Slapping a Corporate Wrist
What is Navy Secretary John F. Lehman Jr. trying to tell us? General Dynamics Corp., he says, has a “pervasive corporate attitude” that since 1973 has resulted in dozens of highly questionable billings to the Defense Department. These include “brazen insurance claims against the Navy” for the company’s “own negligence and faulty workmanship” in its submarine division. They include billing the Pentagon for such things as country-club memberships for company executives. What Lehman is trying to tell us, then, is that General Dynamics has a rather smelly record of playing fast and loose with the public purse. And what does he intend to do about all this? Just about nothing.
Granted, Lehman has fined General Dynamics $676,000 for giving “trinkets” worth one-tenth that amount to retired Adm. Hyman G. Rickover, who built the Navy’s nuclear submarine force. Lehman says that these gifts were “clearly unethical and possibly illegal.” Rickover rather weakly responds that the freebies never affected his dealings with the company. And Lehman has taken away from General Dynamics two contracts worth $22.5 million. But these are something less than staggering blows to a company whose $6 billion worth of government business last year helped it earn $382 million.
To show his displeasure, Lehman took one additional step. Until General Dynamics resolves its claims with the Pentagon and adopts a “rigorous” code of ethics under which it presumably would bind itself to be more honest from now on, new contract negotiations will be frozen. The main result will be to delay construction and delivery to the Navy of a new Trident submarine, which only General Dynamics is able to build. That’s some punishment, all right.
What Lehman didn’t do was insist that three top officials of General Dynamics be barred from future business with the government, as the Defense Department’s inspector general had recommended. By defining the problem as a “pervasive corporate attitude,” Lehman avoided the question of individual responsibility for what went on. On Wednesday, however, one of the three executives, chairman David S. Lewis, announced that he would retire by the end of the year, and with investigations continuing it is not impossible that future legal action might be taken against General Dynamics’ officials.
Meanwhile, we have Lehman’s finding that it is the institution that is at fault. But surely someone made the decisions. Surely someone--not an institution--is accountable.
