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Lawyer Says Pentagon Accused General Dynamics Executive Of Lying

November 7, 1985

WASHINGTON (AP) _ The Pentagon, as part of its effort to revoke the top-secret security clearance of a General Dynamics Corp. executive, has accused him of lying about his role in a 13-year-old bribery case, the executive’s attorney confirmed Wednesday.

The accusation against Lester Crown, executive vice president of General Dynamics, was described as ″baseless″ by Crown’s Washington lawyer, Lloyd Cutler. He said Crown would exercise his right to seek a full hearing on the matter before a Defense Department examiner.

On Sept. 26, a Pentagon attorney informed a House panel the Defense Department was moving to revoke Crown’s clearance. Kathleen A. Buck, the attorney, said the action was based on a policy that prohibits security clearances for people who admit to felonious conduct, and that Crown had been notified he faced the loss of his clearance on Sept. 18.

That notice and a second one issued last month included a ″statement of reasons″ detailing the charges, confirmed Glenn Flood, a Pentagon spokesman. The Pentagon declined Wednesday to release the notice sent to Crown, but details of the document were disclosed by the St. Louis Post-Dispatch and confirmed by Cutler.

If Crown’s clearance is revoked, General Dynamics will lose its right to continue receiving new government contracts unless Crown resigns from the company’s board of directors. General Dynamics is the nation’s third largest defense contractor, having received contracts worth $6 billion in fiscal 1984.

Crown, 60, is the son of Henry Crown, the founder of the St. Louis-based General Dynamics. The Crown family owns more than 23 percent of the company’s stock.

The allegation against Crown stems from an interview by Pentagon investigators last spring. Crown, repeating testimony he gave during a 1976 bribery trial, denied ordering a General Dynamics subordinate to inflate an expense account in order to recoup contributions he made to a bribery fund.

Crown has admitted that in 1972, while serving as president of Material Service Corp., a General Dynamics subsidiary, he contributed money to a larger fund being accumulated to ″bribe certain persons in the Illinois Legislature.″ A federal grand jury named him an unindicted co-conspirator in 1974, and, after being granted immunity, he testified in 1976 at a trial in which several legislators were convicted.

Crown has repeatedly denied that he ordered any subordinates to inflate their corporate expense accounts so that he could recover his money. The Pentagon is now disputing those denials, Cutler said.

According to the Post-Dispatch, the statement of reasons issued to Crown concludes: ″You submitted a false statement to (the investigator) in which you stated under oath, ’I did not ask Mr. (Gerald R.) Nagel or anyone else to inflate Material Service Corporation expense accounts.‴

Cutler said the accusation was ″utterly without foundation.″

″What Mr. Crown told the Department of Defense investigators in 1985 is exactly what he testified to as a government witness before a 1974 grand jury and in a subsequent 1976 trial,″ Cutler said.

″It’s ironic that another government agency should now accuse him of a falsehood in repeating the testimony that the government relied on when it presented him as a prosecution witness 10 years ago,″ Cutler said.

As previously disclosed by Ms. Buck, the Pentagon is also accusing Crown of filing proxy statements in 1974, 1975 and 1976 with the Securities and Exchange Commission that failed to fully disclose his role in the bribery or the alleged padding of expense accounts.

Neither Crown nor General Dynamics disclosed the bribery incident to the Pentagon when Crown became a member of General Dynamics’ board of directors in 1974. Crown did disclose it in 1982 when he applied for a clearance as a director of Trans World Airlines.

In early 1983, the Pentagon reviewed Crown’s security clearance and decided to preserve it. In February of this year, however, after the matter was brought to the attention of Defense Secretary Caspar W. Weinberger by several congressmen, the Defense Investigative Service and the Directorate for Industrial Security Clearance Review reopened the matter.

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