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United States Apparently Dropping Five-Year Northrop Probe

February 24, 1993

LOS ANGELES (AP) _ The federal government apparently has dropped an extensive, five-year investigation of allegations Northrop Corp. executives bribed South Korean officials, according to lawyers and government letters.

Key targets of the probe have been informed they are no longer under investigation or they have had their subpoenaed documents returned, lawyers said Wednesday.

″Our information is that the investigation is over,″ said Jan Lawrence Handzlik, a lawyer for Donald Foulds, a retired Northrop vice president whose documents were returned last month.

Northrop was asked earlier this month by the U.S. government to pick up the company’s original documents, said Northrop spokesman Tony Cantafio, who declined to speculate on the reason for the request.

″The only thing I read into that is that they asked us to pick up our documents,″ he said. ″Beyond that, we have no information.″

A spokesman for the U.S. Justice Department declined to return a message seeking comment.

The government’s probe of the Los Angeles-based company began in 1988 when it looked into allegations Northrop paid millions of dollars to Korean businesses in connection with its attempts to sell the ill-fated F-20 jet fighter to the Korean military.

Korea decided against buying the F-20, which Northrop never put into production because of a lack of orders worldwide.

Although no charges were ever filed in the investigation, the allegations destroyed the careers and reputations of some Northrop officials.

Welko Gesich, who was forced to retire as the company’s executive vice president in 1989, was notified by the Justice Department last week that he no longer was under investigation.

″It has been really tough going,″ Gesich, 72, told the Los Angeles Times. ″The thing that has bothered me is that the company hasn’t backed me up and I gave my life to this company for 35 years.″

Another former executive, James Dorsey, the company’s marketing vice president for South Korea, recently received a letter returning personal documents subpoenaed in the late 1980s, said his attorney, Daniel Bookin.

The scandal involved Northrop’s 1984 payment of $6.25 million, ostensibly to build a luxury hotel in Seoul. The money was wired to a Hong Kong bank controlled by a girlfriend of the late Chong Kyu Park, a South Korean power broker. The money vanished a few days later.

An organization controlled by Park later received an additional $1.5 million from Northrop to extricate the company from its South Korean involvement.

Northrop called the hotel deal a goodwill gesture, but allegations arose that the payments were bribes to help Park sell Northrop’s F-20 fighter jets to the South Korean air force.

Northrop lost three legal attempts in South Korea to recover the money.

When questions began to crop up in 1987, the board reprimanded then- Chairman Thomas V. Jones over the affair.

In 1991, four Northrop insurers agreed to pay $18 million to settle a shareholder lawsuit that alleged misconduct and unlawful business practices by Northrop executives and directors.

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