The former head of Raytheon Co. operations in Saudi Arabia is Roy R. Carver. His first name was incorrect in an article yesterday
The head of the Saudi Arabian missile air defense program in the late 1970s wiretapped a top executive of Raytheon Co., the radar concern that has installed Hawk missile systems in the Middle Eastern kingdom, according to court records and knowledgeable officials.
The wiretap records were turned over to U.S. officials and led to the indictment last summer of Joseph R. Carver, a Raytheon vice president, on charges that he and another Raytheon official received a $1 million kickback from other American businessmen who were shipping modular housing for Raytheon's operations in Saudi Arabia. Carver is listed in court records as a fugitive.
U.S. District Court Judge Norma Holloway Johnson has ordered a public hearing that begins today on whether the foreign wiretap evidence can be used in a U.S. criminal trial.
The wiretapping, which U.S. officials say was conducted in Saudi Arabia without the involvement of U.S. intelligence agencies, was first presented to Johnson in a confidential hearing last year by Justice Department prosecutors assigned to a task force on multinational fraud.
The case is unusual because it involves Saudi detection and allegations of corruption by American officials doing business in the country. In the past, alleged corruption cases in Saudi Arabia have almost exclusively focused on schemes in which U.S. businessmen allegedly have paid off Saudi agents to obtain multimillion dollar contracts in the country.
Raytheon, a Massachusetts-based defense contractor, maintains that it was victimized by allegedly unscrupulous employes, according to Judah Best, the firm's lawyer in the case.
Lawyers for some of the defendants apparently have received access to the wiretap material and are challenging its admissibility on the grounds that it was illegally obtained under both U.S. and Saudi law.
The prosecutors initially claimed that turning over the wiretap material to defense lawyers would harm national security. The Justice Department would not comment on the pending case.
In an opinion issued last month, Judge Johnson challenged the "draconian" position taken by the Justice Department in opposing production of the wiretap evidence to defense lawyers.
Johnson accused the prosecutors of using the confidential presentation of evidence "to avoid the fundamental choice of disclosing certain classified materials or dismissing the prosecution . . . . " She cited earlier appellate decisions that state "the presumption is against the use of secret proceedings . . . whenever the legal rights of individuals are to be adjudicated."
In ordering public hearings to consider whether the evidence should be suppressed, the judge left open the possibility for an additional hearing to probe government witnesses on when and how they became aware of the Saudi wiretapping. From court records, it is unclear why the wiretapping was initiated by the Saudi official.
Another question raised in court papers is that of the "graymail" defense in which defendants attempt to cause the government to jeopardize classified material or intelligence operations as a lever to make prosecutors drop the case.
Given the government's claim of not being involved in the wiretapping, Johnson concluded last month that prosecutors would be hard put to accuse the defendants of engaging in "graymail" since no U.S. foreign intelligence operations were said to be involved in the case.
In her opinion, Johnson summed up the evidence question by saying, "Although the indictment was not returned until the fall of 1981, an investigation of defendants was begun several years ago by the government when it learned of the allegedly unlawful transactions underlying the indictment from sources who had conducted surveillance in a foreign country of at least one of the defendants."
She added, "The government . . . maintains that it had no involvement in the foreign surveillance . . . but in fact, it would appear that the prosecution was initiated largely due to the surveillance . . . . "
As part of the hearing, subpoena records show that a summons was issued on March 30 for Saudi Prince Khalid ibn Abdul Aziz, who supervises the installation of the ground air defense systems in the Saudi Defense Ministry.
The prince--who reports to his father, the Saudi defense minister, Prince Sultan--is expected to appear in court for the hearing. A State Department official said that U.S. diplomatic officials were knowledgeable about the prince's court appearance, but were not involved in the case.
In court records, Judge Johnson justified the summons of the Saudi air defense official by saying, "The court in this case must rely on the testimony of individuals who conducted the challenged surveillance to determine which defendants . . . were monitored."
Raytheon board chairman Thomas L. Philips and company president D. Brainerd Holmes are also scheduled to appear as witnesses at the hearing.
The 1981 indictment accuses Carver of conspiring with executives of a freight shipping firm to fraudulently add on concealed freight charges to several hundreds units of modular housing purchased by Raytheon in 1976 and 1977.
In doing so, the officials of the shipping firm, Interconex Inc., allegedly agreed to pay Carver and another Raytheon executive, Joseph C. Lemire, about $1 million in bribes, according to the indictment.
Another $1 million was allegedly siphoned off of the shipping contracts by then Interconex chairman Lionel W. Achuck and Interconex president John T. Stephens, according to the indictment.
Carver, Lemire, Achuck, Stephens and Interconex were all named in the indictment. All except Carver, who is still a fugitive, have pleaded innocent.
In the course of investigating the alleged scheme, prosecutors asked the court for assistance in obtaining the bank records of companies set up in Liberia, Switzerland, Lichtenstein and the Cayman Islands, where the alleged bribery proceeds were deposited in bank accounts.
At some point in late 1976 or early 1977, court records indicate that other senior Raytheon officials questioned their top men in Saudi Arabia about unusual shipping costs included in the modular housing contracts. The U.S. Raytheon officials also questioned the purpose of the Liberian and Cayman Islands corporations set up by their colleagues.
According to the indictment, the Raytheon executives in Saudi Arabia assured their superiors in August, 1977, that the shipping contracts were proper and that "only legitimate transactions" were being made through the offshore companies that were alleged in the indictment to have been set up as conduits to receive bribery payments.
At the same time, the accused Interconex executives were assuring Raytheon's financial agent for the transactions, Maryland National Bank, that the freight charges were normal and proper, according to the indictment.
One incident reported in the indictment occurred at Washington National Airport on the day of President Carter's inauguration, Jan. 20, 1977.
The president of Interconex, Stephens, and one of his attorneys called what was presumably a frantic meeting at the airport with officials of the D.C. firm that was manufacturing the modular housing for Raytheon.
The indictment charges that at the meeting, Stephens "offered further inducement" to the unidentified officials of International Modular System Inc. on MacArthur Boulevard "not to reveal to Raytheon cost information on the two shipping subcontracts."
On that same day, the indictment charges, Interconex's chairman, Achuck, was meeting with Raytheon officials who were investigating the contracts. Achuck refused to provide any cost information to the Raytheon investigators, saying it was confidential.