Weinberger Halts Payments in General Dynamics Probe : ‘Get-Tough’ Policy Cited by Pentagon

Defense Secretary Caspar W. Weinberger announced today that he is suspending all payments for administrative expenses to General Dynamics Corp. for 30 days while the Pentagon reviews possible irregularities in billing the government.

Weinberger said the investigation will determine whether General Dynamics has billed the government for corporate trips and other expenses and hidden them in weapons contracts.

If the investigation is not completed within 30 days the suspension of payments will be extended, Weinberger told an American Legion convention here.

After Weinberger’s speech, the Pentagon’s chief spokesman, Michael I. Burch, estimated that the withholding order will affect roughly $35 million in payments per month to the giant defense contractor.

‘Get-Tough’ Policy

Burch added that it is proper for reporters to describe the action as part of a “get-tough” policy by Weinberger.

While denying that the order was prompted by congressional hearings last week that spotlighted alleged contract abuses by General Dynamics, Burch added: “We found that General Dynamics’ testimony was nauseating.”

The spokesman said some of the expenses questioned during the congressional hearings may involve criminal violations and are being referred to the Justice Department. He did not elaborate.

Burch said Weinberger had also decided today:

--To order “a review of interim billing rates of all major defense contractors to ensure that they are set at a level low enough to preclude reimbursement for any improper expenses.”

--And to immediately begin requiring “all contractors . . . to certify under penalty of perjury that their claims do not include any expenses for political entertainment or other expenses not made directly for the benefit of the government and required for the performance of the contract involved.”

No Immediate Response

Phone calls to General Dynamics’ Washington offices seeking comment on Weinberger’s decision were not immediately returned today.

The firm, the nation’s largest defense contractor, builds all the Navy’s Trident submarines, most of its attack subs, Army tanks, F-16 jet fighters, Tomahawk cruise missiles and other weapons.

During last week’s hearings before a House subcommittee, General Dynamics Chairman David S. Lewis defended his company and asserted that charges of illegal and shady dealings arose from lies told by a former executive charged with perjury and taking kickbacks--Takis Veliotis.

Allegations by Veliotis, who is now a fugitive in Greece, have prompted a host of investigations involving General Dynamics, particularly at its Electric Boat Division in Groton, Conn., which builds the Trident submarine. Inquiries are now under way at the Justice Department, the Securities and Exchange Commission, the Internal Revenue Service, several congressional committees and the Navy.

Manipulation, Gratuities

The current investigations center on allegations of stock manipulation, inadequate financial disclosures, illegal gratuities to Navy officials and charges to the Pentagon for expenses such as Lewis’ plane trips to his Georgia farm.