The Lockheed Link
Miller, Judith
The Lockheed Link JUDITH MILLER CHURCH: Why do you pay commissions, kickbacks, or bribes when you don't even have a competitor for this plane? COWDEN: Because we are frequently competing not...
...If you base your sales on payoffs to government officials and make them rich, then you force these governments in the direction of military purchases, when other purchases might be far more beneficial to them and to their people...
...Judith Miller is The Progressive's Washington correspondent...
...Furthermore, the bribes and kickbacks substantially inflate the price of Lockheed products—at home as well as abroad...
...And though Lockheed insisted that no U.S...
...Government officials in the shady sales promotion practices...
...officials in practices which seriously undermine the formulation of public policy at home and abroad...
...No evidence exists that Northrop has ever bought an American general before his retirement...
...The subcommittee's investigation has exposed and documented a systematic pattern of illicit payoffs, bribes, and influence peddling that, according to Senator Frank Church, chairman of the multinational p a n e l , " . . . make corruption in politics look like a Sunday school picnic...
...Despite the deletion of the names of officials on t h e take, presumably, to protect the guilty, the Lockheed documents show in detail how the kickback system twists national decision-making at the highest levels, and why poor nations opt so often for guns rather than butter...
...Lockheed chairman Daniel Haughton—Uncle Dan, as he was known to employes of the Lockheed corporate family—fervently denied that the company had engaged inpayoffshereintheUnitedStates...
...In a 1970 memo, a Lockheed official denounced the U.S...
...Ultimately, Daasad was dropped, and according to Lockheed memos, the company abandoned the facade of an agent/ middleman and paid i t s ' * agent' ' f e e s directly to a group of Indonesian military officers through a Singapore account known as the "Widows and Orphans Fund...
...policy when it interfered with prospective sales...
...Morality Tale The Northrop Corporation, which sells military aircraft and buys public servants, is one of those rare and precious establishments the chronicle of whose rise can lift up the hearts of those who scoff at virtue and those who pray for justice alike...
...Lockheed aircraft sales in Indonesia provide not only a case study of this system, but implicate U.S...
...COWDEN: Because we are frequently competing not necessarily with another airplane just like ours, but we are competing for the sales dollars that would be spent on something else...
...When the Sukarno government was overthrown in 1966, Lockheed began to worry about whether its Indonesian agent, the Daasad Musin firm, still had "clout" with the new regime...
...Thus, Lockheed's actions reflect not only on all American businesses abroad, but on the U.S...
...The Lockheed scandal raises serious questions, therefore, about the complicity of U.S...
...The subcommittee has uncovered widespread and ingeniously designed abuses...
...Its blandishments have extended to a yacht on the Potomac and a hunting preserve on the eastern shore of Maryland, where officers of what the armed forces most suggestively call their procurement services are entertained with limitless solicitude...
...The exchange between Church and William Cowden, Lockheed's director of international sales, is of interest not only because Lockheed executives openly acknowledge the practice of kickbacks and bribes through agents' commissions as " a way of life" in business abroad, but because it lays bare the underlying motive for the payoffs: the distortion of national priorities to benefit Lockheed...
...Above all, Lockheed practices abroad raise questions about corporate activities at home...
...It's tough enough doing business nowadays without having someone in your own house making the job more difficult," a Lockheed executive lamented...
...The Defense Department auditors who reviewed Northrop's contracts have finally felt morally repelled enough to call for the FBI...
...Now, thanks to Northrop, the Pentagon is holding forth the promise that a customer might be punished, gently of course, and the prostitute left free...
...Government officials, he admitted discussing whether the commissions were "allowable items of cost" with Pentagon officials, among them Deputy Secretary of Defense William P. Clements Jr...
...It has disclosed hefty secret contributions from an Exxon subsidiary to Italian political parties, aimed at securing a government favorably inclined to American oil interests...
...MURRAY KEMPTON (Murray Kempton is a regular commentator on the CBS Radio "Spectrum" series...
...Had Lockheed not spent $104 million in five years in Saudi Arabia alone to promote the sale of the C-130, a plane that Lockheed concedes had no competition, the Saudis might have decided to build a university or better housing, to provide improved medical care for their citizens, or to buy food...
...Somewhere the cults of the Satanists must be meeting these nights, passing from hand to hand The Wall Street Journal and exulting at this witness that vice has its own rewards...
...Time after time, the Lockheed documents discuss the difficulty of incorporating "under the t a b l e " contributions into the price without suspiciously elevating the final sales tag above a competitor's bid...
...These frolics with Northrop, a Defense Department spokesman says, were only "a customary exchange of social amenities between personal friends...
...Nell Gwyn should have thought to tell her mother that when she came home from being entertained by Charles II...
...The 200 pages of Lockheed files released by the multinational subcommittee, however, present the clearest picture to date of how a corporation can manipulate foreign definitions of national interest and security to further its own pursuit of profits...
...The Defense Logistics Group is promising these people the sun and delivering it with e x t r a s , " Lockheed official Tom Kelley complained...
...The Lockheed bribes and kickbacks are important for several reasons: first, Lockheed is a private corporation that lives by grace of Congress...
...You see, this is where the whole practice becomes so v e n a l , " Church observed...
...A year after the spare parts agreement was reached, another firm offered the Indonesians a 10 per cent commission, twice the sum Lockheed was paying, on the spares contract...
...But it has done its best to make Washington a garden of delights for military officers with contracts to let...
...But the Pentagon's indignation did not include those of its own servants who had stuffed themselves with Northrop's sweets...
...While Haughton denied that his company's officials had talked about bribes, kickbacks, and commission systems with U.S...
...These contradicting reports," concluded the Lockheed official, "created doubts as to the U.S...
...The documents also reveal the ferocity of competition in the foreign military sales arena...
...Slade stated that he could have the Embassy CIA personnel check this out and would fire a report back as soon as possible...
...Air Force attache, and inquired if the U.S...
...Without a Congressional bailout, the corporation would have collapsed several years ago...
...These practices are certainly not confined to Lockheed...
...In other words, they might have opted for Kellogg's Cornflakes...
...CHURCH: Such as...
...Lockheed officials testified under oath that they did not know whether the payoffs had been illegally deducted as ' 'business expenses...
...Embassy's ability to really evaluate the question...
...Government, but also from Lockheed's own subsidiaries...
...Northrop spent the summer and entered the fall blackened by revelations that a powerful ingredient fueling its march through the arms market of the Middle East had been its allotments of bribes to statesmen and generals...
...Competition came not only from domestic and foreign aerospace companies and the U.S...
...Northrop has announced that its profits were up 44 per cent for the third quarter of this year, a record figure...
...But as Watergate and CIA abuses have shown, double standards of behavior are difficult to maintain...
...Government intervention when it was compatible with corporate goals, the Lockheed documents indicate the corporation was equally ready to disregard official U.S...
...As it turned out, the other firm was Aviquipo, a Lockheed-related concern...
...Soon after the CIA report, a contradictory report was receivedfrom Lockheed's field representative in Djakarta: Daasad was definitely "out" with the Suharto regime...
...The consequences of so much sin and scandal are now clear...
...Colonel Slade's CIA contact provided two reports indicating that Daasad was " i n " with the new regime...
...Yet the company's documents clearly indicate that Lockheed executives intended to claim such deductions...
...I n order to obtain a more definite answer to this question," reports a 1967 Lockheed memo, "Ridings [Lockheed] met with Colonel Slade, U.S...
...Government's practice of supplying free spare parts to the Indonesian air force—a practice which impinged, of course, on a Lockheed market...
...It has exposed the use of dummy corporations and third-party agent/consultants to disguise payoffs, kickbacks, and bribes authorized by Northrop Corporation executives ("The Northrop Connection," The Progressive, August 1975...
...And watching Northrop may bring as much satisfaction to the smaller cut of the chivalrous who have long been pained by the inequities of the law that jails the prostitute and lets her customer loose...
...Northrop seems to have regarded its hunting lodge as so valuable a contribution to the national defense that $24,000 of its maintenance cost was charged on the company's bills to the Pentagon...
...The Lockheed use of CIA agents raises serious questions of propriety, but the upshot of the affair is not without irony...
...COWDEN: Such as fighter planes, such as tanks, such as guns...
...Embassy had any means of checking out and evaluating Daasad's position with the new government...
...For more than a year, the Senate panel has been probing corporate payoffs and political contributions made to foreign government officials to promote sales...
...The excerpt is from the testimony of Lockheed Aircraft Corporation officers before the Senate Subcommittee on Multinational Corporations...
...The Lockheed Link JUDITH MILLER CHURCH: Why do you pay commissions, kickbacks, or bribes when you don't even have a competitor for this plane...
...Government as well...
...CHURCH: Such as Kellogg's Cornflakes...
...Despite Lockheed's willingness to use U.S...
...official had ever encouraged the company to engage in such practices, Lockheed executives added that it was difficult to believe Government officials were unaware of them...
Vol. 39 • December 1975 • No. 12
