Lockheed bribery scandals

TheLockheed bribery scandalsencompassed a series ofbribesand contributions made by officials ofU.S.aerospacecompanyLockheedfrom the late 1950s to the 1970s in the process of negotiating the sale ofaircraft.
The scandal caused considerablepolitical controversyinWest Germany,Italy,the Netherlands, andJapan. In the U.S., the scandal nearly led to Lockheed's downfall, as it was already struggling due to the commercial failure of theL-1011 TriStarairliner.
Through the Emergency Loan Guarantee Act of 1971, the Emergency Loan Guarantee Board was created to manage federally guaranteed private loans up to $250 million to Lockheed Corporation. The guarantee program would have the U.S government assume the private debt of Lockheed if it defaulted on its debts. In August 1975 the board investigated whether Lockheed violated its obligations by failing to tell the board about foreign payments made to Lockheed. On October 14, 1977, Lockheed and its 24 lending banks entered into a credit agreement, providing for a $100 million revolving line of credit, to replace the government guarantee commitment; this was used to retire $60 million worth of Lockheed debt. The Emergency Loan Guarantee Board approved the new credit agreement on October 14, 1977 through a termination agreement that closed the Government Emergency Loan Guarantee Board after issuance of its final report on September 30, 1977. Fees paid by Lockheed and its banks to the Board for administering the program loan netted around $30 million, which was sent to theU.S. Treasury.
In late 1975 and early 1976, asubcommitteeof theU.S. Senateled by SenatorFrank Churchconcluded that members of the Lockheed board had paid members of friendly governments to guarantee contracts formilitary aircraft.In 1976, it was publicly revealed that Lockheed had paid $22 million in bribes to foreign officialsin the process of negotiating the sale of aircraft, including theF-104 Starfighter, the so-called "Deal of the Century".
Former Lockheed lobbyist Ernest Hauser told Senate investigators that West GermanMinister of DefenceFranz Josef Straussand his party had received at least $10 million for the purchase of 900 F-104G Starfighters in 1961. The party and its leader denied the allegations, and Strauss filed a slander suit against Hauser. As the allegations were not corroborated, the issue was dropped.
In September 1976, in the final phase of theWest German federal election, the controversy was re-opened when questions were asked about the whereabouts of the "Lockheed documents" within the Federal Ministry of Defence. Anonymous sources also distributed several, possibly falsified, documents to the media. According to one of these documents, member of the GermanBundestagand its defense councilManfred Wörneraccepted an invitation by Lockheed to visit their aircraft plants in the U.S. with the entire trip being paid by Lockheed.In the course of the investigations, it emerged that most of the documents related to the Starfighter purchase had been destroyed in 1962. The whereabouts of the documents were again discussed in a committee of inquiry meeting of the Bundestag between January 1978 and May 1979.An investigation of Lockheed documents by the U.S. revealed that Wörner's trip had been financed by the German Bundestag, and was related to a test flight with theLockheed S-3 Viking. Only part of the travel costs of Wörner's secretary, and Wörner's flight back from the US to Germany was paid by Lockheed:
The Italian branch of the Lockheed scandal involved the bribery ofChristian DemocratandSocialistpoliticians to favor the purchase by the Italian Air Force ofC-130 Herculestransport planes. The allegations of bribery were supported bypolitical magazineL'Espresso, and targeted former Cabinet ministersLuigi GuiandMario Tanassi, the former Prime MinisterMariano Rumorand then-PresidentGiovanni Leone, forcing him to resign his post on June 15, 1978.
The scandal involved theMarubeni Corporationand several high-ranking members of Japanese political, business, andunderworldcircles, including Finance MinisterEisaku Satōand theJASDFChief of StaffMinoru Genda.  In 1957, theJapanese Air Self-Defense Forcewished to buy theGrumman F11F-1F Super Tigerto replace theF-86 Sabrethen in service, but heavy lobbying by Lockheed of keyLiberal Democratic Partyfigures led to the adoption of the F-104 instead.
Later, Lockheed hired underworld figureYoshio Kodamaas a consultant in order to influence Japanese parastatal airlines, includingAll Nippon Airways(ANA), to buy theLockheed L-1011 TriStarinstead of theMcDonnell Douglas DC-10. On February 6, 1976, the vice-chairman of Lockheed told the Senate subcommittee that Lockheed had paid approximately $3 million (equivalent to $16.1 million in 2023) in bribes to the office of Japanese Prime MinisterKakuei Tanakafor aid in the matter.
Lockheed paid¥2.4 billion (equivalent to $55.5 million in 2023)to earn the contract from ANA. ¥500 million ($11.6 million in 2023) of the total was received by the Prime Minister. ¥160 million ($3.7 million in 2023) was received by ANA officials. ¥1.7 billion ($39.3 million in 2023) was received by Kodama.On October 30, 1972, ANA announced its decision to purchase 21 Lockheed L-1011 Tristars, which cost approximately $5 million each, totaling $105 mi ($765 million in 2023), even though it had previously announced options to purchase the DC-10.The 1986 USPresident's Commission on Organized Crimerevealed that from 1969 to 1975 Lockheed used Deak & Company, a large foreign exchange operator owned byNicholas Deak, as the conduit to transfer money intended by Lockheed to bribe Japanese officials. It was disclosed that US$8.3 million ($60.5 million in 2023) was moved to Deak's offices in Hong Kong, where a Spanish-born priest representing Lockheed took the cash and carried it to Japan.
In March 1976, in protest of the scandal, actorMitsuyasu Maenomade asuicide attackon Kodama's Tokyo home by crashing a light aircraft onto it. Maeno died and two servants were injured. Kodama himself was unharmed.
Tanaka was arrested on July 27, 1976, and was released in August on a ¥200 million ($690,000) bond. He was found guilty by a Tokyo court on October 12, 1983, for violations offoreign exchange controllaws but not on bribery.  He was sentenced to four years in prison, but remained free on appeal until his death in 1993.
In December 1975, it surfaced thatPrince Bernhardreceived a $1.1 million bribe in the early 1960s from Lockheed to ensure the Lockheed F-104 would win out over theDassault Mirage 5for the purchase contract. He had served on more than 300 corporate boards or committees worldwide and had been praised in the Netherlands for his efforts to promote the economic well-being of the country.
Prime MinisterJoop den Uylordered an inquiry into the affair, while Prince Bernhard refused to answer reporters' questions, stating: "I am above such things".The results of the inquiry led to aconstitutional crisisin whichQueen Julianathreatened to abdicate if Bernhard was prosecuted. Bernhard was spared, but had to step down from several public positions and was forbidden to wear his military uniforms again.
Prince Bernhard always denied the charges, but after his death on December 1, 2004, interviews were published showing that he admitted taking the money.He said: "I have accepted that the word Lockheed will be carved on my tombstone."
Declassifiedcorrespondences between U.S. Ambassador to the NetherlandsKingdon Gould Jr.andHenry Kissingershowed that Kissinger was informed of the bribes in 1975.
Between 1970 and 1975, Lockheed paid Saudi arms dealerAdnan Khashoggi$106 million in commissions. His commissions started at 2.5% + and eventually rose to as much as 15%. Khashoggi "became for all practical purposes a marketing arm of Lockheed. Adnan would provide not only an entrée but strategy, constant advice, and analysis," according to Max Helzel, then vice president of Lockheed'sinternational marketing.
Lockheed chairman of the board Daniel Haughton and vice chairman and presidentCarl Kotchianresigned from their posts on February 13, 1976. The scandal also played a part in the formulation of theForeign Corrupt Practices Actwhich PresidentJimmy Cartersigned into law on December 19, 1977, which made it illegal for American persons and entities to bribe foreign government officials.
According toBen Rich, director of Lockheed'sSkunk Works: