Washington Post
July 13, 1989

Arms-Fraud Probes Dropped

MX, B-2 Investigations Cease After Northrop Admits to 34 Counts

By Molly Moore
Washington Post Staff Writer

Federal prosecutors, in return for a Northrop Corp. guilty plea to 34 fraud charges and payment of $17 million in fines, have dropped major investigations into allegations that Northrop falsified test data on the MX intercontinental ballistic missile and overcharged the Air Force on the B-2 Stealth bomber program, according to internal Northrop documents.

Northrop, one of the nation's largest defense contractors pleaded guilty Tuesday to 34 criminal charges and agreed to pay the government $17 million in fines in connection with falsified tests on key components of the nucleararmed, air-launched cruise missile and the Marine Corps Harrier AV8B jet.

As part of the plea bargain, federal prosecutors dropped 141 other charges involving those two weapons and agreed in sealed court documents to end several other long running probes, including charges of improprieties in the testing and inspection of the guidance system for the MX missile and allegations that the company overcharged the government on the $70 billion Stealth bomber program, according to an internal memorandum issued to employees at Northrop's Los Angeles headquarters yesterday.

U.S. Attorney William Fahey yesterday declined to comment on the provisions of the sealed court documents, but said the fine--one of the largest criminal fines ever paid by a defense contractorówill be "a tremendous deterrent to corporations who choose to cut corners on certifications [of tests] on significant military programs."

Northrop Corp., in a memorandum to employees, said, "It is certainly gratifying to all of us that we have been able to resolve many of these issues . . . and, to a great extent, put them behind us." Northrop attorney Richard Sauber said the company hopes the plea agreement will bring an end to "the ongoing battle between the U.S. attorney's office and the company."

Fahey's office, however, has been conducting other probes that include new allegations of mismanagement involving the controversial Stealth bomber, false claims for work on the Air Force's Tacit Rainbow anti-radar missile and possible overcharging for work on an airborne electronics system designed to jam hostile radar, according to congressional and Pentagon sources. It is not clear if any of those investigations have ended as a result of the plea agreement.

Rep. John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee's panel on oversight and investigations criticized the Los Angeles prosecutors for what he termed "stealth justice" in connection with the plea bargain.

"What possible national security reason could they have had for sealing these agreements?" said Dingell, whose subcommittee conducted numerous investigations of Northrop in recent years. "This leaves the public and the Congress without the vaguest idea of the rascality Northrop was engaged in or its cost to the public."

The allegations against Northropówhich have been investigated by 11 grand juries, some of which are continuing their workóhave raised reliablity questions about weapons the military considers criticial to national security:

* The company pleaded guilty to falsifying reliability tests of the flight data transmitters for the nuclear air-launched cruise missile, key to the bomber leg of the strategic triad.

* Prosecutors dropped allegations that Northrop used a fluid that did not properly test the missile's ability to perform in arctic temperatures which it would likely encounter en route to targets.

* Prosecutors reportedly have agreed not to pursue allegations that Northrop falisified test data certifying that the guidance system of the MX missile could withstand the heat of a launch without impairing its ability to reach the proper target.

Northrop and federal prosecutors reached the agreement late Tuesday on the first day of what was to have been a lengthy trial involving the allegations of improper tests on components of the Harrier. The agreement extended beyond that case, however, to include similar charges on testing of the cruise missile and the provisions to drop other cases cited in the sealed documents.

Of the 34 counts of making false statements to which Northrop pleaded guilty, 11 involved the Harrier and 23 the cruise missile. Northrop agreed to pay the maximum $500,000 fine on each of the counts. However, prosecutors said that most of the 141 charges dropped also could have resulted in $500,000 fines each.

In related cases, Clarence Gonsalves, a former manager at the Northrop plant where some of the falsified test results were issued pleaded guilty to eight counts of conspiracy and falsifying test results. Another defendant, Cheryl Hannan, a former quality assurance supervisor, was given pretrial diversion, a form of probation.

The government withdrew charges against two Northrop managers, Joseph Yamron and Leopold Engler, who led the division where the tests were conducted.

Special correspondent Jill Walker contributed to this report