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Hughes Chief Surfaces in Defense Investigation : Aerospace: The statute of limitations bars pursuit of Malcolm Currie, sources say, amid a sweeping probe of trafficking in classified Pentagon planning documents.


WASHINGTON — Potentially damaging information involving Hughes Aircraft Co. Chairman Malcolm R. Currie has emerged in Operation Uncover, a sweeping federal investigation of defense firms that trafficked in classified Pentagon planning documents, government sources said Friday.

But the sources, citing the statute of limitations and other impediments, ruled out any attempt to prosecute Currie. Hughes recently pleaded guilty to charges resulting from the inquiry and agreed to pay $3.7 million in fines and costs.

While declining to comment specifically on Currie, U.S. Atty. Henry Hudson in Alexandria, Va., said: "There are additional corporations and individuals that might have criminal liability but with respect to most of them the statute of limitations has run." Hudson's office is prosecuting cases resulting from the investigation.

In a statement, Hughes said "it is absolutely false" that Currie is under criminal investigation as first reported by the Wall Street Journal on Friday.

Hudson's office "advised Hughes that Dr. Currie is not a target in this criminal investigation," Richard Dore, manager of media relations for the General Motors subsidiary, said in a statement.

The information linking Currie to Operation Uncover consists of internal Hughes documents and testimony given last month in the trial of Frank J. Caso, a marketing analyst with Hughes Aircraft from 1961 until last year.

Caso and John R. Kiely, a former marketing manager with Raytheon Co., were convicted June 22 of conspiring to traffic in classified Pentagon reports outlining the weapons system acquisition plans of each military branch. Hughes and Raytheon pleaded guilty in March to related violations.

Caso's testimony and documents filed in connection with his trial suggest that Currie knew of and approved Caso's illegal actions.

Hughes spokesman Dore, however, said in his statement that "Currie did not, as claimed by Frank Caso in his unsuccessful defense at trial, know or approve of the activities" for which Caso was convicted.

Currie submitted voluntarily to lengthy interviews by prosecutors in the case and did not seek immunity from prosecution, Dore added.

Contrary to assertions by government sources that Currie's prosecution was blocked primarily by the statute of limitations, Dore said the Hughes chairman "was not charged with any wrongdoing, as there would be no basis for such a charge."

Caso, testifying about an analysis of advanced attack-weapons programs that he sent to Currie after reviewing restricted Pentagon information in 1983, said: "I made sure that Mal Currie knew what I was doing. He thoroughly supported it, endorsed it. In his very nice, charming way, he put his arm around me and said: 'I've known you a long time, Frank. I'm looking forward to working with you a long time.' "

Currie's lawyer, Herbert J. Miller Jr., declined to discuss Caso's allegations, noting that the former Hughes executive has not been sentenced. "If all of the facts are considered, it's clear that Dr. Currie had no involvement," Miller said.

Caso, in his attack-weapons analysis, noted that his conclusions had been based on government documents known as Program Objective Memoranda that normally are circulated only to senior Pentagon officials.

Before joining Hughes, Currie had headed research activities at the Department of Defense and had access to such documents.

But a source close to Currie contended that the memoranda cited in Caso's analysis previously had been published in a newspaper and the information in them otherwise had been freely circulated.

The government sources, who requested anonymity, cited the testimony of Sharyn Pinkstaff, a Hughes employee who had served as Caso's assistant.

Testifying under a grant of immunity as a prosecution witness, Pinkstaff said Caso had told her that Currie had agreed to modify a Hughes security system that was interfering with Caso's circulation of the classified Pentagon material.

A source close to Currie dismissed Pinkstaff's account of the security system policy change as "rank hearsay," adding: "She has no firsthand knowledge of what transpired between Currie and Caso."

The government sources also called attention to a memo written by Jim Calder, former chief of security at Hughes Aircraft's missile division. The memo described a meeting Calder had with Caso and Eugene Babb, Caso's boss, about the modified security system.

At that session, Calder said in the memo, Caso and Babb described an earlier meeting with Currie at which they notified the Hughes chief "of both the current and previous system that Caso has maintained for sensitive information gathering."

The source close to Currie contended that Calder's memo went only to his own files and not to other meeting participants, who might have provided different accounts.

In addition, the Currie supporter said, passport records show that Currie and his wife were in Europe at the time of the purported meeting with Caso and his boss.

Michael Costello, chief Defense Criminal Investigative Service agent on the case, said Operation Uncover has established that about a dozen mid-level officials of major defense contractors obtained and swapped sensitive Pentagon documents.

Although he would not discuss the allegations involving the Hughes chief, Costello said he believes senior corporate executives above the "Gang of 12" were aware of the activity and at least tacitly approved it.

Prosecutors would have pursued the higher-ups, he said, "but we were held hostage by the statute of limitations," which ran out three months ago.

Staff writers John M. Broder and Robert A. Rosenblatt in Washington and Jonathan Peterson in Los Angeles contributed to this report.

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