Capital Gazette wins special Pulitzer Prize citation for coverage of newsroom shooting that killed five

Perot takes surveillance tactics to unusual lengths

THE BALTIMORE SUN

WASHINGTON -- As political polls now testify, Ross Perot's personal touch and can-do style are a powerful potion. But there is a flip side to his appeal. Ross Perot, captain of industry, is also Ross Perot, super-cop and super-sleuth.

The same young naval officer who tired of the Navy as a "fairly Godless organization" in the 1950s has gone on to use his wealth and energy to build an intelligence network that reflects the military values taught him as an Annapolis midshipman.

The Perot reach goes well beyond run-of-the-mill background checks. His penchant for intrigue, a strict moral code and a fierce competitiveness have led him to authorize investigations that, according to a person familiar with his security operations, included videotaped surveillance of individuals, sometimes to probe for marital infidelities.

One example of Mr. Perot's methods involved his pursuit of police information about a high defense official with whom he was feuding. An Arlington, Va., police detective had linked the defense official to a Vietnamese-born female gambler in Virginia, and Mr. Perot later used these reports and accompanying photographs in a bitter fight reaching inside the Pentagon and the White House.

Mr. Perot has repeatedly said he obtained the information about the official only after the detective came to him. "An undercover policeman from the Washington area knocks on my hotel door and says . . . here is the file," he recently said on C-SPAN, the public affairs cable network. But the detective, James Badey, now retired, says that in fact Mr. Perot first called him "out of the clear" in early 1986 -- a few months after he had given his information to the Federal Bureau of Investigation. Moreover, Mr. Badey says, Mr. Perot already knew much of what he had told the FBI.

"I don't know why he tells it that way," says Mr. Badey, who continues to admire Mr. Perot and expects to vote for him for president. "He came to me, and I do not know why. He didn't get my name out of the phone book. Somebody had given him information. . . . He was right on target. My gut feeling was he was verifying what he already knew."

James Squires, a spokesman for the Perot campaign, initially challenged the retired detective's account but, after speaking again with Mr. Perot, said the candidate was re-examining his own version of events. "Mr. Perot doesn't think it's an impossibility that somebody told him to call Badey," Mr. Squires said.

Mr. Perot declined a request to explain what his policy has been or say whether he considers it permissible to surreptitiously collect information about the private lives of competitors or employees. Mr. Squires said Mr. Perot would only respond to specific cases or allegations and would not talk about general policy.

Moral rectitude

Mr. Perot's moral rectitude is legend among his business associates and has been one of the hallmarks of his campaign. In numerous television interviews, he has been questioned about the strict anti-adultery code he imposed on employees. "I have said on more than one occasion, If your wife can't trust you and you have a lifetime oath in front of a preacher with her, how can I?" Mr. Perot said in a recent David Frost TV interview. He has also said he would not knowingly appoint adulterers to high government posts.

People familiar with investigations financed by Mr. Perot and his companies say they know of nothing illegal about them. But interviews and a trail of court documents raise questions about Mr. Perot's use of power. "I know he can abuse power because I was on the receiving end," asserts John Wheeler, former chairman of the Vietnam Veterans War Memorial Fund, who was on the opposite side of Mr. Perot in a bitter fight over the design of the monument.

The flavor of that fight is illustrated by back-to-back exchanges between an attorney employed by Mr. Perot and the General Accounting Office, which was assigned to audit the veterans' memorial fund. In a morning interview with the GAO, the investigative arm of Congress, the Perot attorney denied that the billionaire had made any "personal" allegations against the fund's leaders; but the attorney called back hours later to ask the GAO to investigate whether a woman, whom he identified as a possible mistress of a former Defense Department official, had received payments from the fund.

GAO working papers, released to the Wall Street Journal under a Freedom of Information Act request, show that Richard Shlakman, then a senior counsel at Mr. Perot's former company, Electronic Data Systems Corp., made the request in March 1984 but that no evidence was found of such payments. "Mr. Shlakman stated emphatically that we should not divulge where we received this tip," the GAO investigator reported in his contemporaneous notes. The Perot campaign spokesman refers questions on the matter to Mr. Shlakman. Mr. Shlakman, an executive with EDS in Texas, says he has "zero recollection" of the incident.

Private detectives

Questions about Mr. Perot's use of private detectives surfaced most recently when Republican Sen. Warren B. Rudman

complained that a Boston investigative firm had begun making inquiries about him in New Hampshire on behalf of the Perot campaign. Mr. Rudman, mentioned as a potential running mate for Mr. Perot, was angry that he hadn't received notice that such checks might be made. Later, Mr. Perot assured the senator he knew nothing of the matter and had authorized no investigation. But Mr. Perot then suggested that an overzealous supporter in his sometimes-unwieldy campaign might have financed the inquiry.

After years of holding off-duty jobs at Mr. Perot's brick-walled estate, scores of Dallas police are in his debt, and former FBI agents serve as his hired investigators and contacts with law-enforcement officials. Their assignments have included missions of mercy, such as in 1990 when Mr. Perot reached out to wounded veterans of the Panama invasion to assure them proper medical care and help toward a new start in their lives. But he can also be unforgiving in using the information that he surreptitiously pursues, a pursuit that shows a striking interest in sex lives.

The publisher of the Fort Worth Star Telegram wrote recently that Mr. Perot, while complaining of the newspaper's coverage of his son's business dealings, had suggested in 1989 that he had compromising photographs of one of the newspaper's employees and a city official. Mr. Perot later said he had talked to the publisher but declared that he made "no comments of a personal nature."

As for alleged videotaping of Perot employees suspected of extramarital affairs, a person familiar with Perot security operations says that the surveillance was limited to public places and that no attempt was made to intrude inside a bedroom, for example. The person adds, in defense of Mr. Perot, that "he didn't do it for titillation. He truly believes what to Ross is a code of morality."

Bit in April 1990, Mr. Perot quickly settled a suit in Texas when a former employee accused him of trying to gain leverage in a business dispute by threatening to expose alleged affairs.

Suit by former employee

The accusations grew out of a 1989 suit by Richard Salwen, a former top Perot attorney who claimed to have been denied his share of real-estate investments he handled on behalf of the businessman. In February 1990, Mr. Salwen amended his complaint to charge that Mr. Perot had undertaken a campaign of "intimidation and harassment" that included threats of adverse publicity to his new employer if the suit continued.

The complaint in Dallas County District Court alleged specific phone calls in which J. Patrick Horner, a top official at Perot Systems Corp., allegedly contacted Donald Collis, the chief financial officer at Dell Computer Corp., which Mr. Salwen had joined. Messrs. Horner and Collis had been acquaintances for years, and, according to Mr. Collis' affidavit, Mr. Horner twice called him at home to give him a "heads-up" on the case and to cite risks of adverse publicity or embarrassment the case posed for Dell.

The Collis affidavit, which summarizes the two conversations, said Mr. Horner wanted Dell's top management to be aware that the Perot people "had conducted some research" regarding Mr. Salwen. This research went far beyond Mr. Salwen's job performance, and as evidence of the attorney's alleged affairs, Mr. Perot was said to have knowledge of hotel reservations and flowers ordered by his former employee.

Mr. Salwen declined to comment, and Mr. Horner couldn't be reached. Mr. Perot's spokesman, Mr. Squires, said yesterday that "Mr. Perot did not attempt to intimidate Mr. Salwen with information of a personal nature." He noted that Mr. Perot had filed a motion in court, before a settlement was reached, that rebutted the amended Salwen complaint. Mr. Squires offered no comment on whether or not Mr. Horner had called Mr. Collis.

Record at EDS

Mr. Perot generally declines to discuss past legal cases involving Electronic Data Systems. Before Mr. Perot sold EDS to General Motors Corp. in the mid-1980s, EDS had a record of using private investigators in tandem with lawsuits alleging improper behavior competitors. For instance, after losing a Massachusetts state contract to California-based Systems Development Corp., EDS launched a legal fight. EDS alleged in Suffolk County Superior Court in Boston that the bidding process had been tainted. EDS also brought in Joseph Wells, a former FBI agent who was then working as a private investigator in Austin, Texas.

"I had never encountered a complaint that contained so much defamation," says Paul Good, an attorney who represented Massachusetts. "It was privileged, but it was dirty pool." Mr. Wells' presence was clearly felt, and court documents in Boston show he sought, for example, to interview the longtime female companion of a Systems Development executive. At a settlement meeting, an attorney in the case asserts that an EDS lawyer warned Systems Development, without explanation, "Wait until you see the videotape."

Mr. Wells, who is now chairman of the National Association of Certified Fraud Examiners in Austin, declines to comment, as does Robert Sylvia, a lawyer who helped represent EDS in the Boston case. In fact, no videotape was ever produced.

In another fight, EDS took on a New York-based data processing firm called Bradford National Corp. after losing a contract, this time in Texas. Mr. Perot flew home from London to personally supervise a team of EDS executives, lawyers and investigators. Hilmar Moore, then chairman of the Texas human resources board, which had awarded the contract, alleges that Mr. Perot provided him "dossiers" of negative information about Bradford.

"Every aspect of the litigation was extreme hardball," says Frank Ikard, one of Bradford's Texas attorneys. A second member of the Bradford legal team asserts that a number of company executives suspected they were being followed during the EDS fight.

Personal sources

At EDS itself, some of those working on the dispute were startled by the negative information Mr. Perot was able to find. One executive who worked there says that Mr. Perot sometimes would get on the phone personally; he says Mr. Perot had his own sources and sometimes would hand over a folder of information to aides.

This pattern fits the description of others familiar with Perot's security operations and how private investigators report to him. In 1990, when Mr. Perot wanted to oust his tenant in an expensive house next door to his own, he won a court order permitting him to use off-duty Dallas police to search the house three times a day. The target of his ire, H. Wayne Hayes, also proved to be the target later of federal securities and fraud investigations. But Mr. Perot had his own forces deployed, including Joseph Masterson, a former FBI officer; Mr. Masterson showed up at Mr. Hayes' bank seeking information on his finances, according to a former bank officer. Mr. Masterson, who met Mr. Perot as an FBI officer in Dallas, declines to comment.

Polygraph tests

During Mr. Perot's days at the helm of EDS, company employees were sometimes asked to take lie-detector tests. When asked about this subject during the David Frost interview, Mr. Perot said, "I don't think I ever used a polygraph test at EDS." When pressed by Mr. Frost, Mr. Perot amended his statement to say that a lie-detector test was once administered to an EDS employee suspected of stealing.

One senior EDS official says that lie-detector tests were administered to EDS employees, mostly those suspected of white-collar crimes, "a couple of times a year." In one case, this official asserts, an employee was questioned, among other things, about an office relationship.

The EDS security team retained a Dallas-area consulting firm that specializes in polygraph tests, Wayne Baker & Associates, to administer the tests. Mr. Baker says he is "forbidden by law" to comment on client matters and would have to get written permission from Mr. Perot and EDS before being interviewed.

Mr. Perot's admirers defend his strong actions. "Media claims that he is autocratic are nonsense. He listens to everybody," says Mr. Shlakman of EDS.

"But when Ross' fundamental values are challenged, he believes in those values and he has the ability to appear autocratic."

The Armitage case

It was Mr. Perot's intense interest in finding any U.S. soldiers who might still be alive in Vietnam, and his fury with the Pentagon official in charge of the missing-in-action issue, that appear to have led him to Detective Badey.

Mr. Perot became convinced that Richard Armitage, then a senior Defense Department official, was mishandling the government's search for MIAs. Mr. Badey, as a detective with the Arlington, Va., police department, was assigned separately to work in the Vietnamese community there and had come across information, including photographs, linking Mr. Armitage to a Vietnamese-born woman convicted of operating an illegal gambling operation.

Among these photographs, one showed the woman but focused more on a picture on a bedroom dresser of her walking on a beach with Mr. Armitage. To Mr. Perot, the photograph suggested that Mr. Armitage was ethically compromised. He showed the photograph to several government officials in Washington.

The Christic connection

But his campaign against Mr. Armitage didn't stop with the material he received from Mr. Badey. It drove Mr. Perot, who had served on President Ronald Reagan's Foreign Intelligence Advisory Board, into a curious and awkward alliance with the left-wing Christic Institute, a think tank in Washington, D.C. The institute had filed a suit that sought to implicate various government officials, including Mr. Armitage, in an alleged drug, arms and money-laundering conspiracy. (Mr. Armitage vigorously denies such allegations.) With gusto, Mr. Perot immersed himself in the case, personally meeting on at least two occasions with the institute's general counsel, Daniel Sheehan, and with other members of Christic's odd network of informants. The Christic lawsuit was thrown out of federal court in Miami in 1988, and the judge ordered the institute to pay more than $1 million in court costs.

Mr. Sheehan says Mr. Perot contacted him first and became so interested in Christic's findings that he asked to meet directly with some of Mr. Sheehan's sources in an effort to find out more about Mr. Armitage's alleged doings. On one occasion, Mr. Sheehan took Mr. Perot to the home of one of his key sources, Carl Jenkins, a retired CIA operative.

Another person who says he was present and can recall the meeting is Eugene Wheaton, who had served previously in the Army's criminal investigations unit and also traded information with Mr. Sheehan. Mr. Wheaton says he accompanied Mr. Sheehan to Dallas for a private meeting with Mr. Perot.

JTC Afterward, he says, Mr. Sheehan called him and told him Mr. Perot would underwrite a trip by Mr. Wheaton to Thailand to dig up information on Mr. Armitage's alleged activities in Asia. "Sheehan contacted me and asked if Ross Perot would pick up my expenses, would I go to Bangkok," says Mr. Wheaton.

Mr. Perot's memory is less clear, but he says it was Mr. Sheehan who initiated the meetings. Mr. Perot has "no recollection" of paying for Mr. Wheaton's ticket, according to his spokesman, Mr. Squires, who adds that "we can't find any record of it." Nor does Mr. Perot remember a meeting with Carl Jenkins or later having lunch in Dallas as described by Mr. Sheehan or Mr. Wheaton, Mr. Squires says.

Mr. Perot's contacts with the institute are all the more striking because in other ventures he has found himself aligned with some of the very people investigated by Christic. Thomas Clines, a former CIA officer named in the institute's suit, says he worked with Mr. Perot's own aide, Jay Coburn, as part of an effort to ransom hostages in Lebanon in the 1980s.

Similarly, retired Army Gen. John Singlaub, a defendant in the suit, says Mr. Perot told him he had contributed to the general's efforts to provide humanitarian assistance to anti-Sandinista insurgents in Nicaragua.

Mr. Perot's campaign against Mr. Armitage had its desired effect. In 1989, facing mounting questions about his background, including his friendship with the Vietnamese-born woman, Mr. Armitage withdrew his name as Army secretary-designate. Now a State Department official overseeing aid to the former Soviet republics, Mr. Armitage declines to comment about his dustup with Mr. Perot.

Mr. Perot plays down his involvement with Christic. Mr. Sheehan says Mr. Perot never gave the institute any financial backing. He adds that he would vote for Mr. Perot "in a second."

Reprinted with permission of the Wall Street Journal. 1992, Dow Jones and Co. All rights reserved.

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