In a story on Canadian nuclear reactor sales published in Washington Post editions of Jan. 15, it was incorrectely stated that South Korea was not a signatory to the nonproliferation treaty. South Korea signed the treaty on July 1, 1968, and deposited its instruments of ratification with the United States on April 23, 1975.
Canada is embroiled in a Lockheed-type payoff scandal in connection with the sale of its nuclear reactors abroad.
The payoffs were allegedly made by Atomic Energy of Canada Ltd. (AECL) through intermediaries to officials in Argentina and South Korea to grease the sale of reactors to those countries.
The scandal, brewing for the last two months, threatens to erupt in the next few weeks and further embarrass the already embattled government of Prime Minister Pierre Elliott Trudeau.
Unlike Lockhead, which, although heavily dependent on the U.S. government, is privately owned, AECL is actually owned by the Canadian government and its senior officials are appointed by the government.
Opponents of Trudeau seized on the scandal as a means of applying more pressure on the troubled government. The prime minister further inflamed the situation by accusing several Conservative members of Parliament of lying. Although Trudeau apologized the next day, his opponents are likely to step up their criticism when the slow-moving investivation speed up, as they are expected to do later this month.
The scandal first came to light last Nov. 22 with the annual report of the auditor generals a public officials who audits all government spending and reports any payments that are questionable.
The auditor general noted that AECL had spent almost $18 million in "agents' fees" from 1974 to 1976 to promote the sale of reactors to Argentina, where the atomic energy agency was in competition with Westinghouse and General Electric of the United States, and to South Korea, where Westinghouse alone was the competition. AECL won both contracts for its first big breakthrough in the tough foreign sales market.
At least $10 million of the total paid in agents' fees by the Canadian agency was "inadequately" documented, according to the auditor general. The report did not say these payments were bribes, but the implication was clear.
The allegations shocked Canadians who had taken an "it can't happen here" stance toward the Lockhead scandal.
AECL officials did not deny that the payments were bribes to Argentinian and South Korean officials. They just said they did not know where the money ended up. Unlike Lockhead AECL made its payments at arm's length through sales agents with exotic foreign names and addresses.
One payment of $154 million was made to United Development Inc. of Tel Aviv, whose president, Shanl Eisenberg, is a German Jew who fled from Nazi tyranny in the 1930s and now operates as a big-time fixer on an international scale. His job was to get AECL a contract in South Korea.
Another payment of $2.4 million was made to Intercontinental General Trading Establishment of Liechtenstein in connection with the Argentinian deal. Its president is Tito Tettamanti, who is also chairman of Fidinam S. A. of Lugano, Switzerland, a firm that was involved in a payoff controversy in Canada's Ontario Province several years ago.
Neither man was talking to the press about the alleged payoffs in Argentina and South Korea. In Argentina, La Razon, a Bueons Aires newspaper, reported that bribes had been paid to former Cabinet minister Jose Ber Gelbard and Adolfo Mario Savino in connection with the reactor sale. Both men have been living in exile since the overthrow of the old Peronist regime in Argentina Gelbard, who has denied the bribery charge, was last reported living in Washington.
In South Korea, there have been no similar reports confirming suspicions of bribery in connection with the reactor sale. An investigator with the U.S. Senate subcommittee on multinational corporations told a Canadian reporter, however, that, "You can't do anything in South Korea without paying off President Park."
In Canada, a parliamentary committee has been investigating the payoff allegations. Canadian parliamentarians, unlike the U.S. counterparts, are not used to mounting official inquiries and they have been slow to question AECL officials.
The government made some initial inquiries of its own but got nowhere and finally handed the case over to the Royal Canadian Mounted Police whose investigation has just started.
Because of the slow pursuit of the scandal by Parliament and government officials alike, the initial furor raised by the payoff allegation has lied down. It could blow up again Jan. 25 with the scheduled appearance before the parliamentary committee investigating the case of former AECL president Lorne Gray, now retired.
Gray was president of the atomic energy agency until the end of 1974 and was responsible for hiring the agents who promoted the Argentinian and South Korean sales. If any Canadian officials know something about the case, it is Gray. So far, he has refused to talk to the press.
Also in jeopardy is the whole Canadian nuclear sales program, which was already under attack from critics at home and abroad before the payoff scandal broke. Critics of the reactor and uranium sales argue that many of Canada's customers, including Argentina and South Korea, are not signatories to the nuclear nonproliferation treaty and cannot be trusted to use the material and technology for peaceful means only.
In response to the criticism, the Canadian government announced late last month that it would no longer sell nuclear goods to countries that have not signed the treaty or that refuse to promise not to build a nuclear bomb.
To date, the government has denied any prior knowledge of payoffs to promote reactor sales, but Gray could contradict this testimony and embarrass the Trudeau Cabinet in the process.