Pentagon Lifts GE Suspension

The Pentagon on Friday lifted a contract suspension against General Electric Co.’s giant aircraft engine division after the company promised to take steps to prevent corruption.

The Pentagon’s Defense Logistics Agency lifted the suspension five days after it was imposed for alleged fraud by GE in an engine sale to Israel. An agency spokeswoman said GE has disciplined all of its employees involved in the alleged fraud and has set up an internal watchdog system to prevent future fraud in GE’s foreign military sales.

The government “is satisfied that appropriate action has been taken with regard to employees possibly involved in the wrongdoing,” said agency spokeswoman Patricia Miller. “Because of privacy and due process considerations, we can’t release these names.”

The contracting suspension stems from a scheme involving an Israeli general, Rami Dotan, and a former GE marketing employee, Herbert Steindler, to divert $40 million in U.S. funds intended for Israel. Steindler was fired in 1991 and Dotan is serving a jail term in Israel. The case is under investigation by the Justice Department.