meese and California attorney E. Robert Wallach (earlier described as "a gentleman with big, limpid eyes beneath sprouting eyebrows . . . and yellow rose for a boutonniere") who spent considerable time trying to help Wedtech get government contracts. MEESE AND Wallach met in law school. The Meese family was a fixture in Oakland society, while the Brooklyn-born Wallach came to Los Angeles after his parents were divorced and he grew up in a poor, working-class environment.

"In the Meeses, Bob Wallach saw the kind of family life he had only dreamed of," writes Traub. " 'It was an absolute Life with Father image of a middle-class American family,' says Wallach. 'Gentle, Christian people, nice, modest home, completely satisfied with life as a routine, completely invested with their children. It's terribly seductive. I used to love going to their home. Ed and I were writing briefs down in the basement, his mother would come down with the sandwiches. It was right out of Andy Hardy. It was the kind of home I had never experienced.' "

While Traub's tale could hardly be described as sympathetic, he does display a sense of charity about the misdeeds of the Wedtech figures. They were not only sinners, Traub indicates, they also were sinned against by the fast-buck political operators and influence peddlers who took their money, again and again.

Traub puts the Wedtech case in perspective when he writes:

"With all the force of his maniacal personality, John Mariotta had willed his little company into existence. He had made a living thing out of the dead matter of the South Bronx . . . But the inventor had infused his creation not only with his energy and passion but with his egotism and his blindness. A man-made thing can't be better than the men who make it, and Wedtech reflected all the virtues and all the follies and the appetites, of the men who fashioned and guided it . . ."

Although Traub probably did not intend to do so, he leaves the reader with a troubling question. How many other companies like Wedtech, in their struggle to prosper or even just to survive, have made the same kinds of noxious deals with the same kinds of politicians and have yet to be caught?

Stan Hinden is a financial writer and columnist for The Washington Post.

Wedtech; Another View

WHAT did Wedtech manufacture anyway? The information is explored in detail in Marilyn W. Thompson's Feeding the Beast: How Wedtech Became the Most Corrupt Company in America (Scribner's, $22.50). When Wedtech's avaricious officers learned in 1984 that the Small Business Administration was about to award the largest defense contract ever set aside for a minority-owned business, they quivered with excitement. The contract -- $500 million to $1 billion -- was for the construction of simple boxlike pontoon boats to be used for offloading Navy supply ships where no port facilities existed. The boats would be lined up, end to end, as a floating pier (a scheme designed specifically for a rapid U.S. military deployment to the Persian Gulf). Trouble was, by going public with a stock offering a few weeks before, Wedtech had cut itself out of the SBA's Section 8(a) program which required that a business be at least 51 percent minority-owned. This was hastily corrected at a meeting at the Helmsley Palace Hotel where the officers' stock ownership was rejuggled. In the end, Wedtech got only a piece of the action -- a measly $24.2 million -- though with options for $150 million in 1985 and '86 and the prospect of a U.S. Army contract for similar equipment. But Wedtech could not possibly finance the startup costs of the boatbuilding operation and delivering a stipulated number of boats for $24 million. So began a mad cycle of increasingly pyramided loans, payoffs and influence peddling. Thompson is a reporter on the Maryland staff of The Washington Post.