Bush's campaign manager interceded for Perot Malek helped tycoon get Medicare billings


WASHINGTON -- The manager of President Bush's re-election campaign, Frederic V. Malek, used his position in the Nixon administration to settle a lucrative federal contract dispute in favor of Ross Perot, government records show.

Mr. Malek, who was then deputy under secretary of health, education and welfare, "instructed" Social Security officials in 1969 to drop their challenge to billings by Mr. Perot's firm for Medicare work in Texas, according to documents in the National Archives. A major supporter of President Richard M. Nixon, Mr. Perot was chairman of Electronic Data Systems Corp., which grew into a data-processing industry giant with the help of millions of dollars in Medicare contracts.

Documents indicate that Mr. Malek also tried to intercede for Mr. Perot in a second dispute about a California Medicare contract but was unable to help because the administration became involved too late in the process to assist without drawing criticism.

A Perot spokesman last night denied that Mr. Perot had used his political connections at the Nixon White House to benefit EDS.

A six-page memo and accompanying notes outlining Mr. Malek's role are among dozens of documents in Nixon-era archives that describe repeated White House contacts with Mr. Perot on business matters, in seeming contrast with the Texas tycoon's political stance as an outsider and a critic of special interests.

The documents have come to light in recent days as scrutiny of Mr. Perot's background intensifies in advance of his likely independent presidential candidacy, expected to be bankrolled with millions from his personal fortune.

A January 1972 memo to then-White House Chief of Staff H. R. Haldeman indicates that Mr. Malek, the man who would become Mr. Bush's 1992 campaign manager, may have helped contribute to Mr. Perot's financial success.

The memo was written by Haldeman assistant Gordon C. Strachan, who later became a Watergate figure against whom charges were dropped. The memo says Mr. Malek was tapped by the Nixon White House in 1969 to deal with complaints from Mr. Perot, who was angry about Social Security Administration (SSA) efforts to reduce the amount his firm could charge for Medicare claims processing in Texas.

Documents indicate that Mr. Malek studied the matter "and on the merits determined Perot should receive the money. He did." Handwritten notes accompanying the memo include a notation that Mr. Malek decided the charge was justified and "instructed SSA to pay."

Mr. Malek's activities during the Nixon administration became a political liability for Mr. Bush in the 1988 presidential campaign. Mr. Malek, who was Mr. Bush's national convention manager, resigned his Republican Party post after it was reported that he compiled a list of Jews at the Bureau of Labor Statistics while he was working at the Nixon White House in 1971. The list was gathered at the request of Mr. Nixon, who reportely suspected that a "Jewish cabal" at the bureau was falsifying economic data.

Mr. Malek was traveling yesterday and could not be reached for comment. But Bush campaign press secretary Victoria Clark said Mr. Malek has told her he "had very limited contact with Perot."

"He said he had very little recollection of any dealings with Perot," the spokesman said. "He said he didn't have that much contact with the guy and didn't have that much familiarity with the issues."

According to a 1971 congressional investigation, Social Security officials, who suspected that EDS was making an "exorbitant" profit, were upset that Mr. Perot's firm would not open its books for federal examination. For that reason, the government had refused to reimburse Texas Blue Cross/Blue Shield, which administered Medicare in Texas, for the full amount billed by Mr. Perot's company for claims processing.

Social Security records from the time indicate that, after comparing the EDS charges in Texas with those from other states, the government withheld about $426,000 from the amount Mr. Perot claimed was due for the period between January 1968 and June 1969.

Mr. Strachan's memo described Mr. Malek as one of two officials who worked on "Perot matters at HEW." Records from a congressional probe of Mr. Perot's Texas contract include a July 1969 letter from Blue Cross/ Blue Shield informing a top Social Security official that discussions of the dispute "are now underway with the staff of the Under Secretary of Health, Education, and Welfare, which we trust will lead to reconsideration of this matter."

The Strachan memo put the amount that was ultimately paid to settle the dispute, after Mr. Malek's intervention, at $400,000; a General Accounting Office report later estimated that Social Security actually paid approximately $585,000.

According to the memo, Mr. Malek and two other officials -- including HEW Secretary Robert H. Finch -- also "tried to intercede on Perot's behalf" during a second disagreement when a California Medicare contract worth $1 million a year was given to a competing firm. But, the memo said, administration officials "became involved too late to turn it around without inordinate flak."

"Malek sums up by saying Perot 'won one and lost one' with the Administration at HEW," Mr. Strachan wrote.

Perot spokesman James Squires said it was his understanding "that the two disputes were handled in the regular administrative process." He described the wrangling over the EDS government contracts as "pretty arcane, precise stuff. We have so many questions about so many things that are 25 years old, and so many memos -- "

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