Toshiba Corp., fighting to keep from being thrown out of a $2.3 billion share of the U.S. market over the sale of sensitive submarine technology to the Soviets, said yesterday that an investigation shows that its executives were not aware of the illegal transaction by one of its subsidiaries and that workers found similar equipment made by a French company in the Soviet Union.
No Toshiba Corp. employe "either played a role in or had any knowledge of the illegal sales of any of the eight propeller-milling machines to the U.S.S.R," according to an investigative report issued yesterday by Toshiba at a news conference. The machines enabled the Soviets to manufacture submarine propellers that are difficult to detect.
The report said that Forest Line, a subsidiary of the French company Machines Lourdes Francaises, may have been the first to sell milling machines -- which grind and shape the submarine propellers -- to the Soviet Union. Toshiba employes said they saw Forest Line machines when installing equipment in the Soviet Union in 1983, according to the report, which was prepared by Mudge Rose Guthrie Alexandre & Ferdon, an American law firm hired by Toshiba.
When questioned recently about the possibility of Forest Line's involvement in the sale of submarine equipment to the Soviets, officials of the French firm said they had no knowledge of such transactions. However, they did not rule out the possibility that such a sale could have been made by one of the units of the firm before they merged to form the corporation five years ago.
"If there was any irregular activity by one of the companies that became MLF in 1982, then it could only have involved equipment that was ordered and delivered in the 1970s," Machines Lourdes Francaises Managing Director Gerard Borgneit said. "I have no knowledge of this since I joined MLF at the time it was created."
U.S. government sources noted that the Soviet submarines did not become "silent" until after the Toshiba equipment was sold, suggesting that the French technology was not sufficiently sophisticated to make the specially engineered, virtually noiseless propellers.
"The French equipment was already there, but the submarines started to get silent only after the Toshiba stuff went in," a government source said.
The Senate, angered by disclosures that the Soviet Union had obtained technology to design and build a new group of quietly operating submarines, included in its trade bill a provision forbidding the importation of Toshiba goods for as long as five years. House members share the Senate's concerns, but their chamber has no pending legislation calling for Toshiba penalties.
A House-Senate conference called to reconcile the two chambers' differing trade bills will decide this month whether to retain the tough sanctions against Toshiba, which sells television sets, microwave ovens, videocassette recorders, copying machines, computers and specialized equipment for hospitals and power companies.
If children do something wrong, "we don't punish the parents or the siblings or the cousins," said Burton Wides, an attorney for Toshiba America Inc., the U.S. subsidiary that is leading a campaign by Toshiba employes, customers and suppliers against the proposed congressional ban on the parent company's merchandise.
Toshiba, which has $13 billion in annual sales, gives considerable autonomy to its 666 subsidiaries and said it had no knowledge that Toshiba Machine Co., one subsidiary, was violating Japanese law by selling eight high-technology milling machines to the Soviet Union. The United States, Japan and other allies have a policy of restricting sales of militarily useful equipment to communist countries.
As part of a $17 million transaction in 1983 and 1984, Toshiba Machine provided the milling equipment to grind and shape the submarine propellers, and a Norwegian company, Kongsberg Vaapenfabrik, made the computer-driven controller to run the equipment.
A small group of top officials at Toshiba Machine decided to carry out the sale and arranged for false reports to be filed with Japanese government agencies, according to the Toshiba Corp. report. The subsidiary's employes filed more false reports when the Japanese government began an investigation.