Teledyne Settles Claims Over Missile Systems : Army: The company will pay $10 million. Its Newbury Park division is accused of falsifying tests on aircraft parts.
Teledyne Inc. has agreed to pay $10 million to settle federal civil claims that the firm’s Newbury Park electronics division falsified tests on aircraft identification systems for U.S. Army Stinger missiles.
Los Angeles-based Teledyne will pay a $5-million fine and spend at least $5 million more to recall, screen and repair 5,900 electronic missile parts tested from 1983 to 1988, the U.S. Justice Department announced Wednesday in Washington.
The Army deployed the surface-to-air Stinger missiles in the Persian Gulf War, but an Army spokesman said none were fired in combat because few Iraqi planes were encountered.
The electronic systems that were improperly tested--or which were sold to the Army after failing tests--are used to identify friendly aircraft, officials said.
“This settlement is intended to ensure that our armed forces have absolute confidence in their equipment so that casualties attributable to friendly fire do not occur in time of war,” said Assistant Atty. Gen. Frank W. Hunger, chief of the Justice Department’s civil division.
Teledyne said in a press release that it cooperated fully with the investigation. There is no record that malfunctions of its IFF-- “identification friend-or-foe”-- system have led to injury or property damage, the company said.
An Army spokesman said field tests of the IFF Stinger system have not led to an unusually large number of complaints.
This week’s settlement addresses only electronic components Teledyne built and tested for Stinger missiles under an Army contract. Teledyne Electronics in Newbury Park also had contracts with the Air Force and Navy to test aircraft identification systems for missiles and other weapons, including the F-16 fighter, officials said.
A Justice Department spokesman would not comment on whether testing for those contracts is being investigated. Nor would a spokesman for the FBI’s Ventura office, which led the investigation of Teledyne’s Army contracts, say whether a broader inquiry is under way.
The settlement follows a two-year investigation that authorities say began when a top Teledyne technician tipped the FBI in March, 1991, that he and other technicians had routinely falsified test results for components of the IFF system.
About 2,500 components that failed tests were sold to the Army, and hundreds of other components were improperly tested, he told investigators.
Teledyne admitted in August, 1991, that it had committed testing irregularities, the Justice Department said. That admission was through a voluntary Pentagon program that encourages defense contractors to disclose past fraudulent activities.
Teledyne maintained Wednesday that the company--not a tip to the FBI--initiated the investigation. But Justice Department spokesman Joe Krovisky said the technician’s tip was the catalyst for the FBI inquiry.
“He provided information that showed the problems were much more serious than Teledyne had first indicated,” Krovisky said.
The $10-million settlement represents the latest in a series of legal problems for Teledyne and its small Newbury Park electronics unit.
Although Teledyne ranks as the nation’s 37th largest defense contractor, it has attracted several major lawsuits by the Justice Department. And the Defense Logistics Agency is considering whether to seek a broad-based suspension or debarment from defense contracts.
The 21-unit, 23,000-employee corporation has twice pleaded guilty to federal felony charges, and the Department of Justice has joined three federal civil whistle-blower suits against the company.
Teledyne Industries also was indicted in May on charges of violating U.S. arms export laws in the sale of 24,000 cluster bombs to Iraq before the Persian Gulf War.
A month earlier, the Pentagon took the extraordinary step of banning one of the firm’s subsidiaries from receiving government contracts for a year, because the company pleaded guilty to improperly testing 9 million electronic components for a variety of weapons, from ships to missiles.
It was the first time the Pentagon has imposed such a strong sanction against one of its 100 largest contractors.
Teledyne also agreed in February to pay $2.15 million to settle allegations brought by a former quality assurance engineer that the firm’s controls division in Los Angeles falsified tests on Navy, Air Force and Army cockpit electronics systems.
And last year, the firm paid a criminal fine of $17.5 million, the largest for defense fraud in U.S. history.
The 250-employee Newbury Park electronics unit was penalized by the federal government in 1989, when it was fined $4.4 million and banned from receiving defense contracts for six months for its role in a massive Pentagon procurement scandal.
The company pleaded guilty to two charges stemming from an investigation into the fraudulent bidding and awards of Pentagon contracts.
Federal prosecutors said consultants, retained by defense contractors such as Teledyne Electronics, bribed government employees for information that helped win contracts. Two company managers were found guilty of wire fraud and criminal conspiracy in a scheme to bribe a Navy official to win a $24-million electronics contract.
Despite its problems, Teledyne Electronics has remained an active defense contractor.
This year, the company has been awarded two Air Force contracts worth $8.7 million for receiver transmitters.
