U.S. Agents Raid 3 Northrop Plants in Southland : Defense: The investigators are checking allegations that the firm supplied inferior products for the F/A-18 fighter program.
Federal agents raided three Northrop plants in Southern California early Tuesday, investigating allegations that the aerospace firm supplied inferior products for the Navy F/A-18 jet fighter and overcharged on its contracts.
About 50 agents swept through Northrop plants in El Segundo, Hawthorne and Carson, looking for defective parts, including plastic tubing, according to federal law enforcement sources. Northrop spokesmen confirmed that the company’s facilities were searched but would not comment further.
The raids began at 6:30 a.m. Tuesday, and some agents were still searching for specific defective parts as late as 2:30 p.m., according to the sources. Northrop assembles the aft and center fuselage sections of the F/A-18 in El Segundo. The Hawthorne plant fabricates parts for the aircraft, and the Carson facility is a records storage center.
“This is going to be a big one,” one highly placed federal source said, adding that investigators expected to find records concerning the overcharges as well as samples of the parts themselves. A full accounting of suspect parts was not available, but plastic tubing for the F/A-18 is believed to be one item on the search list.
The agents obtained a search warrant from a federal judge in Los Angeles, perhaps as recently as Monday, on the basis of a sealed affidavit outlining information developed by the Naval Investigative Service during a long investigation. The raids had been in the planning stages for at least a week. The Naval Investigative Service is part of the multi-agency Northrop Joint Federal Task Force, set up just to investigate Northrop.
“It is part of the same task force group that is looking at Northrop, but this is something new that they are looking at now,” the source said.
The search was the first disclosure of what appears to be yet another major criminal investigation at Northrop, which is facing probes by at least three federal grand juries around the nation.
Earlier this year, Northrop agreed to settle a number of other criminal investigations when it pleaded guilty to 34 felony counts alleging that the firm had falsified tests on parts for nuclear-armed cruise missiles. At that time, Northrop sought to portray itself as having scored a legal victory by pleading guilty and ending many of the cases against it.
But now it has become clear that the plea agreement announced Feb. 28 has done little to put the troubled aerospace firm’s legal problems in the past.
On April 3, Northrop disclosed that the Justice Department was examining its billings on a part of the B-2 bomber’s flight-control system.
On April 12, the Justice Department joined a civil lawsuit filed by a whistle-blower that alleges that Northrop overcharged the Navy after developing a manufacturing process for the F/A-18 jet fighter that is less expensive than provided for in the contract.
On Feb. 15, federal agents raided Northrop’s B-2 Stealth bomber plant in Pico Rivera, confiscating a number of records. That raid occurred some 18 months into a criminal investigation.
“This is becoming a comic opera,” Howard Rubel, a securities analyst at Wall Street firm C. J. Lawrence, Morgan Grenfell, said Tuesday. “Either there is a problem with the company’s accounting system or these federal agents don’t have anything better to do. We have raiders in the Wall Street jargon, but Northrop has given a new meaning to the term.”
A Northrop spokesman issued a statement, saying: “We are working with the government to understand the issues,” language that has been used in connection with previous searches.
The legal problems are costly. Northrop paid a record $17-million fine in pleading guilty in February. And the company remains under a partial contract suspension by the Defense Department as a result of that criminal case.
Despite the damage to Northrop’s reputation resulting from the legal problems, the stock market has shrugged off much of the recent news. Northrop shares were unchanged Tuesday, closing at $17.625 in trading on the New York Stock Exchange.
