Aerospace Industry Looks for Ways to Combat Kickbacks

Times Staff Writer

The aerospace industry, reacting to growing concern over kickback and bribery schemes in defense subcontracts, held an “extraordinary” conference Monday to strengthen efforts to battle corrupt practices.

“This is a meeting called with a high sense of urgency,” Tom Carvey, a Hughes Aircraft vice president, told about 600 defense industry representatives. “It is high time for us to get together and face a pattern of dishonesty that threatens our well being and that of the industry. It is a serious problem.”

A growing number of federal investigations have targeted the problem of corrupt practices in the aerospace industry. The FBI and the Justice Department have been investigating the problem for more than three years, according to FBI agent Joseph Sheehan, one of the speakers.

Senate and House committees are also probing the matter. A Senate oversight subcommittee held hearings in February, resulting in the introduction of a bill several weeks ago, titled the Anti-Kickback Enforcement Act of 1986.


The new law would significantly strengthen civil and criminal penalties for bribery in the defense industry, according to Elise Bean, minority counsel for the subcommittee. For the first time, defense corporations would be liable.

The conference, titled “Buying Ethics,” was sponsored by the Aerospace Industries Assn. of America, an industry trade group that usually concerns itself with arcane engineering issues in the aircraft and missile business.

Association officials said they were extremely concerned over whether the meeting would be interpreted as a blanket acknowledgement that the industry is corrupt. Indeed, a number of speakers made references to the loss of public confidence that has repeatedly occurred when the industry makes embarrassing admissions that its employees are involved in corrupt schemes.

Association President Karl Harr, making a rare appearance at such a conference, observed that “it ill behooves us to exaggerate the problem. The fact that it exists is bad enough.”


Several speakers said the problem of weeding out corruption is easier said than done. For example, employers are legally prevented from violating employee privacy in a wide range of areas, seriously limiting personnel investigations.

The association conference was lauded by many military officials and Justice Department representatives as an important step if the industry is to make serious efforts to clean itself up.

Maj. Gen. Bernard L. Weiss, commander of the Air Force contract management division, said: “A few individuals and a few companies have given us all a bad name.” Later, in an interview, Weiss said he also believes that the problem of kickbacks is widespread. He said the open and frank treatment of the problem is important to finding solutions.

In addition, Weiss raised important new questions in his speech about the changing public expectations that have come to bear on the defense industry.


“The public is demanding a new sense of social responsibility and ethics not seen in the past,” Weiss said. “Normal commercial practices are no longer acceptable for many of the firms.”

Weiss indicated that defense contractors can no longer operate under ethics normally accepted in U.S. business. Rather, they must obey a much more stringent level of ethics followed by the military and the U.S. civil service.

He said Congress and the news media have implanted in the public the perception that the defense industry is an “agent” of the government and should meet the same high standards expected of the military.