Treasury Secretary Accused

SEC says Miller knows about Textron's wining and dining

There have been no payments that are illegal or ... improper anywhere throughout the company." So said G. William Miller, suave, silver-haired chairman of the giant conglomerate Textron Inc. to his stockholders in 1976. Such statements were "erroneous and misleading," the Securities and Exchange Commission alleged last week; after a two-year investigation, it said Textron had made improper payments overseas. And while the SEC left open the question of whether Miller, who is now Secretary of the Treasury, knew about the payments, it said flatly that Miller did know about questionable entertainment provided by Textron at home.

These charges raised the possibility of a major scandal involving a member of the Carter Cabinet. The SEC's civil suit against Textron--Miller was not even named--accused the corporation of extensive bribery of foreign officials to push sales of helicopters, and of improperly wining and dining Pentagon officials. SEC charges have been filed against scores of other major U.S. corporations in the past few years, and Textron responded the way most others have: it did not admit guilt, but declined to put up any defense. Instead, it agreed to an injunction ordering it not to commit any such acts in the future, and to reform its practices to make sure it did not. Case closed.

Or so it would have been, if the company had been almost any other. But the SEC specifically alleged that Textron's "chairmen"--Miller was chairman from 1974 to 1978--knew that the company had spent $600,000 on liquor and meals for unnamed Department of Defense officials. Although the agency does not say so directly, Miller presumably should have known that such payments violated regulations prohibiting officials from accepting any kind of gratuity from a defense contractor. The SEC did allege, however, that Textron's chairmen knew that the company kept no accounting of the entertainment, even though its own proclaimed policy called for it to do so.

Even more serious, the SEC charges reopened--but did not answer--an old question: Did Miller also know about Textron's foreign bribery? Stories about such bribes began to circulate in 1978, just as Miller came before the Senate Banking Committee for confirmation hearings on his nomination to be chairman of the Federal Reserve Board. Committee Chairman William Proxmire questioned Miller closely. "My company did not bribe anybody," said Miller. If it had, he implied, he should have known Said Miller: "I have insisted that I be fully informed about any question of ethics that comes up." On one occasion Miller promised to look into some "strange" transactions in Ghana, then returned to assure the Senators that afer checking with subordinates, he had bund nothing improper. He convinced the Senators; Proxmire cast the only vote against his confirmation.

But the SEC now says that between 1971 and 1978--a period during which Miller was first president and then chairman--Textron passed out a total of $5.4 million in fees, kickbacks and other questionable payments to government officials and other buyers of helicopters in ten countries. Among them: Ghana. An air force official there, charges the SEC, got a $300,000 kickback on the purchase of two helicopters from Textron. At that time, corporate bribery of foreign officials did not violate U.S. law, but failing to disclose overseas payments violated securities law. Far from disclosing payments, the SEC claims, Textron apparently hid or destroyed records, including one document about the Ghana deal.

The SEC did not directly claim that Miller knew about all this. But it did note Miller's assurances to Textron stockholders that there had been "no improper payments," and it added that he "had no reasonable basis" for saying so.

That was enough for Proxmire; he called on the Justice Department "to redouble its inquiry into possible perjury" by Textron officials who testified at Miller's confirmation hearings. The Justice Department does have such an investigation under way, but legal experts doubt that any perjury charge could be brought against Miller. Proxmire, however, clearly is skeptical about Miller's protestations that he knew nothing about the bribery. Said the Senator: "The SEC investigation leaves no doubt but that bribery was corporate policy at Textron. Company books were altered. False statements were filed with the Federal Government. Incriminating documents were destroyed."

The usually genial and voluble Miller at first tried some unaccustomed stonewalling. He issued a bland statement saying that he was "pleased" the Textron case had been settled and that "further comment should come from the parties directly involved." He shouldered his way silently through a mob of reporters into a Friday hearing of the Joint Economic Committee--one of whose members is his tormentor Proxmire--but testified only about the federal budget.

Later, however, Miller summoned a press conference to insist once more that he had never been told about the foreign bribery. He apologized for saying that there had been none, but added, "I believed I could reasonably rely upon the assurances given to me by senior people: that we had not had such payments in Textron. It turns out that I was incorrect." He conceded that he did know about the entertainment of Defense officials, but asserted rather lamely that it was not improper for Textron to offer such "hospitality"--only improper for the Defense officials to accept it. In an interview with TIME, he added, on the subject of foreign payoffs: "Commercial bribery is not unknown even in America. But you don't send the chairman of the board to jail because one of his salesmen made a commercial bribe. You send the salesman to jail."

Miller asserted firmly that he has no intention of resigning as Secretary of the Treasury, and President Carter said Saturday that he will not ask Miller to step down. But it is unlikely that Miller will be allowed to forget about the matter. Proxmire is trying to get the Senate Banking Committee to open a new round of hearings into the whole affair.

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