Caught Bribing

A steel firm pleads guilty

Into the columned entrance of the Federal District Courthouse in Manhattan one day last week walked the attorneys of Bethlehem Steel, the nation's second largest steelmaker (1979 sales: $7.1 billion) and a major ship repairer. They came on a painfully embarrassing mission. On behalf of their company, they entered a guilty plea to an eleven-page statement of criminal offenses. The charges: during the lean years of tanker building and repair that followed the 1973-74 Arab oil embargo, Bethlehem engaged in a complex conspiracy that resulted in the payment of bribes of at least $400,000 to shipowners and agents in return for having them repair their ships in Bethlehem's yards. Bethlehem smuggled a sum close to $1 million into the U.S. to be used, evidently, for illegal purposes.

Because the federal investigators had constructed a well-documented case, Bethlehem chose to surrender rather than fight. Federal agents had learned that in 1972 Bethlehem entered into a conspiracy with a Swiss company, l'Office pour le Financement du Commerce et de l'Industrie, or OFCI. Protected by Swiss banking laws, OFCI collected from Bethlehem "commissions" amounting to $1.7 million. Most of this money was funneled back into the U.S. and into Colombia and Venezuela. It served as bribe funds to induce shipowners to use the Bethlehem yards. Federal prosecutors said that many payments were made in cash in order to avoid the creation of a "paper trail."

The Government maintained that the bribery scheme was by no means a closely held secret at Bethlehem. In the list of charges, the U.S. Attorney stated that the conspiracy was widely known within the company and that a number of Bethlehem shipyard managers knowingly engaged in the illegal payments.

Yet the Government did not indict any Bethlehem executives. Instead, U.S. Attorney John S. Martin Jr. concentrated only on the corporation and readily agreed with Bethlehem's counsel that a $200,000 punishment would be reasonable. "A five-year statute of limitations meant we could not go back beyond 1975," Martin explained. Furthermore, he said, he was unable to establish links between the conspirators and Bethlehem's top management. Contends Martin: "A corporate fine was more appropriate." On Aug. 25, Judge Robert Sweet is expected to announce the size of that fine.

This file is automatically generated by a robot program, so viewer discretion is required.