Grumman Corp. officials made approximately $10 million in questionable payments to facilitate foreign aircraft sales despite a written directive forbidding such action by the company's board of directors, according to an internal audit report released yesterday.
The report was prepared as part of a settlement of a law suit filed against Grumman Jan. 4 by the Securities and Exchange Commission.
The suit alleged that Grumman made the payments in more than a dozen countries in connection with the sale of its Gulfstream II executive jet.
The internal audit committee is expected to release another report within three months dealing with Grumman payments to stimulate sales of its F-14 fighter to Iran.
The SEC alleged that in 1974 Grumman agreed to pay more than $24 million in secret commissions to sales agents for their help in influencing the Iranian government to purchase F-14 fighter planes.
In the audit report, the committee said "the most serious problem" it uncovered was the disregard "by Grumman personnel over a period of several years of policies formally adopted by the board of directors."
The disobedience, the report said, "in some cases clearly willful, was so frequent as to raise serious questions concerning the ability of the board of directors to supervise Grumman's business conduct effectively."
The report noted that while Grumman has settled with the Department of Justice and the SEC, an Internal Revenue Service inquiry continues. It said it could not predict the outcome of this, but said the IRS would probably seek payment of additional taxes.
The report notes that Grumman's chairman. John C. Bierwirth, and its vice chairman, John F. Carr, in 1975 "permitted" the restructuring of two foreign contracts "to insulate Grumman as far as possible from the questionable aspects thereof."
These were on sales of the Gulfstream II to Saudi Arabia and Morocco.
The committee says that, in retrospect, the deals were restructured "specifically because they were questionable." It concluded: "If questionable aspects could not have been eliminated, the transactions should not have been consummated."
Grumman's subsidiary, Grumman American Corp., which produced the executive jet, was sold last year.