A federal judge, saying that corruption in competition "will not be condoned," today imposed a $325,000 fine on the giant Bethlehem Steel Corp., which admitted bribing shipowners' representatives to win lucrative ship repair contracts.
"The guilt here is a corporate guilt, rather than an individual one," said U.S. District Court Judge Robert W. Sweet before imposing the fine, considerably below the maximum penalty of $518,000 but higher than the $200,000 penalty Bethlehem had said it considered appropriate.
Sweet commended Bethlehem for its actions to end the pattern of bribes and corruption that federal prosecutors described as a longstanding implicit corporate policy. The company "firmly locked the barn door" after a Securities and Exchange Commission investigation began to bring the bribes to light, he said.
"What we're talking about is not a few isolated instances but a very lengthy history of unlawful payments going back perhaps 20 years," said Assistant U.S. Attorney Jane W. Parver in a statement before the sentencing. "What we're talking about in essence is a corporate tradition" that was passed on from employe to employe, she said.
In a presentencing memorandum, federal prosecutors also elaborated on earlier statements that Bethlehem had used the same techniques to win repair contracts from foreign navies. Bethlehem has denied bribing officials of foreign navies, and no such charges were included in the 10-count criminal information to which Bethlehem pleaded guilty in July. Bethlehem officials reiterated those denials at the sentencing.
For the acts to which the company pleaded guilty, "We accept the responsibility," said Bethlehem Vice President and General Counsel Curtis H. Barnette, who appeared on behalf of the company at the sentencing. "We deeply regret the circumstances that bring us before this court," he said.
Bethlehem's own presentencing memo sought to minimize the acts which the company admitted, noting that the company's total ship repair business is only a small part of its overall activities and that only a small percentage of that business had been obtained by bribes. The bribes were paid through a Swiss corporation set up by Bethlehem for the purpose of maintaining a slush fund for just those uses, according to prosecutors.
The bribes that were the focus of Bethlehem's plea were paid during a period from 1972 to 1976 from money raised by charging shipowners phony commissions and by padding invoices. Bethlehem employes in its New York sales office and its Baltimore shipyard were involved in the scheme. The bribes were paid during a time when shipyards were competing furiously for business.
Although the company sought to downplay the importance of the bribes to the firm's operations, Bethlehem's attorney, Peter E. Fleming, said in his presentencing memo that the company recognizes "the significance of a criminal conviction which scars the history and reputation of a great American institution."
In a statement issued from Bethlehem's corporate headquarters in Pennsylvania, the firm said that none of three current top corporate officials had any knowledge of the "unlawful activity." The three are Donald H. Trautlein, chairman; Walter F. Williams, president and former vice president for shipbuilding; and David H. Klinges, currently vice president for shipbuilding.
Earlier this month the former assistant general manager of Bethlehem's Baltimore shipyard pleaded guilty to a charge that he defrauded a shipping company out of $50,000. The government charged that the manager, Thomas A. LaMonica, engaged in a scheme to obtain $50,000 from a shipping company by fraud, knowing the same company had accepted $30,000 to send work to Bethlehem.
The government's statement yesterday said that "numerous payments" were made by "a substantial number of Bethlehem employes," most of whom did not personally profit from the transactions. On the other hand, "It is clear such bribes would not have continued to be paid if, in return, Bethlehem Steel Corp. did not reap substantial benefits from them."
The government's presentencing memo dealt with two specific allegations of bribes paid to foreign navies. In both cases the country involved was Colombia, although the memo also noted "the investigation also uncovered evidence that persons in the shipyard division of Bethlehem Steel Corp. agreed to, and, in some instances, did, pay bribes to obtain lucrative ship repair business from another foreign country navy."