The Reagan Justice Department was ``asleep at the switch'' three years ago when a Pentagon investigator discovered that defense contractors and private consultants were illegally obtaining Pentagon weapons secrets, Sen. Charles E. Grassley said today. Attorney General Edwin Meese III denied the accusation, saying at a news conference that the prosecution of defense procurement cases has been one of the department's top priorities and that ``at no time has this department had to be dragged into any indictment where the evidence is there.'' Grassley, R-Iowa, said in a floor speech that a top Justice Department official grabbed the microphone from the investigator in October 1985, as the investigator was about to testify about his findings. Grassley, who chaired the House Judiciary subcommittee at the time, said, ``I stopped the hearing at that point. I wish now I hadn't. There wasnt anything in that testimony that could have jeopardized that case.'' ``The public must be made aware of the fact that the Justice Department was asleep at switch,'' Grassley said, because it was investigating a single company and ignoring reports of widespread abuse in procurement, including bribery. The October 1985 testimony alleged that private consultants were regularly receiving classified details about U.S. weapons systems. ``The Justice Department could have pursued this aggressively more than three years ago but they didn't,'' he said in an earlier interview with the Associated Press. The 2-year-old probe has focused chiefly on Navy weapons-buying. It became public last week when FBI and Naval Investigative Service agents conducted coast-to-coast raids on the offices of past and present Pentagon officials, private consultants and contractors. U.S. Attorney Henry Hudson has said privately that perhaps as many as 200 indictments could be expected out of the investigation, a government source said Sunday. In October 1985 Grassley was chairman of the Senate Judiciary administrative practices subcommittee, a panel which he used to examine defense procurement practices. Grassley is a frequent critic of what he calls widespread waste and abuse in Pentagon spending. Grassley said Justice Department officials blocked the testimony of Robert Segal, a Defense Department investigator who was the Pentagon's liaison with the Justice Department's Defense Procurement Fraud Unit. The DPFU was a special Justice Department office set up to investigate waste in the military budget. It was well known in the Justice Department that some elements of the Pentagon and the Justice Department held DPFU in low esteem and there is speculation that when the current allegations first came to light the matter was steered away from the agency and into Hudson's office. Segal, who worked for the Pentagon's Defense Criminal Investigative Service, was prepared to testify that private consultants regularly received classified Pentagon documents that should not have been available outside the government, Grassley said. Segal also reported at the time that ``many of these (defense) companies appear to have espionage units whose main function is to obtain copies of highly classified documents in order to give their companies a competitive edge,'' Grassley said. Grassley said the allegations predated the current investigation. ``This goes back much before what we're seeing now,'' he said. Segal's testimony, which he never got to deliver but which was released publicly at the time, said that a defense procurement criminal case against GTE Corp. ``is but the tip of the proverbial iceberg. ... The investigation involves at least 25 companies. ... Many of those companies are household words. ... The primary focus of the case is ... the indiscriminate distribution of both proprietary and highly classified government documents by individuals within and without the government.'' Justice Department official Victoria Toensing interrupted the key part of Segal's testimony before he could give it and demanded that it be halted, saying that he was touching on areas that concerned criminal matters pending against GTE. After the contents of Segal's testimony came out in the news media, the Justice Department issued a statement saying that ``The release by Sen. Grassley's staff of erroneous, misleading and inflammatory information about a criminal case that is currently pending trial is most unfortunate and regrettable. ... Justice must not be allowed to become a political football.'' Responding to Grassley, Meese told a news conference that ``Investigating and prosecuting defense procurement fraud has been one of the department's top priorities for several years.'' The attorney general said that since 1985, the defense procurement fraud unit has obtained about 43 indictments and criminal informations in significant cases, has obtained 35 convictions and has recovered some $32 million. When asked about Segal's testimony that the department had not vigorously pursued the passing along of confidential information, Meese said that ``I can assure you that at no time has this department had to be dragged into any indictment where the evidence is there.'' Meese also said there were a number of spin-off cases that grew out of the GTE probe which are being prosecuted. He did not identify them. President Reagan, attending a summit meeting of the leaders of western democracies in Toronto, refused to comment Sunday on reports that former Navy Secretary John Lehman Jr. may have warned his longtime ally, military consultant Melvyn Paisley, that Paisley was under investigation. ``I am not going to comment until we have all the information,'' Reagan said. Lehman has not returned numerous phone calls from The Associated Press seeking comment. Paisley, a former top Navy official and close friend of Lehman, has emerged as a principal target of the investigation. The FBI is looking at Paisley's dealings with a number of major defense contractors that hired him as a consultant shortly after he left his Navy job in April 1987. Grassley said the scandal results from an atmosphere caused by ``a business-as-usual, good-old-boy network where people move from the Pentagon to cushy jobs in private industry and everybody looks out for their friends.'' Senate Armed Services Committee Chairman Sam Nunn, interviewed on ABC-TV's ``This Week with David Brinkley,'' said the Reagan administration concentrated too much on obtaining more money for the Pentagon, without paying enough attention to how it was being spent. ``We had people being selected for their ideological beliefs, for their salesmanship, but not for good sound management. I think the emphasis has been on salesmanship and getting the money and the management end of it has been the last of the list of priorities,'' said Nunn, D-Ga. His view was echoed by Rep. Les Aspin, D-Wis., chairman of the House Armed Services Committee, who also appeared on the ABC show. ``The decisions in the Lehman Navy were really highly centralized in a few people right around the secretary, John Lehman, and he had a very strong view about people who were with him and people who were against him. And some of the people who were with him may be a little shady characters,'' Aspin said.
