World: Bribe Probe For US Arms Firms

Publisher Name: 
Guardian (London)

The US government is investigating two of America's biggest defence contractors, Lockheed Martin and General Dynamics, for possible bribery in foreign sales - with the world's most widely used fighter, the F-16, the apparent focus of interest.

Lockheed disclosed that it had received a subpoena from a federal grand jury for a "very broad" array of information. General Dynamics received a subpoena requesting material "regarding our foreign consulting contracts".

Investigators are seeking information about the companies' contracts and ties with foreign consultants and commission representatives, the overseas middlemen who facilitate foreign sales. Lockheed says it did not pay commission on F-16 sales but a flat fee to foreign sales consultants - a distinction the jury is likely to ponder.

Both subpoenas cover the period from 1990 to the present and concentrate on operations at Forth Worth, Texas, where General Dynamics and then Lockheed produced F-16s. General Dynamics sold the F-16 plant to Lockheed in March 1993 for $ 1.5 billion ( pounds 97 million). Lockheed has since merged with Martin Marietta to form Lockheed Martin, America's biggest defence contractor.

"We are confident that nothing will be found. We don't feel that the government will find any indication of any wrongdoing," a Lockheed spokesman said.

The US dominates the world fighter fleet with the F-16, sold to 17 countries including South Korea, Turkey and Israel. Sales have averaged $ 3 billion a year since 1990.

Lockheed has been accused of bribery before. The Foreign Corrupt Practices Act, the 1977 law forbidding bribes by American corporations to foreign officials, was enacted partly in response to Lockheed sales to Japan.

In January Lockheed was fined $ 24.8 million for bribing an Egyptian MP to help in the $ 79 million sale of three transport aircraft.

AMP Section Name:War & Disaster Profiteering