Too Good to be True, by James Traub

...Mariotta also understood his own deficiencies, and realized that the growing enterprise needed a colleague trained in business organization and capable of inspiring confidence in it among major contractors, government agencies, and, most important of all, bankers...

...In human experience, the shortest measurable period of time is that which elapses between receipt of an unexpected benefit from one's government and recognition that it was entirely deserved...

...Yet those who were in such a hurry to benefit minorities that they would destroy the greatest bulwark against discrimination—selection by merit—bear some responsibility for the Wed-tech disaster...

...My Virgil wanted to show me that the borough he represented was far livelier than I had previously been willing to acknowledge...

...Neuberger, an orphan of the Holocaust, was a shrewd, angry, unscrupulous small businessman, whose gargantuan sexual appetite was accompanied by unexpected spasms of rage or sentimentality, each equally embarrassing to his colleagues...

...These qualified it for loan guarantees and financial help from the Small Business Administration, and lasted long after Wedtech outgrew the prescribed legal definition of a small business, in much the same way that it remained a "minority enterprise" when it had become technically non-minority...

...Once a contractor discovers that it deserved to get the contract it was awarded with the help of politicians, it becomes convinced that everything that redounds to its benefit is good also for the United States of America...

...As the company won more and bigger contracts from the Defense Department, its financial condition deteriorated...

...one that Traub favors...

...it benefits the people in control of the particular company that is awarded the set-aside contract...

...He found the man in a serious, soft-spoken immigrant from Colombia, Mario Moreno...

...He sentenced Wallach to six years...

...Picking between two equally qualified contractors in order to spread employment through the nation is one sort of favoritism...

...21.95 Roger Starr THE AMERICAN SPECTATOR SEPTEMBER 1990 33 time...

...He was flagrantly patient with one Robert Wallach, a California lawyer who appears throughout the book as trying to milk Wedtech's minority status and semi-mythical accomplishments to enhance his reputation with high-ranking Republicans (he himself was a Democrat...

...T he moral I draw differs from the .i...

...Intervention of consultants and the undisclosed paid services rendered by elected legislators were the inevitable result of the set-aside law...

...He played a minor role in the Wedtech story, though he attracts and deserves the denunciations Traub levels even while quietly acknowledging that the Reagan White House was not the first to have a hatchet man like Nofziger...

...This rags-to-riches-to-sackcloth story must compete for Traub's attention with what he views as its political implications...

...And the foolishness is, as Democrats said about their own stray sheep, "by association...

...Edge Number One was its status as "minority-owned," which allowed it to bid on contracts that the Defense Department was directed by Congress to "set aside" for specific racial and ethnic minorities...

...Merely denouncing greed to explain malfeasance will not lead one to the final source of this sad story...

...Manned by migrants from the Caribbean, machines were turning out airplane parts that were acceptable to a large government defense contractor (I recall it was General Electric...

...When Wedtech expanded, its ownership was diluted, as people bought or were given stock...

...Picking a dubiously qualified contractor on the basis of skin color or native tongue is quite another...

...V et Traub does not recognize that 1 there were losers less well protected than the government itself...

...A local legislator of unusually incorruptible stature took me, in the late seventies, I believe, to see its crowded, unkempt, but busy machine shop in the otherwise desolate South Bronx...

...Their achievement was as encouraging as a growth of saplings on a burned-out forest floor...

...His brains, people said, were in his fingers, allowing him to grasp the inner logic of complex industrial processes at a glance and reproduce them in his own shop...

...After fifteen minutes of harangue, Judge Owen turned from Wallach in disgust, saying: "The litany of these things . . . I sicken to talk about them...

...His eyes fixed on establishing a connection between Republicans and the Wedtech scandal, Traub seems not to have pondered enough the policy of minority set-asides and other forms of favoritism by fiat...

...Mariotta, the native-born Hispanic, had been a brilliant and imaginative tool-and-die maker, despite his inability to read or write...

...No realistic observer of government procurement doubts that officials often do favors for contractors they consider qualified and by whom they are sometimes employed after closing their government careers...

...But those who administer contracts recognize instantly that the law does not benefit minority groups...

...Elected officeholders who were found guilty of crimes as a result of their association with the company were Mario Biaggi (congressman, Democrat...

...They are too busy taking bows for their superior human instincts to notice how costly their good feelings were, and not only to the government...

...What pushed Wedtech on to the political successes that foreshadowed its criminal downfall was primarily its "edges...

...With U.S...

...34 THE AMERICAN SPECTATOR SEPTEMBER 1990...

...sion...

...Moreno provided knowledge of the ways of larger companies, a tactful and convincing manner, and mastery of accounting and business practice...

...He cites President Reagan's praise of John Mariotta for his achievements in production...

...Traub also emphasizes that as the company received bigger and bigger contract awards, it strayed further from the truth in describing its financial condition to creditors, poured more assetsinto the private (and concealed) bank accounts of its principal stockholders, and awarded bigger fees to political operatives who claimed to help obtain contracts that strained its physical facilities and technological skills...

...Greed is so basic a factor in human motivation that its rise and fall cannot easily be correlated with the ascendancy of one political party or another...

...Buyers for the armed services—they are not necessarily military personnel themselves—are trained to demand efficient performance of the contract for the purpose of increasing the participation of specific minority-owned contracting firms in the nation's economic life...

...Simultaneously, he was exploiting his stature with the Republicans in order to collect major fees, hundreds of thousands of American dollars, from Wedtech for his services...

...Without being encouraged by the law, and by lawyers and consultants, especially the egregious Wallach, to seek contracts that were manifestly beyond its capacity, Wedtech delivered the airplane parts, complex cooling devices for army tanks, and six-horsepower motors that it contracted for...

...Thus, in Traub's view, the President took on himself responsibility for its subsequent failures...

...John Mariotta's share—the basis of Wedtech's original claim to bid on set-aside contracts—was reduced below the statutory minimum...

...Traub points out that Wedtech did reach some jagged peaks of political conquest...

...They were properlytried and convicted for what amounted to the theft of money from the government...

...Finally, the whole gang of bribers, bribees, corporate officers, government servants, consultants, and advisers ended up as defendants in federal court, where all but one were found guilty of a long series of charges...

...As its condition worsened, it engaged new shuttles of hustlers to sell the stock it issued to optimistic suckers...

...It was Robert Wallach who roused Federal District Judge Richard Owen to a unique pinnacle of rage...

...As Traub does not, neither should the reader waste sympathy on them in their disgrace...

...Traub tells this part of the story well, but the reader gets the impression that his narrative is based more on the disclosures of his favorite prosecutors than on the confidences of the defendants (except, perhaps, Mario Moreno...

...And politicians decided that, if members of minorities were to be enriched for being members of minorities, the politicians themselves should be rewarded for fighting their battles...

...The reader is encouraged to forget—indeed, is never told—that Wedtech actually performed well in its initial contracts...

...One can't doubt that the adoption of set-asides in Congress was motivated by the noble purpose of helping members of disadvantaged minority groups...

...Officials who are sufficiently bold to express their doubts of the contractor's competence are enemies, not only of the contractor, but of the glorious nation clever enough to glimpse the contractor's true merit...

...Like all other such official favoritism, the set-aside makes bribe-taking seem justified and has the potentiality of corrupting the whole procurement process...

...Robert Garcia (congressman, Democrat...

...When they find that they will be held responsible by their military superiors for faulty work and immoderate delays, and, at the same time, by spokesmen from other agencies for what the spokesmen claim are unreasonable demands on minority contractors, they are likely to feel that any personal reward they are offered by those contractors is simply a form of extra pay for hazardous duty...

...Traub's account conveys how John Mariotta recruited inexperienced young Hispanics to work in the shop, inspired them, trained them, and, as Traub puts it, despite the competition from prison and drugs, turned them into an effective work force...

...There, in the darkest circle of the urban netherworld, against a backdrop of charred tenements, filthy vacant lots, abandoned cars, and ruined hopes of every description, new life was springing up...

...Wedtech's second edge was its original modest size and feeble capitalization...

...Without public officials pushing Wed-tech to expand recklessly—and getting paid handsomely for their corrupt efforts—the firm might still be in business, proving that it is possible to develop a solid manufacturing enterprise on the fallow soil of the Bronx, with workers for whom a job was a third choice between drugs and jail...

...Obviously the judge was affronted not so much by the defendant's misdeeds, as by the hypocritical armor of disinterestedness in which he enveloped himself...

...It even delivered about half of the elaborate pontoons for a contract that it never should have been granted...

...Traub patiently explains the origins of Welbilt-Wedtech in the machine-shop partnership of John Mariotta and Fred Neuberger...

...Traub suggests that in Reagan's administration Greed won its current rank as the foremost human vice, displacing those debilitating twins, Sloth and Envy, that a more youthful society tends to consider worse sins...

...Stanley Simon (borough president, Democrat...

...Without him, Traub writes, the firm would have remained at best a "decent, marginal little manufacturing concern in the middle of the wilderness...

...After a few references in its opening pages to contract performance, his book is devoted entirely to the financial side of Wedtech's operations...

...I t's probably more accurate to say that, even with Moreno, Wedtech would never have cut a wider swath than that described by Traub without help from the egalitarian slogans of the TOO GOOD TO BE TRUE: THE OUTLANDISH STORY OF WEDTECH James Traub/Doubleday/379 pp...

...Lyn Nofziger, beyond cavil a Republican and an erstwhile Reagan intimate, was found guilty of violating the Ethics in Government Act by helping Wedtech too soon after he left government service...

...Some of these were violations of long-standing statutes against fraud and embezzlement...

...He would clearly hope to turn Wedtech into a Reaganaut shipwreck, but, despite a few feints at Lyn Nofziger whom the author fails to connect with any serious Wedtech offenses, the only Reagan official made to look really foolish is Ed Meese...

...I was thrilled by what I saw, like many more prominent Wedtech tourists who managed later to turn their ecstasyinto cash...

...While Traub moralizes that Wedtech fell because of the havoc Republicans inflicted on such stalwart American virtues as honesty, the scorecard of convictions conveys a different impresRoger Starr was vice president of a company that contracted to build boats for the Navy in the Korean War...

...Bernard Ehrlich, not elected to office but clearly a politician-lawyer who served high in rank in the National Guard, was also a Democrat...

...The Navy officers and civilian officials who were responsible for administering these contracts naturally rebelled at the prospect of awarding them on political grounds...

...The instrument they used was a so-called "minority enterprise," a corporate defense contractor of the 1980s that was entitled to a special edge in government procurement because its founder happened to be of Puerto Rican ancestry, though Spanish Harlem was his actual birthplace...

...I glimpsed Wedtech when, under the name of Wei-bull, it was still oozing virtue in a neighborhood where not even the word virtue was familiar...

...Of course, the Wedtech case laid bare the greed of those prosecuted, and others who escaped...

...The two prospered together, as I saw when I visited their shop in the early days...

...Traub thinks the plundering, not to mention the overnight speed with which the plunderers forgot South Bronx paella and grew accustomed to quenelles de brochet at the Cite Basque, was the inevitable product of the Reagan presidency...

...Garcia won a partial victory in his appeal...

...Meese was clearly unable to be brusque with friends, associates, neighbors, or even people caught next to him in traffic jams...

...The novel element in the Wedtech case is the exposure of set-asides as a particularly risky form of favoritism...

...Congressman Mario Biaggi got eight from Judge Constance Baker Motley—but no lecture...

...For the past fourteen years he has been associated with the Editorial Board of the New York Times...

...Attorney for New York Rudolph Giuliani's typical flourish, some were brought under the RICO statute that was intended to deal with corrupt organizations...