Britain's Industry Secretary Eric Varley announced an inquiry today into charges that the state - owned Leyland Motor Corp., makers of Jaguars and other well - known British cars, paid millions of dollars in bribes to win export sales.
Varley appeared before Parliament to announce a high-powered probe and promised "no coverup" following a report of major bribery in the Daily Mail, a Conservative paper and foe of the Labor government.
The newspaper reported that the company budgeted $19. 2 million in bribes and "slush money" last year and expected to spend as much as $42.5 million in similar undercover commission in the next financial year.
The allegations were reminiscent of the Lockheed Aircraft company's pay - off scandal in the United States, which had repercussions around the world and led to the disgrace of a former Japanese prime minister and Prince Bernhard of The Netherlands.
The Daily Mail article claimed pay - offs have been systematized and increased since Leyland was nationalized two years ago this month in a rescue operation which saved 190, 000 British jobs.
Both Leyland and the government's National Enterprise Board denied the Daily Mail report that a letter from the board arranged for a secret slush fund to finance the bribes.
"The government is totally opposed to any form of bribery or corruption," Varley said in response to demands for an explanation from Conservative lawnmakers. "The government will not tolerate any coverup of these matters."
The claims against Leyland came only 11 days after Prime Minister James Callaghan placed his signature on a pledge by nations at London's economic summit conference to stamp out international corruption.
At that meeting, President Carter made a special call for corrupt practices to be controlled.
Callaghan told Parliament today: "We will not tolerate these kinds of practices and they must be rooted out, although a heavy responsibility rests with the host countries themselves."
The Mail accused Lord Ryder, head of the National Enterprise Board, of sanctioning bribes and fraud "on a massive scale in a desperate effort to win overseas orders." It printed what it said was the text of an Oct. 15, 1976, letter from Lord Ryder to Leyland chief executive Alex Park allegedly showing the government and the Bank of England connived at "special arrangements" to allow Leyland to pay off fixers.
The board denied its chairman had written to Park about any alleged slush fund. "No such letter has been sent by Lord Ryder or anyone else in the National Enterprise Board to Mr. Park or anuone else in British Leyland," the board said.
Lord Ryder, who is being called back to London from the Greek island of Corfu, will head the board's investigation, Varley said.
British Leyland, meanwhile, "categorically denied" receiving the alleged letter from Lord Ryder. A spokesman for the beleaguered auto giant , which still is struggling to recover from a crippling strike earlier this year, said, "Mr. Park can't remember receiving the letter and there is no trace of it in our files. He categorically denies having ever received this letter."
The company, which builds Land - Rovers, Range - Rovers, Triumphs, MGs and Jaguars, as well as more conventional sedans and buses, also has pledged a thorough investigation of itself in the wake of the Daily Mail's allegations.
Several members of Parliament publicly questioned the authenticity of the alleged lteter reprinted in the newspaper, but the Daily Mail stood staunchly behind its story and pledged to publish a photography of the alleged correspondence in Friday's editions.
"It is not unusual for embarassing and, indeed, compromising documents to disappear in the wake of a journalistic investigation," editor David English said in a statement.
In its story, the newspaper said it had been told my unnamed Layland executives that as much as $42. 5 million for bribes and undercover commissions could be put into the company's "slush fund" in the next financial year. The report also alleged commission men received bundlesof money in suitcases at Leyland offfices.
The newspaper said Saudi Arabia and Iran were two countries which ordered Leyland vehicles after fixers were paid a sum totalling nearly $3. 4 million.