Attorney General Benjamin Civiletti said yesterday that Treasury Secretary G. William Miller had "no knowledge" of questionable payments to foreign officials allegedly made by Textron Inc. when Miller headed that company.
At the same time, Sen. William Proxmire (D-Wisc.) asked Miller to appear Friday before the Senate Banking Committee to answer questions about the payments raised by a government suit against Textron.
Last week, Textron was accused by the Securities and Exchange Commission of paying some $5.4 million to officials of 11 foreign countries to stimulate sales by the company's Bell Helicopter Division.
The SEC alleged the payments were made between 1971 and 1978, when Miller was president, then chairman and chief executive officer of the Providence, R.I., conglomerate.
Miller repeatedly has claimed that the payments were arranged by subordinates and without his knowledge.
In testimony yesterday, Civiletti said that after the Justice Department investigated the payments, "We determined with respect to Miller and others . . . no evidence of knowledge."
In answer to a question by Sen. Lowell Weicker (D-Conn.), Civiletti said he saw no need to appoint a special prosecutor to investigate Miller's role at Textron.
Miller became chairman of the Federal Reserve Board in 1978 after prolonged hearings on the payments question before the Senate Banking Committee. He was confirmed as Treasury Secretary last August.
After yesterday's comments by Civiletti, who made his remarks during testimony about the Justice Department's budget, Sen. Weicker said: "I believe there ought to be a special prosecutor, and I have a feeling others will feel the same way. I don't think we've heard the last of it."
The SEC civil suit, filed in U.S. District Court here, accused the company of violating federal securities laws by failing to disclose the questionable payments to Textron shareholders.
Miller was not named as a defendant in the SEC suit. The company settled the suit by agreeing to entry of a consent decree, in which it neither admitted nor denied the SEC allegations but agreed to take various remedial measures.
The SEC also said Textron failed to record some $600,000 spent entertaining Pentagon officials, and that Miller "knew of this practice."
It is not against the law for a company to entertain government officials, though the Defense Department has strict rules against its employees accepting such favors from contractors. What was an alleged violation of civil law, the SEC said, was for Textron not to properly disclose this pattern of business expenditures.
An SEC repport on the investigation, which was sent to Proxmire last summer at his request, shows that the Internal Revenue Service in 1969 told the company it could not deduct the Pentagon entertainment expenses without naming the recipients.