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Will Ge's Engines Have To Prove Themselves In Court?


The Corporation: STRATEGIES

WILL GE'S ENGINES HAVE TO PROVE THEMSELVES IN COURT?

Are the General Electric Co. jet engines that power F-16 fighters and other military aircraft safe? GE thinks the question is absurd. But that hasn't stopped the U.S. Air Force from spending $200,000 testing parts of an F110-GE-129 engine at a plant in Mason, Ohio.

At issue is whether GE engine parts stand up to electromagnetic interference (EMI). Deputy Defense Secretary John M. Deutch ordered the study last June after the U.S. Justice Dept. joined a lawsuit against GE filed by Ian Johnson, a GE engineer. Johnson alleges that the company falsely told the government that thousands of its engines met bonding specifications for withstanding lightning--even electromagnetic pulses from a nuclear explosion--without parts overheating or failing. Without agreeing to the suit's merit, Justice joined the suit to protect the government's financial interest.

Though the Air Force isn't expected to reveal its findings for a few weeks, the legal jousting is heating up. The Justice Dept. disclosed in a court filing on Apr. 3 that it believes GE knowingly misrepresented and falsely certified that one GE engine line, the 129, met requirements. Justice, which has until Apr. 17 to amend the suit against GE, says it hasn't decided whether to pursue the case. GE denies the government's allegations. The company, which has been cooperating with the Air Force, says it knows the test results and they will confirm that the engines are safe. GE is pleased that Justice has narrowed its interest, so far citing only one engine line, involving several hundred engines. Johnson's suit covers 7,000 or more. The case goes to trial in federal court in Cincinnati on Sept. 12.

A member of a GE task force on bonding, Johnson says he first went through GE's internal review process to complain about possible problems. When he received no satisfaction, he says he hired attorney James B. Helmer Jr. in 1993. The pair then went to the Federal Bureau of Investigation, which wired Johnson to secretly tape conversations at GE for five months. Helmer says top GE engineers agree on tape that they weren't meeting the required standard. Using the False Claims Act, Johnson sued in December, 1993, on behalf of the government, and he could share in any judgments against GE. "I knew I was right," says Johnson, a native of Britain who went to work for GE in 1986.

FAA O.K. GE insists it thoroughly investigated Johnson's claims and contends that it met all contract specifications. Henry A. Hubschman, vice-president and general counsel at GE Aircraft Engines, argues that no GE engine has ever failed because of bonding problems and no customers were misled about what they were getting. He also asserts that no one suffered damages and that the military specifications are so ambiguous as to be "meaningless." What's more, the Federal Aviation Administration says it has found no bonding problems with commercial GE aircraft engines, as claimed in Johnson's suit.

Still, the allegations have caused GE no small headache. Attorneys at GE Aircraft Engines have spent enormous time on the case. The division can ill-afford another legal defeat. It pleaded guilty and paid $69 million in fines and penalties in 1992 after its employees helped divert foreign aid to an Israeli general and a GE executive in connection with military engine sales to Israel.

Even if the Air Force finds nothing wrong with GE engines, the suit isn't about to go away. The tests don't answer the question of whether GE made false claims, as the lawsuit alleges. That means Johnson could get his day in court after all.By Zachary Schiller in Evendale, Mhio


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