Northrop Corp.'s chairman and two top executives have been ordered to testify before a federal grand jury investigating payments of more than $6.5 million to South Korean businesses, the defense contractor said. The subpoenas were issued by the grand jury for the U.S. District Court in Los Angeles, Northrop spokesman Tony Cantafio said Wednesday. Northrop also was ordered to produce documents related to its Korean deals.
Federal officials were not immediately available to comment.The Justice Department and a congressional subcommittee have reportedly been conducting criminal investigations into Northrop's payment of more than $6.5 million to Korean businesses in connection with attempts to sell its F-20 "Tigershark" jet fighter to Korea.
Northrop has denied it violated the Foreign Corrupt Practices Act and has said it was a victim of fraud by its Korean partners in a joint venture to build a hotel and office project in Seoul.
"We made this investment in 1984 in good faith and to show our commitment to Korea on the F-20 project," Cantafio said.
Cantafio said the executives ordered to appear before the grand jury were Thomas V. Jones, Northrop's chairman and chief executive officer; Welko E. Gasich, an executive vice president; and William C. McGagh, identified as Northrop's former chief financial officer.
Eventually, Northrop's program to develop the F-20 jet fighter failed, with development costs tagged at $1.2 billion without a single plane being sold.
Although McGagh's retirement was announced in April, he has been working with the company during a transition period.