High Officer of Dynamics Faces Inquiry : Department of Justice Investigating Alleged Conflict of Interest

A senior officer of General Dynamics has been formally notified that he is a target of a federal grand jury investigation into conflict-of-interest charges, and an indictment may be sought against him soon, sources familiar with the case said Monday.

The executive, George A. Sawyer, joined the beleaguered St. Louis-based firm in June, 1983, less than a month after resigning as assistant secretary of the Navy for shipbuilding and logistics. Federal law forbids a government official from negotiating for employment with a federal contractor over whom he has authority.

Sawyer, who now heads the company’s Land Systems division, long has denied allegations of misconduct that first were aired before a congressional committee last March in the midst of a General Dynamics expense-padding scandal.

Word that Sawyer is the target of a grand jury probe comes two months after the Navy lifted a freeze on awarding contracts to key divisions of General Dynamics that had been imposed in the wake of the scandal. In lifting the freeze in August, the Navy said that the huge defense contractor would get another $1.1 billion in Navy orders.

Will Seek Indictment

Justice Department prosecutors have decided to seek a grand jury indictment on charges that Sawyer lied to federal investigators about the date that he started negotiating for a job with General Dynamics, said sources familiar with the department’s investigation, speaking on condition that they not be identified.

And, at a hearing last spring, members of the House Energy and Commerce oversight subcommittee cited internal company memos in charging that General Dynamics had violated federal conflict-of-interest rules by negotiating to hire Sawyer before he had left his Pentagon post.

Terence O’Donnell, Sawyer’s attorney, noted Monday that the General Dynamics officer “maintains now, as he has always maintained, that he conducted himself properly and fully in accordance with the law.” O’Donnell added that “the matter is under review” by the Justice Department and that it would be inappropriate to predict its outcome.

David S. Lewis, the company’s board chairman, vehemently denied any wrongdoing. He conceded that Sawyer--several weeks before he resigned from the government--had accepted a round-trip ticket from General Dynamics and had visited the firm’s St. Louis headquarters to meet with top officers. But Lewis said no job negotiations had occurred.

Sawyer, 55, agreed with Lewis’ account. Lewis also said that a new vice president’s post created for Sawyer did not involve his working on any of the firm’s Navy contracts.

Defense Secretary Caspar W. Weinberger suspended $35 million in government payments to General Dynamics last March pending a review of its overhead charges on Pentagon contracts. Lewis subsequently announced that the company would abandon claims for $23 million of those disputed charges.

Members of the House oversight panel had introduced evidence--acknowledged by General Dynamics--that part of the overhead charges involved excessive entertainment expenses, country club dues and the boarding of one executive’s dog while the official and his wife took a trip.

The Navy, in its Aug. 13 announcement clearing General Dynamics for more work, said the defense firm had set up “a rigorous code of ethics” to prevent future overbilling of the government and had shown “no pattern of corruption.”