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Lockheed Agrees to Pay Record Fine : Aerospace: Calabasas firm pleads guilty in connection with bribing an Egyptian politician.

January 28, 1995|JAMES F. PELTZ | TIMES STAFF WRITER

Lockheed Corp. agreed Friday to pay a record $24.8 million in penalties and pleaded guilty to violating the Foreign Corrupt Practices Act--a federal law that stemmed from a Lockheed overseas bribery scandal in the 1970s.

The Calabasas-based aerospace giant, in entering its plea before U.S. District Judge Marvin H. Shoob in Atlanta, admitted bribing a member of the Egyptian Parliament with $1 million to gain her influence in helping Lockheed sell three C-130 Hercules transport planes to Egypt in 1989.

Lockheed's payment, which included a $21.8-million criminal fine and a civil settlement of $3 million, is by far the largest ever paid under the act since its passage in 1977, said Justice Department spokesman John Russell in Washington.

The Foreign Corrupt Practices Act forbids commissions and other payments aimed at getting foreign officials to influence contract decisions.

In Lockheed's plea, which followed its indictment last June by a grand jury in Atlanta, the defense contractor also admitted falsifying documents to hide the true nature of the payments to the Egyptian politician.

Lockheed initially said it "would vigorously defend itself" against the charges. But the company Friday said it chose to settle because its own internal probe "found that regrettable mistakes in judgment were made by a few employees in the marketing organization in the late-1980s."

The company also said it's "strengthening its policies and procedures" to ensure that "even the most isolated violations" of the law are detected in the future.

The prosecution of Lockheed was one of the most prominent cases brought under the 1977 law, which has its roots in a scandal involving Lockheed.

Before the law was passed, Lockheed admitted making up to $38 million in bribes, kickbacks and other "questionable payments" to foreign officials, notably Japanese officials, to facilitate aircraft sales between 1970 and 1975.

The scandal helped topple the government of Japanese Prime Minister Kakeui Tanaka in 1974, prompted two top Lockheed executives to resign and eventually led more than 400 U.S. companies to disclose that they, too, had made about $800 million in questionable overseas payments.

In the Atlanta case, two former Lockheed employees also were indicted. One of them, Allen R. Love, pleaded guilty Jan. 20 to a charge of aiding and abetting Lockheed in making the payment. The other, Suleiman A. Nassar, is now a fugitive living in Syria, the U.S. Attorney's office in Atlanta said.

Lockheed's stock closed unchanged at $73.125 a share Friday in New York Stock Exchange composite trading.

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