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True, there are times when having an agent can be a liability, as Grumman Corp. is now learning. The U.S. Navy helped to set up a deal under which Grumman will sell 80 F-14 Tomcat fighters to Iran. But Grumman officials were still worried about competition from McDonnell Douglas, so they bought a little extra insurance: they hired U.S.-based agents for $28 million to make sure that the deal went through. What Grumman did not know was that the agents it chose were in bad odor in Iran. When the Shah learned of the arrangement, he concluded that Grumman had included the $28 million in the $2.2 billion contract price and demanded that the price of the 80 planes be reduced by that much, as a kind of fine. Grumman, arguing that the money came out of its own pockets, is now desperately trying to persuade the Shah to relent.
The Navy's role in the Grumman affair points to another problem in controlling foreign bribery: the Pentagon's relentless push to increase exports of U.S.-made weapons. U.S. military-assistance groups are constantly touting the benefits of American arms in almost every non-Communist country where the U.S. has an embassy. Once military officers determine that a foreign government is interested, they will put it in touch with U.S. companies that can supply the weapons required, and try to help clinch a deal.
The Pentagon has reasons for this policy. Strengthening the military muscle of friendly nations helps the U.S., and the economies of scale that result when a company manufactures weapons for foreign as well as American markets help to keep down the prices that the Pentagon itself pays. But military officers cannot help knowing that in some of the countries in which they are pushing American weapons, bribery is routine. There is no evidence that the Pentagon has actually encouraged payment of bribes to expand exports of arms, but it has been tolerant of agents' fees.
Whatever excuses might be offered for bribery—Pentagon pressure, foreign extortion, "Everybody does it"—the practice has become intolerable. Tips to customs officials to perform duties that they ought to carry out anyway might be unremarkable ethically, but payments to Cabinet ministers to put a U.S. company's interests ahead of those of their own country are totally immoral and strike at the very basis of democratic government.
Economically, bribery may increase a company's sales and profits for a time, but ultimately the practice is self-defeating —as Lockheed is now learning. Some of the U.S. executives who authorized bribes undoubtedly thought they would never be discovered, but they have been, and are costing the companies much-needed sales. Worse, the disclosures could well put a dent in the foreign business of other American corporations that are wholly innocent of any wrongdoing.
A permissive corporate attitude toward bribery loosens morals throughout the company; lower-echelon employees cannot be expected to operate ethically while the boss is setting an example of handing out payola. It is no coincidence that several of the companies caught paying off abroad are the same ones that broke the law at home to make political contributions out of corporate funds. The damage that corporate chicanery is doing to U.S. foreign relations, and to the reputation of the nation overseas, is painfully obvious.