U.S. Found No Evidence of Bribe, Hughes Aircraft Says

A federal grand jury in Los Angeles has found no evidence that Hughes Aircraft paid a $1-million bribe to a Saudi Arabian arms merchant to help obtain a $1.8-billion Saudi air defense contract, the El Segundo firm said Wednesday.

Hughes officials issued a statement saying that the grand jury investigation, which began last March, ended “after being unable to find any evidence to corroborate the payment of the alleged bribe.”

Company spokesman Mike Murphy said news of the grand jury’s decision came from the U.S. attorney’s office in Los Angeles, which refused to comment on the Hughes statement.

At the time the investigation was initiated, Hughes faced another corruption probe. The FBI was already looking into charges of widespread bribery within the Southern California defense industry. That case resulted in the indictment of eight Hughes employees by a federal grand jury in Los Angeles. Federal prosecutors said the eight were charged with soliciting and accepting bribes and kickbacks from subcontractors. All eight pleaded guilty and received sentences ranging from probation to a maximum of two years in federal prison.

At the time the Saudi bribe allegation was made, one senior Hughes official dismissed it as “horse manure” and noted that the allegations came from a “disgruntled” ex-employee.

The investigation was begun after former Hughes engineer Lee Wilson alleged that a $1-million bank draft had been handed over in Riyadh, Saudi Arabia, in October, 1981. The aim of the alleged bribe, which Wilson claimed was given to the firm of arms dealer Adnan Khashoggi, was to buy Khashoggi’s influence with the Saudi government. However, Hughes lost the competition to build the air defense system on Feb. 25; the contract, which included supplying radar and command, control and communication equipment, went instead to Boeing Co. of Seattle.

Wilson, 38, of Irvine, was fired two years ago from his job with Hughes’ ground systems group in Fullerton, which was involved in the bidding for the Saudi contract. Hughes had alleged that he stole a computer.

Wilson, who could not be reached for comment Wednesday, contended at the time that he had been given permission to work with the computer at home.

He pleaded guilty in March to trespassing charges and was sentenced to perform 300 hours of community service. The theft charges were dropped.