Lockheed bribery scandals
Encyclopedia
The Lockheed bribery scandals encompassed a series of bribes
and contributions made by officials of U.S. aerospace company Lockheed
from the late 1950s to the 1970s in the process of negotiating the sale of aircraft.
The scandal caused considerable political controversy in West Germany, Italy, the Netherlands and Japan. In the U.S. the scandal nearly led to the corporation's downfall, as it was already struggling due to the commercial failure of the L-1011 TriStar
airliner.
In late 1975 and early 1976, a sub-committee of the U.S. Senate led by Senator Frank Church
concluded that members of the Lockheed board had paid members of friendly governments to guarantee contracts for military aircraft. In 1976, it was publicly revealed that Lockheed had paid $22 million in bribes to foreign officials in the process of negotiating the sale of aircraft including the F-104 Starfighter
, the so-called "Deal of the Century".
Franz Josef Strauss and his party had received at least $10 million for West Germany's purchase of 900 F-104G Starfighters in 1961. The party and its leader denied the allegations, and Strauss filed a slander suit against Hauser. As the allegations were not corroborated, the issue was dropped.
In September 1976, in the final phase of the 1976 Bundestag
election, the controversy was re-opened when questions were asked about the whereabouts of the "Lockheed documents" within the Federal Ministry of Defence. Anonymous sources also distributed several, possibly falsified documents to the media. According to one of these documents, member of the German Bundestag and its defense council Manfred Wörner
accepted an invitation by Lockheed to visit their aircraft plants in the US with the entire trip being paid by Lockheed. In the course of the investigations, it emerged that most of the documents related to the Starfighter purchase had been destroyed in 1962. The whereabouts of the documents was again discussed in a committee of inquiry meeting of the Bundestag between January 1978 and May 1979. An investigation of Lockheed documents by the US revealed that Wörner's trip had been financed by the German Bundestag, and was related to a test flight with the Lockheed S-3. Only part of the travel costs of Wörner's secretary, and Wörner's flight back from the USA to Germany was paid by Lockheed:
politicians to favor the purchase by the Italian Air Force of C-130 Hercules
transport planes. The allegations of bribery were supported by political magazine L'Espresso
, and targeted former Cabinet ministers Luigi Gui
and Mario Tanassi
, the former Prime Minister Mariano Rumor
and notably then-President Giovanni Leone
, forcing him to resign his post on June 15, 1978.
circles, including Finance Minister Eisaku Sato
and the JASDF Chief of Staff Minoru Genda
. In 1957, the Japanese Air Self-Defense Force wished to buy the Grumman F-11 Super Tiger to replace the F-86 Sabre
then in service, but heavy lobbying by Lockheed of the key LDP
figures led to the adoption of the F-104 instead.
Later, Lockheed had hired right-wing nationalist underworld figure Yoshio Kodama
as a consultant in order to influence Japanese parastatal airlines, including All Nippon Airways
(ANA), to buy the L-1011 instead of the McDonnell Douglas DC-10. On February 6, 1976, the vice-chairman of Lockheed told the Senate subcommittee that Lockheed had paid approximately $3 million in bribes to the office of Japanese Prime Minister Kakuei Tanaka
for aid in the matter.
Lockheed paid ¥
2.4 billion to earn the contract from ANA. ¥500 million of the total was received by the Prime Minister. ¥160 million was received by ANA's officials. ¥1.7 billion was received by Kodama. On October 30, 1972, ANA announced its decision to purchase 21 Lockheed Tristar L1011s, which cost approximately $5 million each, even though it had previously announced options to purchase the DC-10.
Tanaka was arrested on July 27, 1976 and was released in August on a ¥200 million ($690,000) bond. He was found guilty by a Tokyo court on October 12, 1983 for violations of foreign exchange control laws but not on bribery. He was sentenced to four years in prison, but remained free on appeal until his death of a stroke in 1993.
received a $1.1 million bribe from Lockheed to ensure the Lockheed F-104 would win out over the Mirage 5
for the purchase contract. He had served on more than 300 corporate boards or committees worldwide and had been praised in the Netherlands for his efforts to promote the economic well-being of the country.
Prime Minister
Joop den Uyl
ordered an inquiry into the affair, while Prince Bernhard refused to answer reporters' questions, stating: "I am above such things". The results of the inquiry lead to a constitutional crisis in which Queen Juliana threatened to resign if Bernhard was prosecuted. Bernhard was spared, but had to step down from several public positions and was forbidden to wear his military uniforms again.
Prince Bernhard always denied the charges, but after his death on December 1, 2004, interviews were published showing that he admitted taking the money. He said: "I have accepted that the word Lockheed will be carved on my tombstone."
$106 million in commissions. His commissions started at 2.5% + and eventually rose to as much as 15%. Khashoggi "became for all practical purposes a marketing arm of Lockheed. Adnan would provide not only an entree but strategy, constant advice, and analysis," according to Max Helzel, then vice president of Lockheed's international marketing
.
resigned from their posts on February 13, 1976. The scandal also played a part in the formulation of the Foreign Corrupt Practices Act
which President Jimmy Carter
signed into law on December 19, 1977, which made it illegal for American persons and entities to bribe foreign government officials.
According to Ben Rich
, director of Lockheed's Skunk Works
:
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
and contributions made by officials of U.S. aerospace company Lockheed
Lockheed Corporation
The Lockheed Corporation was an American aerospace company. Lockheed was founded in 1912 and later merged with Martin Marietta to form Lockheed Martin in 1995.-Origins:...
from the late 1950s to the 1970s in the process of negotiating the sale of aircraft.
The scandal caused considerable political controversy in West Germany, Italy, the Netherlands and Japan. In the U.S. the scandal nearly led to the corporation's downfall, as it was already struggling due to the commercial failure of the L-1011 TriStar
Lockheed L-1011
The Lockheed L-1011 TriStar, commonly referred to as the L-1011 or TriStar, is a medium-to-long range, widebody passenger trijet airliner. It was the third widebody airliner to enter commercial operations, following the Boeing 747 and the McDonnell Douglas DC-10. Between 1968 and 1984, Lockheed...
airliner.
Background
The U.S. Government had bailed out Lockheed in 1971, guaranteeing repayment of $195 million in bank loans to the company. The Government Emergency Loan Guarantee Board, set up to oversee the program, investigated whether Lockheed violated its obligations by failing to tell the board about foreign payments.In late 1975 and early 1976, a sub-committee of the U.S. Senate led by Senator Frank Church
Frank Church
Frank Forrester Church III was an American lawyer and politician. A member of the Democratic Party, he served as a United States Senator from Idaho from 1957 to 1981....
concluded that members of the Lockheed board had paid members of friendly governments to guarantee contracts for military aircraft. In 1976, it was publicly revealed that Lockheed had paid $22 million in bribes to foreign officials in the process of negotiating the sale of aircraft including the F-104 Starfighter
F-104 Starfighter
The Lockheed F-104 Starfighter is a single-engine, high-performance, supersonic interceptor aircraft originally developed for the United States Air Force by Lockheed. One of the Century Series of aircraft, it served with the USAF from 1958 until 1969, and continued with Air National Guard units...
, the so-called "Deal of the Century".
West Germany
Former Lockheed lobbyist Ernest Hauser told Senate investigators that Minister of DefenceFederal Ministry of Defence (Germany)
The Federal Ministry of Defence is a top-level federal agency, headed by the Federal Minister of Defence as a member of the Cabinet of Germany...
Franz Josef Strauss and his party had received at least $10 million for West Germany's purchase of 900 F-104G Starfighters in 1961. The party and its leader denied the allegations, and Strauss filed a slander suit against Hauser. As the allegations were not corroborated, the issue was dropped.
In September 1976, in the final phase of the 1976 Bundestag
Bundestag
The Bundestag is a federal legislative body in Germany. In practice Germany is governed by a bicameral legislature, of which the Bundestag serves as the lower house and the Bundesrat the upper house. The Bundestag is established by the German Basic Law of 1949, as the successor to the earlier...
election, the controversy was re-opened when questions were asked about the whereabouts of the "Lockheed documents" within the Federal Ministry of Defence. Anonymous sources also distributed several, possibly falsified documents to the media. According to one of these documents, member of the German Bundestag and its defense council Manfred Wörner
Manfred Wörner
Manfred Hermann Wörner was a German politician and diplomat. He served as the defense minister of West Germany between 1982 and 1988. He then served as the seventh Secretary General of NATO from 1988 to 1994. His term as Secretary General saw the end of the Cold War and the German reunification...
accepted an invitation by Lockheed to visit their aircraft plants in the US with the entire trip being paid by Lockheed. In the course of the investigations, it emerged that most of the documents related to the Starfighter purchase had been destroyed in 1962. The whereabouts of the documents was again discussed in a committee of inquiry meeting of the Bundestag between January 1978 and May 1979. An investigation of Lockheed documents by the US revealed that Wörner's trip had been financed by the German Bundestag, and was related to a test flight with the Lockheed S-3. Only part of the travel costs of Wörner's secretary, and Wörner's flight back from the USA to Germany was paid by Lockheed:
- Woerner was accompanied by his secretary and a portion of her expenses were paid by Lockheed. Further, Woerner "lost" his government paid ticket back to Germany and Lockheed "accommodated" him by giving him another ticket.
Italy
The Italian branch of the Lockheed scandal involved the bribery of Christian DemocratChristian Democracy (Italy)
Christian Democracy was a Christian democratic party in Italy. It was founded in 1943 as the ideological successor of the historical Italian People's Party, which had the same symbol, a crossed shield ....
politicians to favor the purchase by the Italian Air Force of C-130 Hercules
C-130 Hercules
The Lockheed C-130 Hercules is a four-engine turboprop military transport aircraft designed and built originally by Lockheed, now Lockheed Martin. Capable of using unprepared runways for takeoffs and landings, the C-130 was originally designed as a troop, medical evacuation, and cargo transport...
transport planes. The allegations of bribery were supported by political magazine L'Espresso
L'Espresso
l'Espresso is an Italian newsmagazine. It is one of the two most prominent Italian weeklies, the other being Panorama. Since the latter has been acquired by right-wing tycoon and politician Silvio Berlusconi, l'Espresso enjoys the reputation of being the main politically independent newsmagazine...
, and targeted former Cabinet ministers Luigi Gui
Luigi Gui
Luigi Gui was an Italian politician and philosopher.Gui was born in Padua . He graduated in philosophy at The Catholic University in Milan. He was an officer of the Alpini corps of the Italian Army, and fought in USSR during World War II...
and Mario Tanassi
Mario Tanassi
Mario Tanassi was an Italian politician, who was several times Minister of the Italian Republic. In 1979 he was condemned by the Constitutional Court of Italy for his involvement in the Lockheed bribery scandal.-Biography:...
, the former Prime Minister Mariano Rumor
Mariano Rumor
Mariano Rumor was an Italian politician, a member of the Democrazia Cristiana and the 40th Prime Minister of Italy.He was born in Vicenza, Veneto...
and notably then-President Giovanni Leone
Giovanni Leone
Giovanni Leone was an Italian politician. He was the 38th Prime Minister of Italy from 21 June 1963 to 4 December 1963 and again from 24 June 1968 to 12 December 1968. He also served as the sixth President of the Republic from 1971 to 1978.-Biography:...
, forcing him to resign his post on June 15, 1978.
Japan
The scandal involved the Marubeni Corporation and several high-ranking members of Japanese political, business and underworldYakuza
, also known as , are members of traditional organized crime syndicates in Japan. The Japanese police, and media by request of the police, call them bōryokudan , literally "violence group", while the yakuza call themselves "ninkyō dantai" , "chivalrous organizations". The yakuza are notoriously...
circles, including Finance Minister Eisaku Sato
Eisaku Sato
This article is about the Prime Minister of Japan. For the governor of Fukushima Prefecture of Japan of the same name, see Eisaku Satō ....
and the JASDF Chief of Staff Minoru Genda
Minoru Genda
was a well-known Japanese military aviator and politician. He is best known for planning the Pearl Harbor attack.- Early life :Minoru Genda was the second son of a farmer from Hiroshima. Two brothers were graduates of Tokyo University, another brother graduated from Chiba Medical College, and his...
. In 1957, the Japanese Air Self-Defense Force wished to buy the Grumman F-11 Super Tiger to replace the F-86 Sabre
F-86 Sabre
The North American F-86 Sabre was a transonic jet fighter aircraft. Produced by North American Aviation, the Sabre is best known as America's first swept wing fighter which could counter the similarly-winged Soviet MiG-15 in high speed dogfights over the skies of the Korean War...
then in service, but heavy lobbying by Lockheed of the key LDP
Liberal Democratic Party (Japan)
The , frequently abbreviated to LDP or , is a centre-right political party in Japan. It is one of the most consistently successful political parties in the democratic world. The LDP ruled almost continuously for nearly 54 years from its founding in 1955 until its defeat in the 2009 election...
figures led to the adoption of the F-104 instead.
Later, Lockheed had hired right-wing nationalist underworld figure Yoshio Kodama
Yoshio Kodama
was a prominent figure in the rise of organized crime in Japan. The most famous 'kuromaku', or behind-the-scenes power broker, of the 20th century, he was active in Japan's political arena and criminal underworld from the 1950s to the early 1970s....
as a consultant in order to influence Japanese parastatal airlines, including All Nippon Airways
All Nippon Airways
, also known as or ANA, is one of the largest airlines in Japan. It is headquartered at the Shiodome City Center in the Shiodome area in Minato, Tokyo, Japan. It operates services to 49 destinations in Japan and 35 international routes and employed over 14,000 employees as of May 2009...
(ANA), to buy the L-1011 instead of the McDonnell Douglas DC-10. On February 6, 1976, the vice-chairman of Lockheed told the Senate subcommittee that Lockheed had paid approximately $3 million in bribes to the office of Japanese Prime Minister Kakuei Tanaka
Kakuei Tanaka
was a Japanese politician and the 64th and 65th Prime Minister of Japan from 7 July 1972 to 22 December 1972 and from 22 December 1972 to 9 December 1974 respectively...
for aid in the matter.
Lockheed paid ¥
Japanese yen
The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...
2.4 billion to earn the contract from ANA. ¥500 million of the total was received by the Prime Minister. ¥160 million was received by ANA's officials. ¥1.7 billion was received by Kodama. On October 30, 1972, ANA announced its decision to purchase 21 Lockheed Tristar L1011s, which cost approximately $5 million each, even though it had previously announced options to purchase the DC-10.
Tanaka was arrested on July 27, 1976 and was released in August on a ¥200 million ($690,000) bond. He was found guilty by a Tokyo court on October 12, 1983 for violations of foreign exchange control laws but not on bribery. He was sentenced to four years in prison, but remained free on appeal until his death of a stroke in 1993.
Netherlands
Prince BernhardPrince Bernhard of Lippe-Biesterfeld
Prince Bernhard of Lippe-Biesterfeld , later Prince Bernhard of the Netherlands, was prince consort of Queen Juliana of the Netherlands and father of six children, including the current monarch Queen Beatrix....
received a $1.1 million bribe from Lockheed to ensure the Lockheed F-104 would win out over the Mirage 5
Dassault Mirage 5
The Dassault Mirage 5 is a supersonic attack aircraft designed in France by Dassault Aviation during the 1960s, and manufactured in France and a number of other countries. It was derived from Dassault's popular Mirage III fighter, and spawned several variants of its own.-Early development:The...
for the purchase contract. He had served on more than 300 corporate boards or committees worldwide and had been praised in the Netherlands for his efforts to promote the economic well-being of the country.
Prime Minister
Prime Minister of the Netherlands
The Prime Minister of the Netherlands is the chairman of the Council of Ministers of the Netherlands. He is the de facto head of government of the Netherlands and coordinates the policy of the government...
Joop den Uyl
Joop den Uyl
Johannes Marten den Uijl, known as Joop den Uyl was a Dutch politician of the Labour Party . He served as Prime Minister of the Netherlands from May 11, 1973 until December 19, 1977....
ordered an inquiry into the affair, while Prince Bernhard refused to answer reporters' questions, stating: "I am above such things". The results of the inquiry lead to a constitutional crisis in which Queen Juliana threatened to resign if Bernhard was prosecuted. Bernhard was spared, but had to step down from several public positions and was forbidden to wear his military uniforms again.
Prince Bernhard always denied the charges, but after his death on December 1, 2004, interviews were published showing that he admitted taking the money. He said: "I have accepted that the word Lockheed will be carved on my tombstone."
Saudi Arabia
Between 1970 and 1975, Lockheed paid Saudi Arms dealer Adnan KhashoggiAdnan Khashoggi
Adnan Khashoggi is a Saudi Arabian arms-dealer and businessman. He is also noted for his engagements with high society in both the Occident and Arabic-speaking worlds, and for his involvement in the Iran–Contra and Lockheed bribery scandals, and numerous other affairs...
$106 million in commissions. His commissions started at 2.5% + and eventually rose to as much as 15%. Khashoggi "became for all practical purposes a marketing arm of Lockheed. Adnan would provide not only an entree but strategy, constant advice, and analysis," according to Max Helzel, then vice president of Lockheed's international marketing
International marketing
International marketing or global marketing refers to marketing carried out by companies overseas or across national borderlines. This strategy uses an extension of the techniques used in the home country of a firm...
.
Aftermath
Lockheed chairman of the board Daniel Haughton and vice chairman and president Carl KotchianCarl Kotchian
Archibald Carl Kotchian , known as Carl or A.C., was an American business executive who served as the president of Lockheed Corporation...
resigned from their posts on February 13, 1976. The scandal also played a part in the formulation of the Foreign Corrupt Practices Act
Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act of 1977 is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.- Provisions and scope...
which President Jimmy Carter
Jimmy Carter
James Earl "Jimmy" Carter, Jr. is an American politician who served as the 39th President of the United States and was the recipient of the 2002 Nobel Peace Prize, the only U.S. President to have received the Prize after leaving office...
signed into law on December 19, 1977, which made it illegal for American persons and entities to bribe foreign government officials.
According to Ben Rich
Ben Rich
Benjamin Robert Rich was the second director of Lockheed's Skunk Works from 1975 to 1991, succeeding its founder, Kelly Johnson. Regarded as the "father of stealth," Ben Rich was responsible for leading the development of the F-117, the first production stealth aircraft...
, director of Lockheed's Skunk Works
Skunk works
Skunk Works is an official alias for Lockheed Martin’s Advanced Development Programs , formerly called Lockheed Advanced Development Projects. Skunk Works is responsible for a number of famous aircraft designs, including the U-2, the SR-71 Blackbird, the F-117 Nighthawk, and the F-22 Raptor...
: