Sundstrand Fires 5 Tied to Pentagon Case

Sundstrand Corp. said Thursday that it had fired five executives and disciplined 12 others for their roles in a Pentagon fraud scandal that has cost the suspended defense contractor more than $127 million.

The Rockford, Ill.-based manufacturer of aircraft-control systems also said it had taken administrative action to ensure that it would never rehire the five fired employees or five other former executives who had previously left the company in connection with charges of overcharging the government on contracts.

The company refused to say how high up in its management ranks the disciplinary measures went.

“We’re not identifying them except to say they represent various levels of management,” spokesman Claude Vernam said in a telephone interview.

Says Discipline Necessary

Sundstrand, the largest employer in Illinois’ second-largest city, said in a statement that the disciplinary measures were “unpleasant” but necessary.

“Sundstrand is determined to conduct its defense-contracting business with integrity and unwavering dedication to complying with the laws, regulations, practices and policies that are expected of us as a company by our shareholders, customers, suppliers, employees and communities in which we serve,” the company said in its statement.

In addition to the five who were fired, Sundstrand:

- Docked the salaries and issued letters of reprimand to four employees.

- Froze the salaries and issued letters of reprimand to two employees.

- Issued letters of reprimand and ordered special training in ethics and government-contract compliance for two employees.

- Ordered similar training for four additional employees.

Sundstrand pleaded guilty Oct. 12 to overcharging the government on defense contracts from February, 1980, to January, 1987, and was fined a total of $127.3 million.

Probe Continues

The Defense Department later suspended Sundstrand from bidding on or receiving government contracts. The suspension is to remain in effect until the Defense Department is satisfied that abuses won’t recur, a process that could take anywhere from a few months to several years.

U.S. Attorney Anton Valukas of Chicago said in October that his office would continue to investigate possible criminal wrongdoing by individuals at Sundstrand, with a report expected within 90 days.

Valukas said Thursday that the investigation was nearing completion.

“Give or take some slippage, I think we’ll resolve this thing fairly quickly,” he said.

Sundstrand said in its statement that it was negotiating with the government and was “hopeful of a speedy conclusion leading to the lifting of (the) suspension.”

The company also said it was negotiating with the government for settlement of other penalties that could total nearly $40 million.

Sundstrand, which has a work force of 4,500, has depended on defense contracts for more than 40% of its sales, which totaled $1.4 billion in 1987.