Ralph M. Parsons Co., a major international contractor, was sued by the government yesterday for failing to tell its shareholders that it paid $6 million to a "consultant" in the Middle East in order to get a valuable contract there.
The company was injoined from further violations of securities laws in U.S. District Court here on a complaint filed by Securities and Exchange Commission.
In addition to Parsons Co., the suit named Parsons Corp., a recently formed holding company, and RMP International Ltd., an affiliate based in the Cayman Islands.
The SEC consented to the SEC civil complaint, without either admitting or denying the agency's allegations.
The SEC also charged Parsons with making questionable domestic payments.
According to the complaint beginning in 1972 several senior officials at Parsons, including its former and present treasurers, paid as much as $50,000 to a union representative in New Jersey.
The payments were made "in order to avoid slow-downs, or work stoppages and to assure the availability of union labor" at a company project, according to the complaint. The payments were recorded on the company's books as "employee welfare expenses," the SEC said.
The civil complaint notes that such a payment to a union official constitutes a federal crime, but an SEC spokesman refused to say whether the case has been referred to the Justice Department for possible criminal prosecution.
In another allegation of a questionable domestic payment, the SEC said the company contributed $5,000 in cash to a political campaign in Hawaii and recorded it in on company books as going for "professional services."
The SEC did not disclose in which Middle Eastern country Parsons allegedly made the $6 million payment.
Parsons provides engineering and technical services on projects worldwide, including airports, refiners, and subway transportation systems.
According to the SEC complaint, in 1976 Parsons engaged an outside counsel to investigate questionable domestic and foreign payments by the company. The counsel reported his findings to the board of directors in March 1977.
Last April the company made a filing with the SEC that declared, among other things, "All payments to sales representatives have been and are being properly recorded . . . and identified as such . . ."
But the SEC complaint, which follows an investigation that began in April makes it clear that the company did not fully disclose the circumstances of the payments to stockholders or to the SEC.