General’s Notes Hint at McDonnell Bailout Plan : Aerospace: Air Force C-17 program manager’s jottings appear to show that a rescue was discussed at a meeting in October, 1990.
Although Pentagon officials have denied for more than a year that the government had a plan to bail out financially troubled McDonnell Douglas, handwritten notes made by a key Air Force general appear to show that a detailed rescue was discussed in 1990.
The notes were taken by Maj. Gen. Michael Butchko, the former Air Force program manager for McDonnell’s loss-plagued C-17 cargo jet program, at a crucial Oct. 2, 1990, meeting attended by senior defense officials and McDonnell Chairman John McDonnell.
At that meeting, McDonnell vowed to stop the C-17 program unless the company got about $550 million in special financial aid.
Butchko testified at a congressional hearing on May 13 that he could not recall attending the Oct. 2 meeting and did not have any information about a detailed financial plan to assist McDonnell.
But the general’s notes appear to show otherwise. In fact, they quote a Navy officer at the meeting as saying he did not want to “appear we are bailing out MDC.” MDC refers to McDonnell Douglas Corp.
The notes were attached to an amended transcript of his testimony sent last month to the House Government Operations Committee, which held the hearing.
In a letter to Defense Secretary Dick Cheney, Rep. John Conyers (D-Mich.), committee chairman, charged Thursday that Butchko and another high-level Air Force official misled his committee.
The Conyers letter includes a demand that all notes and other written materials from the Oct. 2 meeting be turned over to the committee, which has been investigating the bailout.
Butchko said through a public affairs officer that the Conyers letter was addressed to Cheney and it would be inappropriate for him to respond. A spokesman for Cheney had no immediate response.
McDonnell officials have asserted in the past that no bailout was requested or granted.
The Pentagon inspector general’s office is also investigating government efforts to bail out McDonnell starting in 1990. An inspector general’s audit issued last April found that a plan existed to “fix” the firm’s problems, and that some of the plan was put into effect.
So far, two government payments to the St. Louis-based aerospace firm--one for $148 million and another for $72 million--have raised the most questions. When top Defense Department officials were questioned at Conyers’ May 13 hearing, they denied that the payments amounted to a bailout.
Butchko’s notes shed important light on the issue. They quote former Undersecretary of Defense John Betti as saying: “Can we legitimately release $? Then release now. Our actions can allow MDC to save itself.”
Although Butchko and former Assistant Secretary of the Air Force John Welch Jr. testified that they knew nothing about a demand for $550 million by John McDonnell, the notes appear to show otherwise.
In his notes, Butchko wrote:
“548 need.”
“300-350 available?”
He drew a line under that and then wrote: “200-250 short.”
