A. Carl Kotchian dies at 94; ex-Lockheed chief admitted paying bribes to foreign officials By Peter Pae December 21, 2008
A. Carl Kotchian, the former president of Lockheed Aircraft Corp. whose admission of paying millions of dollars in bribes to foreign government officials led to the imprisonment of Japan's prime minister and political upheaval in several countries in the 1970s, has died. He was 94.
Kotchian, who had been ill with ailments related to aging, died Dec. 14 at Sequoia Hospital in Redwood City, said his son, Robert Kotchian.
Kotchian was a key figure in what became one of the biggest bribery scandals ever. His testimony before a Senate committee in 1976 later contributed to sweeping reforms and passage of U.S. laws against Americans and U.S. firms paying off foreign government officials.
His admission had dramatic political reverberations overseas. It led to the downfall of Japan's ruling government, discredited the Dutch monarchy and set off official inquiries in Colombia, Turkey, Italy, West Germany and Saudi Arabia.
The Senate probe eventually revealed that payoffs, bribes and kickbacks had been part of doing business overseas for American companies for decades. Although Lockheed and Kotchian received the brunt of the attention, more than 400 U.S. companies eventually admitted to paying foreign officials more than $700 million, or more than $2.5 billion in today's money.
In a memoir published only in Japan, Kotchian said Lockheed was a scapegoat and that the payoffs -- common throughout the 1960s and early 1970s -- were part of the way the "game" was played overseas. He maintained that no payoffs were made to American officials and no American laws were violated.
"If we were back in those times, I'd do it again," Kotchian said in an interview with the Associated Press in 1978. "In present times, with the change in attitude and standards that are being applied now, I don't think that I would."
The scandal overshadowed a notable aviation career that spanned 35 years and paralleled Lockheed's rise to become one of the biggest aerospace companies in the world. Kotchian was president of Lockheed when it was still headquartered in Burbank and before it merged with Martin Marietta Corp. The company's headquarters then moved to Bethesda, Md.
"He was a widely admired leader, a dynamic individual who greatly contributed to the growth of Lockheed over a very long period of time," said Sherman N. Mullin, former president of the Skunk Works Corp., Lockheed's advanced development subsidiary.
Tall, blue-eyed and gregarious, Archibald Carl Kotchian was born July 17, 1914, in Kermit, N.D., but grew up in Long Beach, where he attended Long Beach Junior College, now Long Beach City College, before graduating from Stanford University with a bachelor's and master's in business administration. His family said Kotchian never liked "Archibald" and preferred Carl or A.C.
A certified public accountant, Kotchian briefly worked for Price Waterhouse & Co. in Los Angeles before joining Vega Airplane Co., a subsidiary of Lockheed Aircraft Co., in 1941.
He rose through the ranks at Lockheed and oversaw the upsurge in World War II aircraft production in Burbank and then later started up a new division in Marietta, Ga., that later became the production site for the C-130 cargo plane and the F-22 fighter jet.
Kotchian was named president of the firm in 1967 and until 1976 -- when forced to resign amid the bribery scandal -- helped oversee development of several notable aircraft, including the C-5 Galaxy military transport, the SR-71 Blackbird spy plane and the L-1011 TriStar passenger jet.
But it would be the L-1011 that would spell the end of Kotchian's aerospace career. It also almost killed the company, financially and politically.
Kotchian spearheaded the development of the L-1011 jet, which Lockheed began building without a firm commitment from a single airline, a risky move that eventually cost the company billions of dollars.
In 1971, the U.S. government bailed out the company with a $250-million loan as rising development costs for the L-1011 and other military programs were about to put the company out of business. But a government panel set up to oversee the bailout began investigating whether Lockheed had violated its obligations by not disclosing foreign payments.
In a Senate hearing in 1976, Kotchian said he had traveled to Japan in 1972 to try to interest the Japanese in the jetliner. He said he was approached twice within his first day in Tokyo for payoffs of 500 million yen, or $1.7 million.
He said he made payments to representatives who made "clear" the money would end up in the office of Japan's then Prime Minister Kakuei Tanaka. Another was made to a consultant who said it was needed to gain the interest of an intimate of Tanaka, who was later convicted and sentenced to four years in jail stemming from Kotchian's testimony.
In his memoir, Kotchian wrote that by the time the deal was completed, payments had been made to officials of the airline and six other politicians. Lockheed eventually sold 21 planes, worth $430 million at the time.
In all, Kotchian said he made $12 million in payments to Japanese politicians and businessmen.
"If Lockheed had not remained competitive by the rules of the games as then played, we would not have sold the TriStar's jumbo jet and would not have provided work for tens of thousands of our employees or contributed to the future of our corporation," he said.
During the Senate hearings, Kotchian also said Lockheed had bribed government officials in Italy and the Netherlands in the 1960s to sell military fighter jets.
"We don't condone this but . . . it was the only way we could sell aircraft," Kotchian said.
Kotchian's son, Robert, said Friday he never sensed that his father had any regrets or remorse about the payoffs.
"He felt he did the right thing for the good of the company," Kotchian said. "He felt that if he didn't do it, somebody else would. I think he was stuck between a rock and a hard place."
In addition to his son, Kotchian is survived by two grandchildren. Kotchian's wife, Lucy Elizabeth Carr, died in 2002.
No services are planned, and interment will take place at the Bohemian Cemetery in Lidgerwood, N.D., where many of Kotchian's family members are buried.
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