Adm. Hyman G. Rickover has accused Justice Department officials, including the recently appointed U.S. attorney in Alexandria, of taking steps to "scuttle" a criminal investigation into alleged fraud in multimillion dollar claims by Newport News Shipbuilding & Dry Dock Co.
In a letter shortly before his forced retirement the admiral complained that the new Alexandria prosecutor, Elsie L. Munsell, had abolished a special fraud section handling the investigation and reassigned two senior fraud prosecutors to other duties when she took office last November.
"Although the Newport News investigation has not been dropped officially, I can think of no better way to scuttle a complex investigation of this sort than to abolish the unit handling the investigation, split up the investigation team, and impose additional responsibilities upon those familiar with the case," Rickover charged.
Rickover's accusations were contained in a Jan. 13 letter to Attorney General William French Smith and made available this week by Congress' Joint Economic Committee, which is publishing several volumes of documents and memos by the outspoken former chief of the Navy's nuclear shipbuilding. Rickover, who was retired Jan. 31, was not available for further comment.
Munsell yesterday disputed Rickover's complaints about Justice's handling of the Newport News investigation and one other shipbuilding case. The second investigation focused on Litton Industries Inc., which was indicted by a U.S. grand jury in Alexandria in 1977 for allegedly defrauding the Navy of $37 million. Rickover accused Justice of making "no effort to bring this case to trial" since it was transferred to Mississippi in 1978.
"I regard both of these cases as open cases to which we are devoting appropriate time and energy," Munsell said. "They're not as dead in the water as the admiral might think."
The Newport News investigation reportedly stems from claims by the company in 1975 and 1976 for $742 million in additional costs incurred during construction of seven nuclear-powered submarines, three cruisers and two aircraft carriers at the Newport News shipyard. In 1978, the claims were settled by the Navy, which agreed to pay the company $165 million.
The congressional committee released two letters responding to Rickover's charges from D. Lowell Jensen, assistant attorney general in charge of the criminal division. In one Jensen said the Newport News case "continues to be the subject of investigation and close review." In the other he said Justice "is committed to providing sufficient manpower and expertise . . . to move the Litton case expeditiously to a fair and just conclusion."
Spokesmen for Litton and Newport News, a subsidiary of Houston-based Tenneco Inc. and Virginia's largest private employer, declined yesterday to comment on Rickover's allegations.
In his letter to Smith, Rickover cited the Newport News and Litton investigations and two other federal probes as evidence of Justice's "poor record" of prosecuting shipbuilders for alleged fraud in seeking additional payments for cost overruns on Navy contracts. "Today, after years of effort, it appears that the Justice Department is systematically closing down these investigations," Rickover said.
He also pointed to Justice's announcement in January that it had dropped an investigation of alleged fraud by the Electric Boat division of General Dynamics Corp. and to a previous decision by Justice to close a shipbuilding probe of Lockheed Corp.
Allegations by Rickover and others about abuses in shipbuilding claims were made public in hearings during the 1970s by a subcommittee headed by Sen. William Proxmire (D-Wis.). In a letter included among the committee's newly released documents, Proxmire also complained that the shipbuilding cases "have languished and are now being dropped."
Allegations against the Virginia shipbuilder have been investigated by two federal grand juries in Richmond and a third grand jury in Alexandria. Rickover said in his letter -- and other sources confirmed -- that before Munsell's appointment, fraud prosecutors in Alexandria "sent the Justice Department a report strongly urging prosecution." Justice attorneys now are reviewing documents previously gathered in the investigation to determine what action to take.
Some sources said delays may pose difficulties for investigators, partly because of five-year statutes of limiations. In a May 26 letter made available by a congressional committee aide, Rickover urged Justice to assign new staff to the Newport News probe quickly, warning: "The longer the matter rests unattended, the less likely that justice will ever be done in this matter, which may be the most massive raid on the federal treasury in the history of the United States."
The Litton indictment was transferred to Mississippi in December 1978 after an appeals court in Richmond overturned a ruling dismissing the charges. In January 1979, Chief Judge Dan M. Russell Jr., of Mississippi's Southern District, held a hearing and agreed to consider preliminary motions by defense lawyers and prosecutors. Russell has not ruled on the motions or set a date for trial.
Recently, there have been indications that Justice may seek to bring the indictment to trial. Frank W. Dunham Jr., a former prosecutor now in private practice, acknowledged in an interview that he recently agreed to a request by Justice officials to take part in prosecuting the charges if a Litton trial is scheduled. Dunham had supervised the Litton investigation.