The United States has ignored a record of bribery
connected to American defense contracts in the Middle East.
A new study said the U.S. Defense Department keeps awarding contracts to
leading military suppliers despite their violations of anti-bribery
legislation. The study cited Boeing, General Electric and Lockheed Martin.
The Washington-based Project On Government Oversight said the government
has violated its policies that contracts be awarded only to responsible
contractors that have a satisfactory record of integrity and business
ethics. But the report said 16 of the top 43 contractors chosen during
fiscal 1999 have been fined billions of dollars for violations.
"Yet, only one of the 43 contractors has been suspended or debarred from
doing business with the government," the report said. "This suspension
action, against General Electric's Aircraft Division, lasted only five days
after they pled guilty to diverting millions of dollars from the U.S.
Foreign Military Aid Program to finance the sale of F-16 engines to Israel."
The report said that in 2000 Boeing was charged with 110 violations in
connections with Export Control Act and the International Traffic in Arms
Regulations. The violations included munitions and defense equipment
exported to Turkey among other countries.
During the previous year, Litton Applied Technology Division and Litton
Systems Canada, pleaded guilty to conspiracies to defraud the United
States and Taiwan in connection with military sales to Taiwan and Greece.
The report said the two subsidiaries paid a criminal fine of $16 million and
an additional $2 million for restitution and the cost of the investigation.
In 1995, Lockheed Martin pleaded guilty to violating the Foreign Corrupt
Practices Act for paying bribes to officials of the Egyptian government. The
report said Lockheed Martin paid a criminal fine of $24.8 million.
"However, this has not stopped the government from awarding billions of
dollars in contracts to these companies," the report said. "The contractors'
preferred alternative to suspension or debarment is an Administrative
Agreement and the government nearly always agrees to this alternative."
The report said that since the 1995 bribery episode in Egypt, Lockheed
Martin and its subsidiaries have been accused of at least eight violations
and have paid about $7 million in fines, penalties and settlements. Since
1995, Litton subsidiaries pleaded guilty to two criminal violations and paid
about $17.8 million in fines.
POGO recommended that the Federal Acquisition Regulation be amended so
that a contractor with a record several of civil settlements and consent
decrees be disbarred or suspended from U.S. weapons tenders.
