Chairman David S. Lewis and two other top executives of General Dynamics Corp. should be suspended from participating in Navy contracts because of evidence that they "lack business integrity and honesty," the Pentagon's inspector general has recommended.
In urging the suspension in a letter to Navy Secretary John F. Lehman Jr., Inspector General Joseph H. Sherick cited investigative findings of "improper and possibly illegal conduct" by Lewis, executive vice president and chief financial officer Gorden E. MacDonald and executive vice president George A. Sawyer, a former Navy official.
Sherick noted several continuing criminal investigations of the three corporate officers and revealed for the first time that the Justice Department is considering civil action "against all parties concerned."
Referring to the other investigations focusing on General Dynamics' work for the Navy, Sherick listed what he called "adequate evidence" of wrongdoing by the three officials, including allegations of stock manipulation, gift-giving to the wife of an admiral, conflicts of interest and falsification of statements.
The letter was delivered to Lehman Thursday night at about the same time Lewis was telling a stockholders' meeting in California that any suspension would be "completely unwarranted and completely unfair." He said the firm would sue to overturn such a decision.
A Navy spokesman said Lehman would decide next week whether to uphold Sherick's recommendation.
General Dynamics, the nation's third-largest defense contractor with $6 billion in goverment sales last year, has a monopoly on production of Trident nuclear submarines. Other critical weapons produced for the Navy include nuclear attack submarines, Phalanx rapid-fire guns and Tomahawk cruise missiles.
Sherick first voiced his ideas in Congress last week, and a Pentagon spokesman said at the time that General Dynamics faced a cutoff in defense business if the recommendation was approved and if the firm refused to sideline the officials.
When the spokesman was asked if that was a realistic threat because of the company's role in producing key military equipment, he said, "We'll cross that bridge when we come to it."
In his letter, Sherick cited four examples of what he said "may involve criminal conduct, and clearly raise questions as to the responsibility" of the three executives."
Sherick said investigative findings, all of which have been previously reported, provide evidence indicating that:
* Lewis and MacDonald had participated in a decision to issue a press release that "falsely stated" that the first Trident submarine would be delivered in October 1979. Sherick said the officials knew the submarine could not be ready before the end of 1980 but forecast an earlier delivery to stop the decline of General Dynamics stock.
* MacDonald had directed a company employe to buy a $1,125 pair of earrings for the wife of then-Adm. Hyman G. Rickover, who had overseen General Dynamics' submarine contracts at the time.
* Lewis, MacDonald and Sawyer had discussed the possibility of General Dynamics hiring Sawyer from March through May 1983 while he was still serving as assistant secretary of the Navy for shipbuilding and logistics and made decisions affecting the firm.
* Sawyer denied to Navy officials that he had negotiated for a job with General Dynamics before May 20, 1983, when in fact he had begun job discussions as early as March 1983.