Panel Probing Northrop--Korean Pact
A sales representation agreement and a foreign joint venture for a hotel that Northrop entered with South Korean officials to help sell its F-20 jet fighter to the Korean air force has come under investigation by the House Energy and Commerce Committee, The Times has learned.
Northrop paid $6.25 million to the Asia Culture Travel Development Co., an organization set up by the late C. K. Park, a Korean with high-level connections in that country’s government, according to subcommittee investigators.
In addition, Northrop set up a sales representation agreement with the Dong Yang Express Group in January, 1984, to seek that firm’s assistance in marketing the F-20 jet fighter, according to documents obtained by The Times. An additional $1.5 million was paid in June, 1986, when the representation agreement was terminated, according to the termination agreement.
Under the agreement, Northrop was to pay Dong Yang 2% of the value of contracts that Northrop obtained through the efforts of the representatives. The payments to Dong Yang were not to exceed $55 million, according to the representation agreement, a copy of which was obtained by The Times.
Congressional investigators are looking into whether the agreement violated the Foreign Corrupt Practices Act that cover payments to foreign officials and whether Northrop was attempting to improperly buy influence in South Korea.
The representation agreement was signed by Joseph T. Gallagher, vice president and general manager of the firm’s aircraft division, which was developing the F-20 jet fighter for export to foreign nations. The termination of the agreement was signed by William G. McGagh, Northrop senior vice president of finance.
The sales representation agreements said that Dong Yang’s responsibilities were, in part, to “obtain market intelligence” and “conduct research into Northrop’s competitors’ sales activities in the territory.”
