A federal grand jury in Los Angeles is investigating whether a subsidiary of Lockheed Martin Corp. made illegal payments to a Taiwanese consultant to win arms deals in the late 1980s and early 1990s, according to sources familiar with the probe.
Lockheed, based in Bethesda, acknowledged in a filing with the Securities and Exchange Commission this week that it had received a subpoena seeking documents related to the "1990 international sale of area defense radar systems" by Lockheed's Sanders defense electronics unit. Sanders was then part of Lockheed Corp., which merged with Martin Marietta Inc. in 1995 to form Lockheed Martin.
Lockheed spokesman Lee Whitney said the company believed it has violated no laws and added that the firm, which is the country's largest defense contractor, "is cooperating fully" with the investigation headed by the U.S. attorney's office in Los Angeles.
People familiar with the matter said the probe concerns the activities of Taiwanese consultant Richard Hei, a former major in Taiwan's air force who has figured prominently in arms sales to Taiwan. Hei has provided information to investigators about the Sanders contract, but the subpoena requests additional documents relating to other arms deals, the sources said. Taiwan has been one of the largest purchasers of American weapons in the past decade, spending billions of dollars on fighter jets and air defense systems.
Sanders specializes in defense electronics and at one time made radars.
Hei has not been charged with any crime and could not be reached for comment yesterday.
His role in Taiwanese arms purchases came to light most recently in June, when Litton Industries agreed to plead guilty to charges that two of its businesses made illegal payments to Hei to gain $47 million worth of defense sales to Taiwan. Litton, based in Woodland Hills, Calif., paid $18.5 million in fines and restitution to the government.
Litton spokesman Randy Belote said that despite its guilty plea, "the company continues to maintain this was a case about accounting irregularities and misfiling of government reports" rather than violations of laws that prohibit U.S. companies from paying bribes to foreigners to solicit international business.
In filings with the SEC earlier this year, the company said it was warned that Litton and some present and former company executives possibly faced criminal indictment as a result of the probe. Litton, instead, decided to plead guilty to lesser charges.
In a news release detailing the Litton plea, U.S. Attorney Alejandro Mayorkas of the Central District of California said the Litton units paid Hei commissions worth more than $4 million to win Taiwanese arms business. Government prosecutors charged that Litton concealed these payments "through the use of false and fictitious agreements and purchase orders, as well as false and misleading entries in defendants' accounting books and records."
Hei also was named in court papers filed in connection with a 1993 guilty plea made by a Teledyne Inc. unit on charges that the California company made illegal payments to win military contracts from Taiwan in the mid- to late 1980s.