A new Export-Import Bank loan program to help American companies meet government-subsidized foreign competition will be financed from the bank's $3.7 billion budget for regular loans. The source of funds was incorrectly described in yesterday's Washington Business. A headline in yesterday's Business & Finance section said incorrectly that three firms had been charged in connection with bribes allegedly paid to officials of Mexico's national oil company. No charges have been filed against the three companies, which were identified by the government as participants in a scheme to pad bids to cover bribes.
Three oil-field-equipment firms, including a division of International Harvester Co., joined during the 1970s to set prices and paid $9.9 million in bribes to officials of Mexico's government-owned oil company, federal prosecutors charged yesterday.
The companies, Crawford Enterprises Inc. and Ruston Gas Turbines Inc., both of Houston, and the Solar Turbine Division of International Harvester, were bidding for contracts worth hundreds of millions of dollars from Petroleos Mexicanos (Pemex).
The allegations were made in papers filed in U.S. District Court in Los Angeles as part of a plea agreement between the government and C.E. Miller Corp. and its president, Charles E. Miller, who is said to be cooperating with the prosecution. The company and Miller were charged Friday with aiding and abetting the bribery scheme, in the first action growing out of a nearly-four-year-long grand jury investigation.
None of the three other companies has been charged with any offense, but additional charges are expected.
According to the case outlined by the Justice Department in an "offer of proof," the elaborate scheme was aimed at obtaining part of the $600 million that Pemex was prepared to spend on equipment. The purchases were to be financed by a $1.2 billion line of credit with the Export Import Bank of the United States.
The government said that Donald G. Crawford, chairman of Crawford Enterprises Inc., set up a system for bribing Pemex officials in late June 1977. He allegedly agreed to pay two high-ranking officials in charge of production and purchasing 5 percent of the value of contracts he received. Crawford made the arrangement through Mario Gonzalez, a brother-in-law of one of the Mexican officials.
According to the government, Crawford used the term "folks" to refer to the Mexican officials to conceal their identities. The two were Jesus Chavarria, whom the Justice Department has identified as a sub-director for trade for Pemex, and Ignacio DeLeon, sub-director in charge of purchasing. Both men have since left Pemex.
According to the Justice Department, Miller and his company were contacted in 1977 by an employe of Crawford about working together on six Solar turbine compression systems that Pemex planned to buy from Crawford Enterprises. Miller previously had done similar work for Solar. Miller learned of the 5 percent payments to the "folks," the government said.
The other firms became involved after Crawford Enterprises learned that Pemex was cancelling an order from Crawford. "Miller . . . learned that Crawford believed Solar's agent Dyna Vulkano was responsible for the cancellation and that this was a power struggle which CEI could not afford to lose."
Crawford and his employes told Miller that "to actually become the power in Mexico and control the compression-equipment purchases, they needed to stop Solar's agent from rocking the boat and convince Solar to join with CEI as an active participant."
Crawford paid an additional $45,000 to the "folks" to have the contract reinstated, according to the government's allegations. Solar's agent began receiving 10 percent of Miller's subcontract on Crawford's Pemex work. Payments were funneled through Miller because Crawford did not want to have two agents on his company's books, the government said.
At that point, "Solar agreed to coordinate sales to Pemex with CEI," the Justice Department alleged.
"Crawford, with Miller's assistance, would calculate the prices to be bid to Pemex by CEI, Solar and Ruston," the government said. "In this manner, Crawford would insure that the percentage for the folks would be included in every bid and was able to determine in advance which company would receive the prime contracts.
"Additionally, with CEI, Solar and Ruston submitting bids to Pemex, Pemex purchase of turbine compression equipment would appear competitive, thereby concealing the corrupt relationship which Crawford enjoyed with Chavarria and DeLeon," according to the government.
The "pricing pattern" began in January 1978 and continued into 1979 "when the Department of Justice investigation commenced," the government filing said. It added that Crawford received approximately $225 million in contracts between June 1977 and March 1979, and the Miller firm received approximately $79 million in subcontracts from Pemex, CEI and Solar.
International Harvester shut down its Solar Turbine division in 1981 and sold its assets. Harvester issued a statement late yesterday saying it has known for some time it might have been a target of the investigation. "No member of its senior management has ever been aware of any company involvement in a payments scheme with Pemex," the statement said.
Ruston officials did not return a reporter's phone call yesterday about the papers filed by Justice Department attorney William F. Pendergast and U.S. Attorney Stephen S. Trott.
Crawford issued a statement that it "reiterates its repeated disavowals of wrongdoing in connection with these allegations" and said "it does not regard either the substance of the government's allegations or the implications of the guilty pleas entered today as bearing upon the integrity of CEI's business dealings with Pemex."