Lockheed Aircraft Corp.—the company famous for its financial troubles, spectacular cost overruns and controversial Government loan guarantees—has now acquired another dubious distinction. Having admitted under prodding by the Securities and Exchange Commission that it has slipped at least $22 million under the table to foreign government officials and political organizations, the company issued a defiant statement that sounded almost like an assertion of the right to bribe.
A lengthening list of giant U.S. corporations, including Exxon, Gulf, Mobil, United Brands and Northrop, had previously admitted to making similar payoffs. The SEC's policy has been to require corporations in such cases to reveal who got their political payments and to agree not to make any more. Some have complied, others are resisting. Last week Ashland Oil Inc. argued that securities laws do not require public disclosure of the recipients of questionable payments that the company says it has made in Nigeria, Gabon, Libya and the Dominican Republic. Ashland has already supplied the names to the SEC.
Lockheed went further. It stated that identifying its beneficiaries could hurt its $1.6 billion backlog of unfilled foreign orders, presumably by causing embarrassed foreign governments to cancel contracts, and also damage prospects for future sales. Nor would Lockheed promise to make no more political payments. Such payments, it said, are a normal and necessary feature of doing business in certain parts of the world, are essential to sales and "are consistent with practices engaged in by numerous other companies abroad."
That blunt stand forces into the open—as no previous case has—some of the legal, ethical and practical questions surrounding the whole issue of foreign bribery and political payoffs by American corporations. Immediately, Lockheed's position could provoke a legal battle over just how far the SEC can go in forcing a company to make public its foreign payments. If the company and the agency cannot agree—and Lockheed's statement would seem to leave little room for compromise—the SEC could hale Lockheed into federal court on charges of violating the agency's financial reporting requirements. Generally speaking, foreign political payments—or even outright bribery—do not violate any U.S. law, but concealing them on a corporation's books does. In addition, of course, the payments might violate laws of the countries where they were made.
The broader questions are whether payments to foreign government officials and politicians are really necessary to U.S. companies' overseas sales and what the Government can do to stop the practice. The answers, unhappily, seem to be that Lockheed and other aerospace companies really would lose sales—to open-handed British, French, German, Japanese and Soviet concerns—if they did not make such payments. Further, the U.S. Government is too deeply involved in the companies' fortunes to do anything very effective.