Teledyne Is Accused of Bribery : Defense: The aerospace company is alleged to have paid a former Egyptian general to help it gain business in Egypt, congressional sources say.

The Federal Bureau of Investigation is probing allegations that Teledyne Inc. hired a former Egyptian general who made illegal payments to buy influence for the aerospace company’s business in Egypt, according to congressional sources.

The allegations were first made in a whistle-blower lawsuit filed by former Teledyne executive Stephen Reddy, who was a senior program manager for Teledyne’s Middle East business for six years.

A subsidiary of Los Angeles-based Teledyne is already under suspension by the Defense Department after the company’s guilty plea to criminal charges that it falsified tests on electronic relays sold to the Pentagon. The company agreed to pay a $34-million criminal fine and faces a related civil case.

The Reddy suit, filed under seal in U.S. District Court in Los Angeles last July, alleges that Teledyne never disclosed to the Securities and Exchange Commission or to Defense Department authorities, as required under federal law, that it had hired a foreign agent in the Middle East.

“If there is a suit, we haven’t been served,” a Teledyne spokesman said Wednesday. “And therefore we wouldn’t know what’s in it, and we wouldn’t have any comment about it.”

FBI spokesman John Hoos said the agency “was not in any position to comment” on the Reddy matter.

Hoos referred questions to Justice Department official Steve Maddox. Sources close to the investigation identified Maddox as the attorney in charge of the Reddy case.

Reddy, who is also an attorney, is among the highest-ranking defense industry executives known to have filed such a suit against an employer. The charges were brought under the False Claims Act, which allows individuals to sue contractors on behalf of the government and share in any monetary awards.

The suit alleges that Teledyne hired former Egyptian air force Major Gen. Qayed Nadim in 1981 and he illegally “purchased influence.” The suit alleges that Teledyne has paid him more than $1.5 million since then.

The suit cites company memos and Telex messages about Nadim, including one in which a Teledyne executive reports that “. . . we are talking about at most an extra $150K to keep Nadim happy.”

Reddy alleges in the suit that Teledyne paid for Nadim’s apartment at a cost of $288,000, with the understanding that ownership of the property would eventually pass to him. Documents obtained by The Times show that Teledyne Chairman George Robert, then company president, signed the lease on Nadim’s apartment.

In an interview, Reddy alleged that he saw Nadim on several occasions make cash bribes to Egyptian officials.

Herbert Hafif, Reddy’s attorney, said he turned over evidence in the case to the House Energy and Commerce Committee, which is investigating Reddy’s allegations and the case of false testing of relays.

“This involves the use of our defense dollars to corrupt foreign government officials in an effort to gain favoritism for a particular contractor,” said Phillip Benson, another attorney for Reddy.

The suit alleges that Teledyne’s electronics division in Newbury Park falsified testing and inflated charges on electronic gear sold in Egypt. The equipment, known as “identification friend or foe systems,” was subject to high failure rates and in many cases was entirely defective, the suit alleges.

Egyptian officials were so angry about the defects that they threatened to withdraw a $20-million performance bond posted at First Interstate Bank in Los Angeles, Reddy said in an interview. In 1987, Teledyne obtained a court order to prevent Egypt from withdrawing the bond, he said.

The suit alleges that Teledyne charged manufacturing costs for the Egyptian equipment to contracts for the U.S. government, including one involving Grumman Corp.’s E2C early warning aircraft program. More than $35 million was shifted to the Pentagon from Egyptian programs, the suit said.

Reddy said he laid out his allegations in a letter in early 1991 to Teledyne Vice President Hudson Drake, “listing all of the cheating that had been going on.”

Shortly after, Teledyne auditors got documents relevant to Reddy’s allegations, but Reddy said Drake never contacted him. In August, 1991, Reddy was laid off, he said.

“I hadn’t really expected them to take that drastic action,” Reddy said. “I thought they would try to work out the problems. A number of people who had spoken out against the company were also laid off.”