The Mysterious Fall of a Star

By John S. DeMott/Washington

Only 14 months ago, Richard Colino, 51, was well regarded and prosperous. As director general of the Washington-based International Telecommunications Satellite Organization, or Intelsat, which manages the global satellite- communications system, he had an annual salary of about $250,000, with prospects of hefty increases. His executive perquisites included a chauffeur- driven Lincoln Town Car, an annual housing allowance of about $40,000 and free first-class air travel to anywhere in the world. Colino, who graduated from Amherst and Columbia University School of Law, inspired admiration and sometimes envy among his peers. "In many ways," says a former associate, "he was an extraordinary director general."

Now Colino's world has crumbled. He has declared bankruptcy, his passport has ^ been revoked, and his spacious five-bedroom house in Chevy Chase, Md., has been sold to Columnist George Will for about $950,000. Reason: Colino was fired from Intelsat, and his old job is currently held by Dean Burch, the former Federal Communications Commission chairman. Most crushing of all, Colino faced U.S. District Court Judge Gerhard Gesell in Washington last week and was sentenced to six years in a minimum-security federal prison after pleading guilty to helping defraud Intelsat of $4.8 million. In addition, the defendant was ordered to pay $865,000 in restitution to Intelsat. "I have no excuses," said a pale and stooped Colino, who asked Gesell for a "chance to demonstrate that I can still lead a productive life and contribute to society . . . What happened was an aberration."

In January 1984 Colino took office as the first American director general of Intelsat, which was established in 1964 to manage and coordinate global satellite communications among its original eleven member nations. Today Intelsat boasts 114 affiliated countries and owns 13 communications satellites, which handle a billion telephone calls a year. It also provides transmission facilities to television networks for such events as the 1984 Olympic Games and last year's Tokyo economic summit. Intelsat's 1986 revenues: $488 million.

Colino joined Comsat, Intelsat's U.S. affiliate, in 1965. After 15 years he became its representative on Intelsat's board of governors and then jumped to the top rung at the international agency. He took office just as critics, especially within the Reagan Administration, accused Intelsat of obstructing the growth of competing satellite systems that would bypass Comsat. The clever and resourceful attorney moved swiftly to increase Intelsat's flexibility. Among other things, Colino led Intelsat to sell satellite transponders, which are the parts of the orbiters that relay electronic signals, to 13 countries, including Japan and Argentina, which use them only for domestic communications needs. The move greatly reduced the costs for those countries of setting up national communications systems. Under Colino's leadership, Intelsat's revenues grew by more than $30 million in 1986.

Colino found in Intelsat a loosely monitored, trusting organization. He apparently spotted an opportunity in the construction of Intelsat's ostentatious glass-and-steel headquarters building in northwest Washington. Only one-third of the 600,000-sq.-ft. edifice was being built when Colino took office in January 1984. That spring he suggested to Intelsat's 28-member board of governors that the last two phases of the building's construction be consolidated into one. Then, according to court papers, Colino connived with William P. Lipscomb Co., an Arlington, Va., construction firm, promising to award it the new contract in exchange for a kickback of $2.4 million to himself and several associates, both inside and outside Intelsat. Colino allegedly peeked at bids and warned his favored firm that its offer must be no more than $25.4 million. The Arlington company came in at $25.398 million and won the contract in December 1984.

Lipscomb, it turned out, did not have the promised kickback money in hand. Colino thereupon devised still another ruse, say investigators, whereby Intelsat was charged $1.2 million by Lipscomb to enable the firm to order construction materials far in advance of use. The money was paid out in January 1985, but no materials were ever ordered or delivered. Part of the cash went to a Swiss bank account controlled by Colino.

One spur to Colino's peculation was his authority to spend up to $500,000 without consulting Intelsat's board. In one instance, Colino helped create a contract for sham construction work, broke it into three smaller contracts of less than $500,000 each, and pocketed some of the money himself. In another deal, the Government charged, Colino created a Panamanian consulting company that billed Intelsat for fees; these were in turn siphoned into Colino's Swiss bank account.

Intelsat began getting suspicious a year ago, when Charles Gerrell, an Arkansas mortgage broker who was later convicted with Colino of conspiracy to commit fraud, demanded payment of a commission for arranging a construction loan. A spot internal audit discovered that no such payment was due. Further auditing by Peat Marwick revealed other oddities. In early December 1986, on his return from a jaunt to Australia, Colino found his eighth-floor office sealed off by armed guards. He was escorted from the building shouting, "I'm taking names! I'm going to kick butts when I get back in power!" But he never did. Within hours, Colino and Jose Alegrett, a Venezuelan and Intelsat's deputy director general, were fired. Alegrett was cited in the case for being involved in some of Colino's dealings, but he has returned to Venezuela and has not been charged with any crime.

Why did Colino decide to rip off his employer? A former Comsat associate describes Colino as "ambitious and manipulative" and bitter at not advancing more rapidly earlier in his career. An associate in Intelsat speculates that Colino thought he would make the organization "grow so fast they wouldn't miss the money." But they did, and a promising career self-destructed.