Navy to Question Firm on Rickover Gifts
A Navy tribunal has summoned officials of the General Dynamics Corp. to a formal hearing into allegations the company provided illegal gratuities to Adm. Hyman G. Rickover and other officers to gain favorable contracting treatment.
Law enforcement officials said the company could be liable for penalties of three to 10 times the worth of the gifts--reported to value tens of thousands of dollars--if the three-member panel concludes General Dynamics broke a contract clause and federal law.
Board Sends Firm Letter
In a letter to General Dynamics Dec. 28, the board said it wanted to know if the company, the nation’s largest defense contractor, “offered or gave gratuities to any official of the U.S. Navy with a view toward receiving favorable treatment” on contracts.
The board summoned the company to a hearing on Feb. 4.
The company had no comment.
Navy Secretary John F. Lehman Jr. created the panel in response to a demand for an investigation from Rep. John D. Dingell (D-Mich.) chairman of a House Energy and Commerce subcommittee that has been investigating General Dynamics.
Dingell requested that Lehman cancel $5 billion in General Dynamics’ contracts after information was uncovered that the firm gave gratuities and gifts to Rickover, widely credited with founding the nuclear Navy.
Dingell alleged that the gratuities and gifts violated a standard contract clause and federal law.
However, sources have said that a Naval Investigative Service probe turned up evidence that Rickover requested many of the gifts so he could pass them to members of Congress to lobby for support for his programs.
Law enforcement officials have said General Dynamics, which is the subject of eight investigations, including a federal grand jury, and other firms passed gifts and gratuities to Rickover totaling $250,000.
Lehman, noting General Dynamics is the only contractor capable of building the strategic missile-firing Trident submarines, declined to cancel the contracts, but impaneled the gratuities board.
The board is composed of C. John Turnquist, of the office of Navy general counsel; Wayne Arny, deputy assistant secretary of the Navy for shipbuilding and logistics, and Rear Adm. J.S. Sansone, deputy for Navy material contracts and business management.
3 Other Companies Involved
Lehman also said three other contractors--General Electric Corp., Westinghouse Electric Corp. and the Newport News Shipbuilding & Drydock Co.--had passed gifts and gratuities to Rickover. The board has scheduled no hearings with respect to those firms.
A Navy spokesman said the investigation into the other firms “is ongoing.”
