Textron Inc., the Providence-based conglomerate, said yesterday that it is being investigated by the Internal Revenue Service for possible criminal violations in connection with a $2.9 million payment its Bell Helicopter division made to an Iranian company.
In a proxy statement made public yesterday, the company also said a grand jury has been empanelled to examine "possible criminal violations in promoting sales abroad."
G. William Miller, chairman of the Federal Reserve Board, was president or chairman of Textron during 1973 to 1975, the period the IRS is investigating.
Miller's confirmation was delayed for more than a month while the Senate Banking Committee probed the $2.9 million payment from Bell to Air Taxi Inc. and whether Miller knew that Air Taxi was secretly controlled by the now-dead commander of the Iranian Air Force.
Textron's Bell division made the $2.9 million payment to cancel its sales representation agreement with Air Taxi at the same time Bell was awarded a $500 million helicopter contract by the Iranian government in 1973.
The payment was meted out between 1973 and 1975; the Internal Revenue Service's intelligence division is examining tax returns for those years.
The Securities and Exchange Commission also is investigating Textron for several possible violations.
Miller told the Senate Banking Committee that he had no knowledge that Air Taxi was owned in part by the late Gen. Mohammed Khatemi, (who died in a hang glider accident in 1975). He said that if it were true, and if Bell knew it, the company would not have engaged Air Taxi to be its sales representative.
Air Taxi had been sales representative from 1959 until 1964 and again from 1968 until the cancellation of its agreement with Bell in 1973. Air Taxi still represents Bell in Iran for civilian helicopter sales.
A spokesman for Textron said that, so far as the company knows, the IRS, grand jury and SEC investigations will go over the same areas that the Senate Banking Committee covered in connection with the Miller confirmation.
The banking committee did not establish that Miller or any other Textron officials were aware that Air Taxi was controlled through a nominee by Khatemi.
Senate Banking Committee Chairman William Proxmire (D-Wis.) had urged Miller to withdraw from the nomination because of the cloud that would hang over his tenure as Fed chairman until the SEC investigation were over and the potential embarrassment that would ensure if the SEC charged Textron with wrongdoing.
Miller told Proxmire that, not only did he have no knowledge of any wrongdoing on Textron's part, but he was not convinced that Khatemi was the secret owner of the Iraninan company. Miller's nomination was approved 14 to 1 by the Senate Banking Committee on March 2, with only Proxmire objecting and was approved by the entire Senate the next day on a voice vote, with Proxmire again objecting.
Miller was sworn in as Fed chairman, succeeding Arthur Burns, on March 8.