SCANDALS: Now, the Bribery Probes Begin Abroad

The repercussions of foreign bribery by U.S. corporations continued to rattle much of the world last week. In the wake of American probes that have uncovered massive payoffs to foreign businessmen and government officials, especially by Lockheed (TIME cover, Feb. 23), one foreign country after another began cranking up its own investigation. The major developments:

> In Japan, a nationwide TV audience watched spellbound as the budget committee of the Diet questioned seven businessmen who had been involved in buying Lockheed planes. All seven denied any knowledge of Lockheed fees and bribes, which, in testimony to a U.S. Senate subcommittee headed by Idaho Democrat Frank Church, were said to total $12.7 million.

Hara-Kiri. Premier Takeo Miki instructed the Japanese embassy in Washington to request the names of any government officials believed to have taken Lockheed bribes. Senator Church said he would be happy to turn over the names if his subcommittee can pry them out of Lockheed, but that he would pass them on “through channels,” presumably meaning the State Department. That could pose a dilemma for Secretary of State Henry Kissinger, who has opposed making the names public for fear of damaging friendly governments.

Miki realizes that if he cannot convince Japanese voters that he is cracking down on corruption, his Liberal Democrats, who have ruled Japan since 1955, could have their parliamentary majority sharply reduced in elections later this year. The depth of public feeling is indicated by a letter from a right-wing organization to Yoshio Kodama, Lockheed’s secret agent in Japan. The letter demanded that Kodama atone for taking $7 million from Lockheed by “committing ritual hara-kiri.”

— In The Netherlands, Prince Bernhard had his first meeting with a quickly organized three-man committee appointed by the Dutch Cabinet to investigate charges that he accepted $1.1 million from Lockheed. Though the prince steadfastly denied receiving cash from Lockheed, he conceded that Lockheed had offered him a free JetStar plane for his good services; he said he turned it down.

The investigative commission, headed by Andreas Dormer, the Dutch chief justice of the European Court, ran into a roadblock in attempts to probe the prince’s financial transactions. Swiss authorities, who fiercely resist disclosure of bank records, warned that Donner would face arrest for “economic espionage” if he dared set foot on Swiss soil in his investigative capacity. Later, under Dutch pressure, the Swiss Cabinet scheduled a special meeting to decide what assistance, if any, to give the Donner commission.

— In Egypt, a member of a parliamentary committee charged that Boeing Co. had paid commissions to executives of the national airline Egyptair, which bought a total of ten 707s and eight 737s. Boeing said its business with the Egyptian airline had been transacted “properly.” Nonetheless, there were reports that Gamal Erfan, chairman of Egyptair, was considering resigning.

>In Venezuela, Alberto Flores, No. 2 man in the country’s delegation to the Organization of Petroleum Exporting Countries, resigned his post in order “to be free to defend himself.” He is suspected of being among seven officials who allegedly accepted a bribe from Occidental Petroleum Co. in return for drilling concessions.

The climate of suspicion is making it more difficult for U.S. firms to do business abroad. Lockheed’s new chairman, Robert W. Haack, hastily flew to Ottawa last week to reassure Canadian officials that no bribes have been involved in Lockheed’s efforts to win a $950 million contract for 18 Orion antisubmarine planes. Nonetheless, the Canadian government indicated it would take its time signing the deal, largely because of doubts about the company’s ability to survive the spreading scandal. The U.S. Senate passed, 60 to 30, a bill greatly tightening Government controls on overseas sales of American weapons. Among other things, the bill would force companies to report all agents’ fees on arms sales, however small.

Personal Delivery? Critics of scandal-tainted corporations have been demanding management changes, and two companies responded last week—in diametrically opposed ways. In an astonishing display of corporate arrogance, Northrop Co. reinstated Thomas V. Jones as chairman. Jones had been both chairman and president when Northrop paid $30 million to agents and officials abroad and made illegal political contributions in the U.S.; he resigned as chairman last year after Northrop’s executive committee said he bore a heavy responsibility for those acts.

In refreshing contrast, Phillips Petroleum agreed, in a court-approved settlement of stockholder lawsuits, to give outside directors 60% of the seats on an expanded board (they fill nine of 17 seats now) and empower them with responsibility for preventing a recurrence of past misdeeds. One charge contained in the settlement documents: Richard Nixon in 1968 “personally” received an illegal $50,000 campaign contribution from Phillips in his Fifth Avenue apartment in Manhattan.