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One reason for the GAO's doubt that Lockheed can repay its loans on time is that civilian sales of the TriStar are lagging because of the recession: the company did not book a single order last year. Another reason is that Lockheed is counting heavily on continued large foreign sales of military equipment—and the publicity about its bribery can only hurt. The Japanese Government last week dropped tentative plans to buy $650 million worth of Lockheed's long-range, low-altitude P-3C Orion planes, which are capable of detecting and destroying submarines. Indeed, the Japanese are having second thoughts about buying 110 to 120 new fighters, costing $10 million to $20 million each, from another American company—either General Dynamics, Grumman or McDonnell Douglas. At week's end the scandal cost Kotchian and Lockheed Chairman Daniel J. Haughton their jobs. Lockheed's 15 directors assembled for a special meeting called by Haughton; a few grumbled beforehand that they had not been kept fully informed of the potential dimensions of the bribery revelations. By the time the meeting began, Haughton and Kotchian had drafted a letter, addressed to all Lockheed employees, announcing their resignation. It referred to "the cascading waves of criticism and outright attack that Lockheed and its management have been subjected to" and called for "a new standard of international business conduct." Haughton had been scheduled to retire on his 65th birthday in September, but Kotchian, 61, might have been expected to succeed him.
For a short period, Lockheed will be headed by Robert W. Haack, former president of the New York Stock Exchange, who was named chairman pro tem. He will share power in a new "office of the chief executive" with two other officials: Roy Anderson, vice chairman for finance and administration, and Lawrence O. Kitchen, president. While briefly in charge, Haack said, his top priority will be to refinance Lockheed's debt, now about $600 million. That may be difficult; Democratic Senator William Proxmire of Wisconsin is planning to introduce legislation demanding a speedup in Lockheed's repayment of the Government-guaranteed portion of its debt.
The revelations about Lockheed and other U.S. corporations caught up in the bribery scandals have their roots in the Watergate debacle. During its investigation of corporate handouts to President Nixon's 1972 re-election campaign, the Watergate special prosecution force found that some companies were keeping their auditors as well as their stockholders in the dark about the nature and purpose of large payments overseas. Subsequent probes by the Securities and Exchange Commission, the Church subcommittee and the IRS have uncovered case after case of payments of corporate money to U.S. politicians, to foreign officials, or often to both.
Many more companies could be scarred by scandal before the investigations are finished. One company now under suspicion is Boeing, which supplies more than half of the commercial airliners flown in the non-Communist world. The SEC last week disclosed that it is investigating Boeing for possible bribery, kickbacks and illegal political contributions, and filed suit to compel the planemaker to hand over its records.