The head of Northrop Corp.'s executive committee maintains it is only speculation that a 1984 venture with Korean partners was designed to launder bribes so South Korea would buy the company's F-20 fighter plane.
However, O. Meredith Wilson told a congressional subcommittee Wednesday, he concedes it was "unusual" for his company to have invested in a Seoul hotel that never was built - and he cannot say with certainty that none of the $6.25 million, all of which has disappeared, went to bribe the Korean government.Before Wilson testified to the House Energy and Commerce Subcommittee on Oversight and Investigations, a staff investigator suggested the Northrop investment was left murky on purpose to give company executives "plausible deni-ability" of any wrongdoing.
At the time Northrop entered the venture with C.K. Park, a well-connected former Korean government official, it was seeking to persuade South Korea to purchase its ill-fated F-20 over General Dynamics Corp.'s competing F-16.
Several senior Northrop officials involved in the affair have retired or have been reassigned in recent weeks and months, the latest being Welko Gasich, the vice president for programs, who retired Tuesday. Last spring, William McGagh took early retirement as chief financial officer and a company director.
There have been published reports predicting the imminent retirement of Northrop Chairman Thomas Jones, a focus of the inquiry because he signed a 1975 consent decree with the Securities and Exchange Commission promising the company never again would make overseas payoffs. Jones had pleaded guilty in 1974 to making illegal campaign contributions.
After the signing of the consent decree, the executive committee under Wilson was given expanded authority to oversee Jones and his management team.
Wilson would not specify what sanctions had been imposed on which company officers involved in the transaction, though he agreed to answer that question confidentially in writing.
Wilson stuck to Northrop's position that it fully intended to build the hotel and had been victimized by unscrupulous Korean partners.
Wilson said Northrop executives, including Jones, failed to research properly the backgrounds of the Koreans. He also said senior officers led the executive board to believe there were safeguards to protect Northrop's interest and did not disclose they had signed the deal without committee approval.
Wilson, whose testimony was subpoenaed, was the only official of the giant defense contractor to testify Wednesday, although eight others had been asked to appear.
"Northrop is dependent on the U.S. taxpayers for over 95 percent of its annual income," Dingell reminded Wilson sternly. "Yet when the taxpayers' representatives asked Northrop officials to account for what they have done, they refused to testify about their actions."