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Former Employee Says Firm Covered Up Microchip Defects

December 28, 1989

FULLERTON, Calif. (AP) _ A former Hughes Aircraft Co. engineer has filed a $9.6 billion lawsuit against the company charging that it concealed a potential defect in computer chips used in defense systems.

The lawsuit was dismissed as mostly ″fantasy″ by a Hughes official.

Metallurgist Michael C. Denlinger, a former senior staff engineer at a Hughes division here, filed the lawsuit in U.S. District Court in Santa Ana last June, but it remained sealed until it was served on Tuesday.

Denlinger claims that more than 4 million computer chips used in national defense systems may corrode because Hughes took a shortcut in a soldering process that can cause cracks in what should be airtight surfaces.

″We think our national security is compromised,″ his attorney, Frank Barbaro, said Tuesday.

Denlinger, who worked for Hughes for 14 years and was most recently responsible for testing strengths of materials, brought the action under the federal False Claims Act, which allows whistleblowers to share in damage awards in defense fraud cases.

Damages in false claims cases are usually triple the value of the products. Denlinger’s attorneys claim the company sold $3.2 billion worth of systems using the allegedly faulty computer chips.

The U.S. Department of Justice must decide whether to join such false claims lawsuits, which usually are sealed while the department investigates.

The department told the federal court that its research of the Hughes case was complete, and court papers indicated the department would make a decision on the case within 60 days.

Denlinger alleges that defective chips installed since 1984 caused two failures in the Navy’s submarine-launched Advance Capability torpedo system.

While routine screening found two defective chips in torpedoes, the lawsuit’s allegations are wrong, said Dan Reeder, a spokesman for Hughes’ Ground Systems Group in Fullerton.

″Most of the stuff is just fantasy,″ he said. ″We have never had any failure of the test torpedoes due to hardware problems during any of the hundreds of runs we have gone through.″

Denlinger said in the lawsuit that he repeatedly wrote memos about possible cracking of the chips but they were ignored. He resigned in November 1988.

Hughes said Tuesday that it has inspected every chip since becoming aware of a cracking problem in 1985, and said it was an industry-wide problem.