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Perot's manner masks his complexity

THE BALTIMORE SUN

WASHINGTON -- Starting from scratch, a hard-charging Texas supersalesman built one of the world's great fortunes on a bold yet simple premise: You can have your cake and eat it, too -- as long as Ross Perot is in the kitchen.

Prospering in a cutthroat computer industry because of uncanny success at selling one thing above all else -- the can-do reputation of Henry Ross Perot -- the crew-cut kid with the Texarkana twang rocketed to riches by promising clients that he could produce more, better and faster -- all at no extra cost.

Three decades after quitting IBM to set out on his own, the data-processing billionaire seems ready to launch the biggest sales pitch of a legendary career: selling himself to frustrated voters as the man who can use common-sense savvy and high-tech vision to make Washington work again.

In a little more than two months since Mr. Perot first broached a possible independent candidacy for the White House, he has skyrocketed in the polls. Echoing the promises that made him rich, he has pledged to give government back to the people through modern technology, in the form of "electronic town halls," and vowed he can apply hard-headed business sense to balance the budget without breaking a sweat.

But those who have watched him for decades say the uncomplicated candor that voters find so appealing obscures a more complex reality that reveals much about his potential as a politician. The history of his rise to renown shows that, with Ross Perot, what you see may indeed be what you get, but what you get often is more than you bargained for.

Considered a determined scrapper, who says his disdain for red tape can make America competitive again, Mr. Perot also has been accused of seeking sweetheart deals on secret, no-bid federal contracts.

The iconoclastic political outsider who attacks special interests also has been described as a canny inside operator who has mounted fearsome lobbying campaigns to protect his interests. Mr. Perot's image is a highly charged mixture of opposites: practical visionary, populist tycoon, welfare billionaire, cowboy of the computer age.

Like opposite sides of a coin, the qualities that recommend him to many as a breath of fresh air also have produced controversy through the years, and prompted even Mr. Perot himself to wonder about his suitability for politics.

"I'd be terrible in public office," he told an interviewer in 1969. "I'm too action-oriented." Twenty years later, he similarly dismissed his political prospects, saying: "I don't see myself as someone who can save the United States."

'I can make this work better'

For many who see Mr. Perot as a political savior, however, his appeal lies in the legendary business success that began in 1962, when he quit as one of International Business Machines' top salesmen to found Electronic Data Systems Corp. Incorporated on his 32nd birthday, EDS would make Mr. Perot a billionaire before he was 40 and provide the foundation for a fortune estimated today at more than $2.2 billion.

With EDS, Mr. Perot set out to convince businesses that, for no more than they were already spending, they could improve productivity through his savvy and computer wizardry; his profit would come from the money saved by greater efficiency.

"His pitch is, 'I can make this work better without costing you any more.' That's his governmental philosophy, too," said Texas Democratic consultant George Christian.

The break that made Mr. Perot a billionaire came three years after EDS was started, when Texas Blue Cross/Blue Shield was chosen to administer the new Medicare program in his home state.

At the time, Mr. Perot worked for Blue Cross as a data processing manager while he tried to establish EDS. With no competitive bidding and no government approval, and while he still was on the payroll, Blue Cross gave EDS a contract in 1966 to process Texas Medicare claims. Federal officials raised questions about a sweetheart deal.

But in keeping with his image as a man who rides to the rescue, and who is only reluctantly offering himself as a presidential contender, associates say Mr. Perot took the job because Blue Cross desperately asked for help.

"With the volume of claims in Texas, they had a tremendous problem handling it. They asked Ross to come in and fix it," said Thomas J. Marquez, one of Mr. Perot's first hires at EDS.

In late 1967, officials at the Social Security Administration, which ran the Medicare program, demanded competitive bidding and advance approval of Texas contracts. But within days of the demand, Mr. Perot's firm had another no-bid contract, setting off a five-year wrangle with Social Security officials, government auditors and congressional investigators.

Defying the government

The government had a list of complaints beyond a possible conflict of interest: Mr. Perot refused to open EDS books to federal examiners, who questioned whether he was making what one called an "atrocious profit"; EDS billed at one rate for computer work on Blue Cross' private insurance business and ** charged a higher rate for Medicare processing; EDS refused to give the government title to a data-processing system developed with federal money; Mr. Perot's firm obtained an $8 million loan from a bank headed by a member of the Texas Blue Cross board of directors.

When Social Security threatened to withhold payment until EDS bid for business and opened its books, Mr. Perot refused, in effect daring the government to cut off claims service for millions of sick senior citizens.

"He sort of defied the government every step of the way and insisted he was doing the government a wonderful service," said former Rep. John H. Buchanan Jr., an Alabama Republican whose subcommittee investigated Mr. Perot's contracts in the early 1970s. "Here was a man who had clearly enriched himself and his company at taxpayer expense."

EDS blamed complaints on nit-picking by petty bureaucrats. "We just went in and got the job done. We didn't have time to worry about hurting their feelings," Mr. Marquez said.

While the fight raged, EDS capitalized on its Texas experience and Mr. Perot's growing reputation to win Medicare and Medicaid contracts in California, New York, Pennsylvania and a parade of other states. By 1971, EDS was collecting more than $20 million annually from Washington, compared with less than $100,000 for its nearest private competitor.

An overnight sensation

With its government business fueling impressive growth, Mr. Perot took EDS public in late 1968. The unassuming Dallas magnate became an overnight sensation when Wall Street traders sent the stock soaring, landing Mr. Perot in the record books with the largest fortune ever made in a single day. Within a year, the man who had started the company with $1,000 borrowed from his wife held EDS stock worth almost $1.3 billion.

But as EDS' business grew during the late '60s and early '70s, so did controversy about his hard-charging approach. A House hearing disclosed that Mr. Perot's firm administered the bidding process for part of California's Medicare work, then underbid the competition. The General Accounting Office charged that a firm handling Medicare bidding in Ohio and West Virginia changed its contract specifications to favor Mr. Perot, and then chose EDS even after the Perot firm submitted the highest bid. New York Gov. Nelson Rockefeller sparked criticism when, after meeting with Mr. Perot, he restored EDS to competition for a state welfare contract.

Rockefeller critics wondered whether politics played a role, noting that Mr. Perot had developed close ties with the Nixon White House. Congressional probers in Washington raised similar questions when Social Security called a truce with Mr. Perot after Mr. Nixon took office. Documents in the National Archives indicate that Mr. Perot often complained at the highest levels about contract problems, and that officials, including then-Health, Education and Welfare Secretary Robert H. Finch, interceded on EDS' behalf.

During congressional hearings about EDS' practices, officials said they had been ordered to destroy records involving examinations of EDS. Angry House members also learned that Mr. Perot had met with several senators to press for a special measure to bar potential competition for Medicare business.

"Ross Perot's all for competition except when it comes to himself," said Mr. Buchanan, who now is chairman for public policy at People for the American Way, a liberal lobby group.

Working the system

Controversy about Mr. Perot's skill at political infighting has followed him for decades, causing some to question his credentials as an enemy of politics-as-usual.

"He knows how to push buttons. He knows how to work the

system," Mr. Christian said.

In 1975, a Perot lobbyist pressed for a special tax break worth more than $15 million, but public criticism and reports about nearly $51,000 in contributions to congressional tax writers prompted Mr. Perot to renounce the deal.

In 1980, he mounted a furious campaign after losing a Texas Medicaid contract. A battalion of lobbyists descended on the capital to criticize the competing company and the state relented, paying a $3.1 million settlement to appease the other firm and returning the contract to him.

In Fort Worth today, a family investment group managed by Ross Perot Jr. has drawn fire for capitalizing on political influence to develop an industrial airport and thousands of surrounding acres. The Perots donated land for the facility but pushed intensely for about $150 million in federal, state and local funding. When the Federal Aviation Administration initially balked, then-House Speaker Jim Wright -- a recipient of Perot contributions -- quietly persuaded House budget writers to insert money for the project into a spending bill.

Mr. Wright's action drew fire with disclosures that, at about the same time, a firm connected to the project purchased the home of a top Wright aide, selling it later for a loss, and that the same aide was paid to speak at functions held by airport interests.

Setbacks on Wall Street

Mr. Perot has suffered setbacks, however. After Nixon administration officials persuaded him in 1971 to take over the floundering duPont Glore Forgan brokerage, an unsuccessful three-year stint on Wall Street cost him as much as $60 million.

In the early '70s, Wall Street was no kinder to EDS. The traders who had handed Mr. Perot the fastest fortune in market history put him back in the record books in 1970 for losing more money in a single day than any other person in history. A one-day plummet cut the value of Mr. Perot's EDS stock by an estimated $470 million. By 1974, the value had dropped to around $150 million, from a one-time high approaching $1.5 billion.

But any questions about Mr. Perot's effectiveness may have been answered in the public's mind in 1979 with his dramatic mission to rescue two EDS employees from Iran.

His financial setbacks were erased in 1984 when General Motors Corp. bought EDS for about $2.5 billion. The sale started a short, stormy marriage, with Mr. Perot attacking GM's leadership so incessantly that two years later the company paid him $700 million to leave the corporate board.

But the divorce wasn't friendly, either. In 1988, on the day that his separation agreement allowed him to hire EDS employees, Mr. Perot raided his old firm and launched a competing company called Perot Systems, setting out to duplicate the blueprint that brought such success at EDS.

Starting over

After closed-door meetings, he wrangled a no-bid contract with the U.S. Postal Service. Again, he held out an almost irresistible offer: He would find ways to improve mail efficiency, and take all his profit from the savings.

But as with EDS' Medicare business, there were howls about a sweetheart deal. More hearings were called on Capitol Hill, and government auditors again were sent to investigate. Under intense fire, Postmaster General Anthony Frank revoked the deal. Mr. Perot bitterly blamed General Motors and EDS, which ** had protested the no-bid contract, and promised an "all-out war" to win business from EDS.

A failure to recognize differences between the corporate and government worlds, longtime observers say, could be Mr. Perot's biggest drawback in offering himself as the candidate to bring business savvy to Washington.

"Perot can be a bull in a china shop," said Bernard Weinstein, director of the University of North Texas' Center for Economic Development. "He would probably find the bureaucratic and political processes in Washington pretty annoying."

But admirers say his bull-headed brand of results-first leadership may be just what America needs in 1992.

"He doesn't have all the answers to all the questions in this country, but he does have the ability to dissect problems, and find ways to solve them," said former Texas Gov. John Connally. "And once he decides what the solution is, he goes after it with determination.

"I think he wants [the White House] desperately, because he thinks he can do something," Mr. Connally said. "I sure do think he can win . . . and I think this is going to be the most fascinating political year in the last 100 years."

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