Toshiba: Soviets Already Had Technology : French Submarine Equipment Found in USSR, Company Claims

WASHINGTON —  Toshiba Corp., fighting to keep from being thrown out of a $2.3-billion share of the U.S. electronics market over the sale of sensitive submarine technology to the Soviets, said Wednesday that its workers had found similar equipment made by a French company in the Soviet Union.

The equipment in question enables the Soviets to manufacture submarine propellers that are virtually noiseless, a key factor in anti-submarine warfare.

According to an investigative report issued Wednesday by Toshiba at a news conference, a company named Forest Line, a subsidiary of the French firm Machines Lourdes Francaises, may have been the first to sell the Soviet Union milling machines that grind and shape submarine propellers.

Saw French Machines

U.S. government sources noted, however, that the Soviet submarines did not become “silent” until after the sale of the eight high-technology milling machines made by a Toshiba subsidiary, suggesting that the French technology was not sufficiently sophisticated to make the specially engineered, virtually noiseless propellers.

“The French equipment was already there, but the submarines started to get silent only after the Toshiba stuff went in,” a government source said.

Toshiba employees said they saw Forest Line machines when they installed equipment in the Soviet Union in 1983, according to the report, which was prepared by Mudge Rose Guthrie Alexandre & Ferdon, an American law firm hired by Toshiba.

When questioned recently about the possibility of Forest Line’s involvement in the sale of submarine equipment to the Soviets, Machines Lourdes Francaises officials said that they had no knowledge of such transactions. However, they did not rule out the possibility that such a sale could have been made by one of the firms that make up MLF before they merged to form the corporation five years ago.

“If there was any irregular activity by one of the companies that became MLF in 1982, then it could only have involved equipment that was ordered and delivered in the 1970s,” MLF Managing Director Gerard Borgneit said. “I have no knowledge of this, since I joined MLF at the time it was created.”

Senate Calls for Restrictions

Toshiba said in the report that no Toshiba Corp. employee “either played a role in or had any knowledge of the illegal sales (by the subsidiary firm) of any of the eight propeller milling machines to the USSR.”

The Senate, angered by disclosures that the Soviet Union had obtained technology to design and build a new group of quietly operating submarines, has included in its trade bill a provision forbidding the importation of Toshiba goods for as long as five years. House members share the Senate’s concerns, but their chamber has no pending legislation calling for Toshiba penalties.

A House-Senate conference called to reconcile the two chambers’ differing trade bills will decide this month whether to retain the tough sanctions against Toshiba, which sells television sets, microwave ovens, video-cassette recorders, copying machines, computers and equipment for hospitals and power companies.

If children do something wrong, “we don’t punish the parents or the siblings or the cousins,” said Burton Wides, an attorney for Toshiba America Inc., the U.S. subsidiary that is leading a campaign by Toshiba employees, customers and suppliers against the proposed congressional ban on the parent company’s merchandise.

Three of Toshiba’s four principal U.S. business units are headquartered in Orange County. At its manufacturing facility in Irvine, Toshiba makes telecommunications devices, sophisticated medical equipment and laptop computers. The company employs about 500 Orange County residents.

Toshiba, which has $13 billion in annual sales worldwide, gives considerable autonomy to its subsidiaries and said that it had no knowledge that one of them, Toshiba Machine Co., was violating Japanese law by selling the propeller milling machines to the Soviet Union. The United States, Japan and other allies have a policy of restricting sales of militarily useful equipment to Communist countries.

As part of a $17-million transaction in 1983 and 1984, Toshiba Machine provided the milling equipment to grind and shape the submarine propellers, and a Norwegian firm, Kongsberg Vaapenfabrik, made the computer-driven controller to run the equipment.

A small group of top officials at Toshiba Machine decided to carry out the sale and arranged for false reports to be filed with Japanese government agencies, according to the Toshiba Corp. report. The employees filed more false reports when the Japanese government began an investigation.

In a related development, two executives of Tokyo Aircraft Instrument Co. resigned after one of their subordinates allegedly sold company technical information to Soviet officials, a spokesman said Wednesday in Tokyo. Kosaku Shibata, executive director of the firm, and Nobuo Itakura, head of its operations department, resigned Aug. 31.