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Hughes Investigating Possible Diversion of Fees : Pay to Some Consultants May Have Been Issued to Former Intelsat Official

May 11, 1988|RALPH VARTABEDIAN | Times Staff Writer

An internal investigation by Hughes Aircraft of its satellite contracts with Intelsat is looking into whether fees paid to some Hughes consultants in South America were diverted to former Intelsat Deputy Director Jose L. Alegrett, according to former Hughes Vice President Paul Visher.

A federal grand jury investigating the payments has subpoenaed Hughes Aircraft records relating to satellite marketing consultants, Visher said Tuesday in a telephone interview. The subpoenas name Visher and former Hughes Aircraft Chairman Albert Wheelon, according to a source close to the investigation.

Intelsat, an international agency that provides telephone service via satellite between countries, has bought most of its satellites from Hughes.

Wheelon abruptly retired last week after only 13 months as the firm's chief executive, citing unexplained personal reasons. But the retirement came after a hastily called meeting of Hughes Aircraft's board and the issuance of the federal subpoenas. The Los Angeles-based company is a General Motors subsidiary.

Visher, who retired last year as a top marketing officer at Hughes Space & Communications Group in El Segundo, said that neither he nor Wheelon had any knowledge of any diversion of fees. Wheelon could not be reached for comment.

Visher said the use of consultants to assist in marketing is not unusual in the industry. Hughes hired a relatively small number of consultants in South America, ostensibly to help Hughes officials keep track of the market for satellite sales to smaller countries.

Those consultants were paid fees of $1,500 to $2,000 a month over an extended period. The total value of the payments appeared to be in the range of a few hundred thousand dollars.

It is not clear what evidence, if any, exists to show that the payments to the consultants were intended to go to Intelsat officials, according to knowledgeable sources. Visher said he passed a polygraph test administered in the internal investigation.

"I was not aware of it (the payments)," Visher said. "Both Bud (Wheelon) and I would have stopped that if we had known."

Even if Wheelon did not know, it is possible that General Motors officials decided to hold him accountable as head of the Space & Communications Group, a job he held for 15 years before he was promoted to Hughes executive vice president in 1986, according to sources at Hughes.

The federal grand jury investigation is apparently a continuation of a probe started several years ago that led to the firing in late 1986 of Intelsat Director General Richard Colino and Alegrett, his deputy.

Colino, an American, was charged with interstate transportation of money obtained by fraud, in connection with a scheme to obtain $4.8 million through the rigging of construction and financing contracts for Intelsat's new headquarters in Washington.

Alegrett, a Venezuelan national, disappeared after his firing and is believed to be in Venezuela.

Visher said he voluntarily retired late last year. That was about the same time that the internal investigation began, according to knowledgeable sources.

Company in Turmoil

"This whole thing was a mess, and I didn't want to be involved anymore," Visher said. "It is unfortunate for Hughes Aircraft that this is happening. It is unfortunate to lose somebody as capable as Bud Wheelon."

Indeed, the ouster of Wheelon has thrown Hughes Aircraft into turmoil.

Wheelon installed a number of executives around Hughes who were formerly associated with him in the satellite group. As a result, some Hughes insiders are questioning whether further personnel actions are coming.

Officials familiar with events surrounding Wheelon's abrupt departure said General Motors, the parent firm, wants to sharply limit Hughes Aircraft's independence and that the Wheelon retirement indicates a certain "paranoia" at GM.

At least some officials are drawing parallels between Wheelon's exit and that of H. Ross Perot, the founder of Electronic Data Systems who was ousted by GM's board after the auto maker acquired EDS.

One former Hughes executive suggested that Wheelon's ouster was engineered by GM's Elmer Johnson, a 56-year-old executive vice president widely reported in Detroit to be mounting an intense drive to succeed GM Chairman Roger B. Smith. Formerly a corporate attorney from Chicago, Johnson was brought to GM in 1983 by Smith as general counsel.

Wheelon's ouster "was orchestrated by GM attorneys," one knowledgeable source said. "When you look at this, you will find GM attorneys all over the place. GM bureaucrats could not tolerate Hughes having an independent legal department." GM's Johnson could not be reached for comment.

Personality Differences

Johnson was believed to be the architect of the Perot ouster. "Elmer is clearly maneuvering for power," Perot said last November.

Wheelon's problems with GM may have been compounded by personality differences. Aerospace analysts and Hughes sources said Wheelon had not gotten along well with GM officials ever since becoming Hughes' chief executive last year.

While relations between GM officials and Wheelon were going sour during the past year, GM officials were impressed by Malcolm R. Currie, the Delco Electronics president named to succeed Wheelon last week. Currie, 61, who previously worked for Hughes from 1954 to 1969 and 1977 to 1986, declined to be interviewed.

Times staff writer James Risen contributed to this story from Detroit.

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