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TRW Pays $3 Million In Conspiracy Plea Agreement

August 25, 1988

CLEVELAND (AP) _ Defense contractor TRW Inc. on Thursday paid a $3 million penalty after pleading guilty to three counts of conspiring to overcharge the federal government for military aircraft and M-1 tank parts.

William B. Lawrence, TRW vice president and assistant secretary, waived the company’s right to a trial and entered the plea on its behalf before U.S. District Judge George W. White.

The criminal penalty was one of the largest assessed a defense contractor, according to U.S. Attorney Patrick McLaughlin.

Lawrence said the company also paid a separate $3 million to be applied as an advance payment on civil restitution to the U.S. Department of Defense. That brings to $11.8 million the amount TRW has given the government to settle a pending civil lawsuit over the conspiracy.

TRW has estimated its Compressor Components Division overcharged the government between $3 million and $11 million, Lawrence said. McLaughlin declined to discuss the amount the government would seek in the civil case.

″TRW as a company deeply regretted that the events occurred. We have taken steps to try and prevent a recurrence of those incidents,″ Lawrence said. He said the company has instituted employee responsibility programs approved by the Defense Department to make sure the situation does not come up again.

The company sold the Compressor Components Division in 1986 as part of a corporate restructuring, Lawrence said.

In connection with the case, four former TRW employees have pleaded guilty to conspiring to defraud the government, and a fifth, Charles Broome, 64, is to be tried Sept. 6 on charges of conspiracy and making false statements, McLaughlin said.

TRW pleaded guilty to conspiring between 1973 and 1984 to inflate labor expenses it charged the federal government in contracts for the manufacture of military aircraft engine parts. The company also admitted it had conspired to inflate labor costs on compressor fan blades for the M-1 tank between 1980 and 1984.

A third count accused the company of conspiring to charge the Defense Department for operations and labor never performed in the manufacture of blades for the J-79 aircraft engine.

The guilty plea concludes a federal grand jury investigation that began in 1984, when TRW voluntarily disclosed that its employees had engaged in questionable conduct, McLaughlin said.

An internal investigation by TRW in 1984 uncovered overcharging by company employees, Lawrence said. He said the conspiracy was limited to low-level managers.

Lawrence said he did not expect Thursday’s settlement to affect other TRW defense contracts or attempts to bid for additional defense work.

″We have worked very closely with the Department of Defense with respect to these matters,″ he said. ″And in our view there is no significant risk we would be debarred.″

In a related 1987 settlement, the Defense Department agreed not to bar TRW from government contracting based on the Cleveland case, the company said in a statement.

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