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US: Close Ties Between Congressman and Defense Contractor Scrutinized

The web of connections between Rep. Randy "Duke" Cunningham and a defense contractor continued to grow Friday, as did questions about the relationship between the contractor and the congressman.


by William Finn BennettNorth County Times
June 19th, 2005

The web of connections between Rep. Randy "Duke" Cunningham and a defense contractor continued to grow Friday, as did questions about the relationship between the contractor and the congressman.

Newly discovered information Friday showed that a subcommittee on which the North County Republican served last year authorized a $100,000 federal grant to a foundation controlled by the contractor, a foundation for which Cunningham's wife and one of his daughters serve on an advisory council.

The disclosures about the foundation's connection to Cunningham are the latest in a series of revelations about the relationship between Cunningham and the contractor, whose company has received millions in defense contracts. Cunningham serves on a House subcommittee that controls military expenditures.

This week, Democrats and watchdog groups called for an investigation into whether the contractor, Mitchell J. Wade of the defense firm MZM Inc., overpaid Cunningham ---- possibly by as much as $700,000 ---- when he purchased the congressman's Del Mar home.

Critics have also called for an investigation into Cunningham's living arrangements on Wade's 42-foot yacht in a Washington Marina.

Cunningham is a member of the House Appropriations Defense Subcommittee, which oversees military expenditures and influences the awarding of defense contracts to firms such as MZM.

Supporters of an investigation allege that the connections between Wade and Cunningham led to more support for contracts for Wade's company, which they say would be an ethical violation.

In the 2004 fiscal year, MZM received more than $65 million in defense contracts, cracking the list of the top 100 U.S. defense contractors nationwide.

Cunningham has said in prepared statements this week that his relationship with Wade has been "above board" and appropriate. Cunningham has not returned repeated phone calls from the North County Times.

The federal grant that came into question Friday involves a subcommittee on which Cunningham served and The Sure Foundation Inc., with which the Wade and Cunningham families are involved.

Wade is the treasurer of the foundation. Wade's wife, Christine Wade, is president emeritus of the foundation. Cunningham's wife, Nancy Cunningham, and one of his daughters, April, sit on the advisory council for the foundation, which raises money to help refugee children.

Congressional records show the House Appropriations Committee's District of Columbia subcommittee, on which Cunningham served as vice chairman last year, in October authorized a $100,000 grant to The Sure Foundation.

Neither MZM officials nor Sure Foundation officials returned phone calls Friday for comment about the grant.

Requests for an interview with Cunningham were denied Friday. However, in an e-mail to the North County Times, Cunningham wrote: "I have no further comment on this speculative information," the statement read. "I am working on a comprehensive statement that will address issues that have been raised recently."

Connections keep coming

Controversy has swirled around Cunningham this week, with newspaper reports of other connections between Wade and the eight-term congressman, including questions about whether Wade overpaid when purchasing Cunningham's home.

On Sunday, news surfaced that in late 2003, another company controlled by Wade purchased Cunningham's Del Mar home for $1.68 million. Property sales records show that the average sales price for similar-size homes in the same area between March and December of that year was more than $500,000 less than what Wade paid for the home.

Wade's company then resold the property in October 2004 for $975,000 ----- a $700,000 loss. The average sales price for similar-size properties in that area between March and December 2004 ran $300,000 more than Wade's sale price.

On Tuesday, the North County Times learned of another tie between the men. While in Washington, Cunningham stays at least part of the time on a 42-foot yacht anchored at a Washington marina on the Potomac River. U.S. Coast Guard records show that the boat, called "Duke Stir," is owned by Wade.

In response to North County Times inquiries on the boat and his living arrangements, Cunningham sent a three-sentence statement saying that he pays to stay on the boat and that he plans to produce records and documents to prove that.

In addition to the real estate deal and the boat and foundation connections, there are other monetary connections between Cunningham and the defense firm's president.

Wade, his wife and a political action committee for MZM donated a combined $24,000 to Cunningham's campaign fund from 2001 to 2003, Federal Election Commission documents show. Much of the money from MZM's political action committee, a group designed to raise campaign funds, was donated by MZM employees.

Washington reacts

Washington politicians split along party lines when reacting to the news of Cunningham's connections to the contractor. Democrats have called for an investigation, while Republicans have defended Cunningham.

During a press briefing Tuesday, House Majority Leader Tom DeLay, R-Texas, himself under pressure on allegations of unethical conduct, defended the former Top Gun pilot as an "honorable man" when queried about Cunningham's real estate deal.

When asked about the transaction Thursday, House Minority Leader Nancy Pelosi, D-San Francisco, told reporters that the House Ethics Committee should "do its job."

The House Ethics Committee is not yet functioning this year as Democrats and Republicans bicker over staffing issues.

Asked Wednesday about Cunningham's woes, House Speaker Dennis Hastert, R-Ill., told reporters that questions over the real estate transaction amounted to one more reason why the Ethics Committee has to get up and running.

In a Friday article, the San Diego Union-Tribune reported that an unnamed source in the U.S. Department of Justice said Thursday that the FBI had begun an inquiry into the home sale.

Asked by the North County Times to confirm a possible investigation Friday, Department of Justice Washington spokesman Bryan Sierra said: "The department has no comment on that particular report."

A TV news station, KGTV, reported Friday that the U.S. Attorney's Office has launched an investigation into the connections between Cunningham and the contractor.

The U.S. Attorney's Office would not confirm or deny the existence of that investigation.

On Friday, Washington-based Citizens for Responsibility and Ethics in Washington ---- which calls itself "a nonprofit progressive, legal watchdog group" ---- called on the House Ethics Committee to launch its own investigation into the real estate transaction.

"The fact that it was sold at such a price to someone with business before Cunningham's committee makes the deal all the more suspicious," Melanie Sloan, the organization's executive director, wrote in a Friday news release.

In a Friday press teleconference in San Diego, the national group Campaign for a Cleaner Congress called on Cunningham to return the $700,000 that MZM lost when it sold Cunningham's Del Mar home "to avoid any appearance that they intended to bribe you for your support in winning their government contracts."

The group also asked Cunningham to resign from the House Defense Appropriations Subcommittee and to release all correspondence between the congressman and Wade and his companies.

And the group called on Cunningham to come forward with an explanation of the facts, saying the congressman should "step up to the plate and come forward with the truth."

"Let's give him a chance," said Stanley Zubel, an attorney and a member of a newly formed state offshoot of Campaign for a Cleaner Congress.

Zubel added that the more questions that surface about Cunningham and MZM, the more "the burden shifts to the congressman to say no, no ... it didn't go down that way. Here's what really happened."

writer Erin Schultz contributed to this report.





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