Sears, Roebuck and Co. was indicted this week by a federal grand jury in Los Angeles for allegedly concealing $1.1 million in Japanese television manufacturers' rebates from U.S. customs over a nine-year period to pay less duty on the sets.
A spokesman for Sears, the nation's largest retailer, said the company planned to plead innocent to the charges."We believe the company's conduct was proper and legal," he said. "It appears that the government has misinterpreted the process by which Sears negotiated its costs for a line of imported television sets."
This is the first in what is expected to be a series of indictments resulting from a Justice Department probe. One retailer, Alexanders, a New York department store, pleaded guilty last year to falsifying Customs documents on 2,050 Japanese sets imported in 1974. Rebates were disguised as inspection and repair fees and commissions. The store was fined $5,000.
In 1971 the Treasury found that Japanese sets were being "dumped" in this country, i.e., imported at below their wholesale cost in Japan.
Since 1971 the Customs Service has required every importer to pay duties on the difference between the domestic and the overseas price. However, dumping duties aren't enforced diligently, according to representatives of U.S. manufacturers.In 1978 the Treasury estimates that more than $700 million in color TV duties remained unpaid making this the biggest dumping case ever.
A spokesman for COMPACT (Committee to Preserve American Color Television) said, "the indictment is the first in what Customs officials have themselves described as widespread illegal rebates paid by Japanese manufacturers to illegally bypass U.S. dumping laws. It is our position that if the U.S. Treasury had enforced its own 1971 dumping finding against the Japanese TV producers, many of the 13 American companies that have been forced out of the TV manufacturing business would still be producing TV sets today and many thousands of jobs that have disappeared would still be in existence."
The indictment charged that Sears avoided paying duties by making false declarations that didn't disclose "kickbacks, rebates and credits privately arranged between Sears and others."
If convicted of both charges of conspiracy and making false statements to Customs, Sears could receive a maximum fine of $10,000. Besides Sears and Alexanders, Montgomery Ward Co. and J.C. Penney Co. also have acknowledged they are under investigation but have denied doing anything illegal.