items that were provided to the Navy for Admiral Rickover's use during sea trials of submarines constructed at Electric Boat.

The other category consisted of gifts made at ceremonial functions at Electric Boat, principally the keel layings and launchings of submarines.

Company counsel has advised me that it is a breach of the gratuities clause in General Dynamics' submarine contracts to offer or give a gratuity to an officer or employee of the United States Government to obtain a contract or to secure favorable treatment in the awarding, amending or making of determinations concerning the performance of a contract. No gift or any other thing of value, including the jewelry in 1977, was ever given to Admiral Rickover by General Dynamics with the intent that is forbidden by the gratuities clause, as described above. There is no evidence that would refute that statement. I believe this subcommittee itself announced to the press its own conclusion that Admiral Rickover did not seek favors with any intent to be improperly influenced and, further, that he never was improperly influenced. We agree with those obvious conclusions.

A very major portion of the total of alleged gratuities given to Admiral Rickover was not gifts to him at all, but involved provisions supplied by General Dynamics to the Navy for sea trials of submarines under construction at Electric Boat. The items put on board vessels for these events were of the same nature as provisions for the Admiral supplied by the Navy on sea trials departing from a Navy yard. They were for his comfort, convenience and entertainment. The provisions were requested by the Navy, identified in a list prepared by the Navy and given to Electric Boat. The list, in existence in one form or another for many years, even assumed its own identity. It was known as the "Rig for Rickover List." It was commonly known within the Navy and at Electric Boat that items on the "Rig for Rickover List" were expected to be provided by Electric Boat at the time of Electric

Boat's submarine sea trials.

They were, in effect, contract

extras. Any suggestion that they individually or collectively were gratuities to the Admiral, whether because he made known to the Navy the items he wanted included in the list or otherwise, is just plain wrong.

Another substantial category of alleged gratuities was the gifts given by the company in connection with ceremonies at Electric Boat, such as submarine launchings. This category, as best we can determine, represents the greatest volume of the total of gratuities alleged to have been given the Admiral. The great majority of those gifts was given to numerous persons invited to the ceremonial functions. They were not at all gifts to Admiral Rickover, but were gifts to the persons who received them. It is true that Admiral Rickover wanted gifts given at ceremonial functions. He recommended to whom they should be given. He sometimes would ask for additional quantities of certain items which were to be given to selected persons after the event. He was the person who frequently actually handed the gifts to the recipients. In no way do these facts change the obvious, that the ceremonial events were Electric Boat's affairs at which Electric Boat was the host and at which Electric Boat was the one giving the commemorative items, and, second, that the items were gifts from Electric Boat to the guests in attendance and to the persons who later received them.

A launching is a major event in the life of a vessel. The giving of gifts at launchings is a centuries old tradition. Under Navy regulations relative to receipt of gratuities by Navy personnel, the acceptance of gifts at ceremonies such as launchings was specifically recognized as permissible. Not one shred of evidence exists to suggest that any Electric Boat commemorative gift was ever an illegal gratuity with the intent proscribed by the antigratuities clause or statute.

In addition to the foregoing principal categories, a variety of items, usually of minor value, were given to Admiral Rickover over a long period of years. These items were given in response to the Admiral's requests, which usually stemmed from his

eccentricities.

The Admiral was a unique person in his commanding position in the Navy's nuclear propulsion program. He was difficult. He was feared, but respected. He was impossible to get along with, but he already was legendary in the years while he was still in active service.

In this context, people both respected him and did what he told them to do or asked them to do. In the desire to get along with him, it was easier to comply with his petty or idiosyncratic requests and to get on with the building of submarines than to waste time resisting those requests. The gifts of the trivial items reflected a desire to get along with the Admiral so that they could get on with the job.

With respect to the gifts of the two pieces of jewelry, in the eyes of the individual who acceded to Admiral Rickover's request for them, they were a recognition of the Admiral's complaint that others less deserving than his wife had been sponsors at ceremonial events and had received nice gifts, while Mrs. Rickover had not. The pieces of jewelry certainly were not given with any intent or expectation to influence him or corrupt him.

Again, to constitute a violation of the gratuities clause or the statute, a gratuity must have been offered or given with the intent to obtain a contract or favorable treatment in the awarding, amending, or the making of determinations concerning the performace of a contract. It is totally absurd to suggest that a gratuity was ever given to Admiral Rickover with this intent.

The gratuities clause is, in essence, an antibribery provision. It forbids a gift to be given with an intent to corrupt. The reputation of Admiral Rickover universally is that be was incorruptible. One cannot make or offer a gift to corrupt when one knows that the person to whom it is given or intended to be given cannot be corrupted. To blemish Admiral Rickover's reputation with the suggestion that he might be corrupted is a disservice to a distinguished public servant. Yet, that is what the allegations made against this company and others in fact do.

In sum, the great majority of items, in volume and value, were given in connection with sea trials and launchings. All the other items were given in response to requests from Admiral Rickover and giving them was ill-advised. Although the gifts were not charged to the Government, they have embarrassed the company, the Admiral and the Navy. It is unfortunate that the Admiral asked for things, and it is unfortunate that the company gave them to him, but there was nothing corrupt in any of it.

4.

ALLEGED FALSIFICATION OF BOOKS AND RECORDS

TO CONCEAL ILLEGAL GRATUITIES

SUBCOMMITTEE ISSUE: It is alleged that the company has falsified its books and records to conceal gratuities.

GENERAL DYNAMICS POSITION: This is not true.

DISCUSSION:

The context of the allegation, as I understand

it, is that the company's records were falsified to conceal the purchase of a pair of earrings that were given to Admiral Rickover.

I am advised that the records of Electric Boat reflect payment of a jeweler's bill for $1,284, which bill showed that the company had bought 20 retirement watches, when, in fact, the bill was for 10 retirement watches and the amount due for the jewelry.

Why the jewelry was not listed on the invoice is not clear to me. It appears that the action was taken by the jeweler and an employee to satisfy instructions that the cost of the jewelry was not to be charged to any account that could result in a billing against any Government contract. I am inclined to accept that reason; and while Electric Boat books reflect the bill submitted, at least our employee knew that the bill itself did not accurately reflect what was bought.

Even as I believe the giving of gifts to Admiral Rickover was ill-advised, I disapprove of the manner by which the billing and payment for the jewelry was made. If the direct initiative for the incorrect invoice came from a General Dynamics employee, it was a mistake. If our employee simply concurred, that too was a mistake. I am confident that this was an isolated event.