Wednesday October 31, 2001

CHICAGO - Northrop Grumman Corp. has been accused by the government of defrauding the Pentagon of tens of millions of dollars on defense contracts, including one to produce top-secret parts for the B-2 stealth bomber.

The government said in civil court papers filed last week that the defense contractor produced bogus inventory records and other documents to hide that it had inflated costs on contracts for producing radar jammers and other sophisticated electronic equipment.

The Chicago Tribune yesterday reported that federal prosecutors have also begun a criminal investigation. Assistant U.S. Attorney Linda A. Wawzenski declined to comment on the Tribune report.

Northrop spokesman Frank Moore denied the allegations yesterday and said federal prosecutors investigated a decade ago and brought no charges.

He added, "Northrop Grumman further believes that the allegations made by disgruntled former employees are baseless and is confident that it will prevail at trial." Moore would not comment on the report that a criminal investigation had been started again.

The U.S. attorney's office in Chicago filed its lawsuit on behalf of two whistle-blowers who say they were fired by the Los Angeles-based aircraft company in the late 1980s after contacting Pentagon criminal investigators and the FBI concerning fraud.

The electronic equipment included components not only of the batwing B-2s now in action over Afghanistan, but F-18 fighters and the B-1 and B-52 bombers, the government said.

The equipment is manufactured by a division of Northrop based in suburban Rolling Meadows, Ill.

The lawsuit says Northrop charged the government for scrapping more parts than it had originally purchased. It says whistle-blower James H. Holzrichter discovered the problem in 1988 while reviewing computer printouts.

The lawsuit also says Northrop executives tried to fix the problem with bogus documents.

Another whistle-blower, Rex A. Robinson, told the government that Northrop also billed the Defense Department for the time he and other employees spent waiting to be assigned to work, according to the lawsuit.

Robinson said that while he was in a "holding tank" he worked only about 50 percent of the time.

Under federal law, the whistle-blowers can collect three times the amount of the fraud plus a fine if the allegations are proved.