Hidden Expenses Called ITT ‘Policy’ : Charge: A former employee of ITT Gilfillan says the defense firm veiled names of people entertained at company expense.

A former employee of ITT Gilfillan, a Van Nuys-based unit of ITT Corp., claims that he was only following company policy when he approved expense statements of another employee who, according to federal prosecutors, illegally entertained Air Force officials to obtain confidential information about military contracts that could have been worth $236 million.

Dougal W. S. Prins, ITT Gilfillan’s former director of field marketing in Washington, charged in court papers that the defense contractor had a policy of veiling the identities of people who were entertained at ITT Gilfillan’s expense.

An attorney for ITT strenuously denied Prins’ charges.

In October, 1988, ITT Gilfillan, which makes radar systems, pleaded guilty in federal court in Boston to one count of conspiracy to defraud the government. The U.S. Attorney in Boston charged that ITT Gilfillan obtained confidential information on Air Force radar programs by giving illegal gratuities to Air Force officials.

The case predated the government’s nationwide Operation Ill Wind investigation of Pentagon procurement fraud, but it was seen at the time as a prototype of the government’s arguments in those cases. ITT Gilfillan claimed it was forced to enter the guilty plea when Edward M. Vicenzi, a former ITT Gilfillan marketing representative, earlier pleaded guilty to a similar charge.

The accusation by Prins comes as part of a libel suit he filed last June against ITT Corp. in U.S. District Court in Washington in connection with a newspaper story that said Prins was fired by ITT Gilfillan.

Prins was laid off in 1987 by ITT Gilfillan in a company restructuring, before ITT Gilfillan and Vicenzi were indicted, according to Prins and the company. Prins was one of several ITT Gilfillan executives mentioned in the case, but he was not indicted.

Vicenzi had plied officials at a Massachusetts air base with $15,000 worth of meals, entertainment and liquor in 1983 and 1984 to obtain Air Force documents and data that might be used to bid on government contracts, the U.S. Attorney’s office in Boston charged.

As one of Vicenzi’s supervisors, Prins approved Vicenzi’s expense vouchers for some of the meals and other gratuities, even though Vicenzi didn’t use the names of officials he was entertaining, according to documents filed by the U.S. attorney when ITT Gilfillan entered its guilty plea.

Prins says in his suit that ITT Gilfillan policy called for names to be omitted from the vouchers for the sake of “confidential reporting procedures.”

And in an affidavit in the libel case dated March 15, Prins’ superior at ITT Gilfillan, Peter Canepa, further charged that ITT Gilfillan policy was either “to create a fictitious name or to identify the individual’s organization or business affiliation, but specifically not to identify the individuals by name.”

“That is preposterous,” ITT countered in a filing that cited sections of the company’s “Code of Corporate Conduct” that termed accurate expense reporting a “moral responsibility.”

Prins claims he was libeled by ITT Gilfillan and the Boston Globe newspaper in an Oct. 25, 1988, Globe story on the ITT Gilfillan guilty plea.

The article quoted an ITT spokesman as saying Prins had been fired. Prins claims in his lawsuit that the statement was libelous because he was actually laid off as part of an ITT Gilfillan restructuring move, while the article implied Prins “had been fired by ITT because he had engaged in wrongful, possibly criminal, conduct,” according to his suit.

Both ITT Gilfillan and the Globe deny libeling Prins. ITT claims the Globe misquoted the ITT spokesman--a charge the Globe denies.

Prins, 56, now works as an engineer for a Virginia company, and is represented in his libel case by his daughter, attorney Jenelle C. Prins-Stairs, because he “simply doesn’t have the money” for typical lawyers’ retainers, she said.

Meanwhile, in a related case, Prins’ former boss Canepa is suing ITT in Los Angeles Superior Court. Canepa and another ITT Gilfillan employee, Robert McBride, last year filed suit against ITT for wrongful termination when they were fired for allegedly approving improper expense statements.

Canepa and McBride also claimed in their suit that they were following “methods and procedures utilized by other ITT and Gilfillan supervisory personnel.”

McBride settled with ITT in January, and Canepa may soon settle, too, according to an attorney for the two former employees, William C. Hansen, who declined to disclose the terms of McBride’s settlement. An attorney for ITT declined to comment on the case.