Taken for a Camel Ride?

Scandals involving the business practices of multinational companies have become so commonplace that exposing them is emerging as a growth industry in itself. Last week when the London tabloid Daily Mail published an expose of an elaborate system of alleged bribes and payoffs maintained by Britain's big, government-controlled automaker, British Leyland Motor Corp., the shock waves reached the highest levels of Britain's shaky Labor government.

The story raised questions about the exposers as well as the exposed. British Leyland has some similarities to the Lockheed Aircraft Corp., the American company whose use of secret money to help win sales abroad touched off the current concern over international business ethics. Like Lockheed, the British auto giant (1976 sales: $4.9 billion) had to seek government assistance to keep it going; in 1975 the British government spent millions to buy 95% of the company's stock and rescue it from bankruptcy. Also like the American firm, British Leyland depends heavily on its export business. The Daily Mail charged that the firm has been "paying bribes and conspiring to defraud foreign governments on a massive scale in a desperate effort to win overseas orders."

British Leyland's "slushing," as the Daily Mail told it, amounted to $19.4 million in the 1975-76 financial year and is estimated at $42.5 million for 1977-78. Furthermore, the paper claimed to have evidence that these payments were authorized by a Cabinet member, Industry Secretary Eric Varley.

But the Daily Mail's evidence seemed highly questionable. One item was a photostat of a letter that the paper said had been sent by Lord Ryder, who as chairman of the National Enterprise Board oversees companies in which the government owns shares, to British Leyland Chief Executive Alex Park. The letter spoke of a "proposed method for dealing with 'special account arrangements' " that had been "nodded through" by Varley. The note went on to mention Ryder's concern about "the escalating trend of payment to 'contract agents,' " especially in the Middle East, and included a warning that the company should not be "taken for a 'camel ride' in such dangerous territory," evidently referring to shakedowns by unscrupulous go-betweens.

Secret Cash. At a tense session in the House of Commons, Industry Secretary Varley denied having "nodded anything through" that was connected with overseas payoffs. A British Leyland financial executive named Graham Barton later admitted that he had forged the Ryder letter. But he insisted that he had done so only to emphasize "what I regarded as a national scandal," and maintained that other documents cited in the Daily Mail story were genuine.

Those included what was described as a confidential company report prepared by Barton outlining a system for making "special payments" out of Switzerland to British Leyland distributors and agents. Among the abuses mentioned was a practice of overbilling distributors so that they would appear to have little taxable profit; secret cash payments would then be "suitcased" to them--literally carried in satchels--or deposited in numbered bank accounts in Switzerland or Liechtenstein.

Varley ordered Ryder to lead an investigation into the slush-fund charges, but pressure was mounting on the government to conduct a separate inquiry. In any case, the discovery of some noncontract payments abroad would hardly come as a surprise. Sir Fred Catherwood, chairman of the British Overseas Trade Board, candidly admitted last week that "in one-third of our markets, bribery is a way of life." Nonetheless, the Daily Mail's story could hardly have come at a more awkward time. Only two weeks ago, at the London summit, British officials joined representatives from the U.S. and other countries in solemnly pledging to help stamp out the very practices with which British Leyland is charged.

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