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Raytheon Survives Scandal in Brazil
Multinational Monitor / October 1996

By Larry Luxner

Just as IBM sinks deeper and deeper into scandal over its questionable business practices in Argentina, another U.S. multinational -- Raytheon Co. -- is quietly going ahead with its own controversial project in neighboring Brazil, after over-coming similar allegations of bribery and corporate misconduct.

In May, the Brazilian Senate authorized financing for a $1 billion contract with Raytheon Co. of Lexington, Mass., a leading engineering and defense conglomerate. That gave Raytheon the legislative green light to implement its Amazon Vigilance System (known by the Portuguese acronym SIVAM), a radar surveillance system designed to protect Brazil's Amazon resources from illegal mining, logging and drug smuggling, and to give Brazil control over its own airspace.

"SIVAM will provide a wide range of benefits for the people of Brazil and help Brazil ensure the sustainable development of the Amazon region," said Raytheon Vice-President James W. Carter in a prepared statement. "SIVAM's network of ground-based and airborne radars, environmental monitors, optical, infrared and satellite-based sensors, and weather radars and stations will be the core of the most modern environmental surveillance system in the world."

Others were less enthusiastic.

Sen. Gilberto Miranda, chief of the Senate Commission on Economic Affairs, called SIVAM obsolete and expensive compared to other systems he'd seen in the United States, Russia and Ukraine, and said it won't provide total coverage of the Amazon region.

Miranda himself became embroiled in scandal last year, when police released wiretapped phone conversations in which Julio Cesar Gomes dos Santos, an adviser to Brazilian President Fernando Henrique Cardoso, allegedly suggested that José Alfonso Assumpcão -- a businessman who represents Raytheon -- bribe Miranda to get him to stop holding up the project by delaying authorization for its financing.

Raythen denied a bribe was ever offered, saying that "at no point in the transcripts does Gomes dos Santos recommend or suggest that Assumpcão pay a bribe to Sen. Miranda." In a statement issued shortly after the allegations surfaced, the company insisted that it "has not, and never will, condone the payment of bribes or gratuities to government officials, and [that] no such payments have been made by Raytheon in connection with the SIVAM program."

Even so, the allegations of influence-peddling forced the resignation of three top Brazilian officials, including Aeronautics Minister Mauro Gandra. And last December, President Cardoso criticized the U.S. ambassador in Brasília, Melvyn Levitsky, after the diplomat told a journalist that shelving the deal without a valid reason would hurt bilateral relations as well as future foreign investment in Brazil.

Raytheon won the SIVAM contract, it says, "by providing the best technology, the lowest price and the best financing." The $12 billion conglomerate defeated three other contenders including Unisys, France's Thomson and the German-Italian consortium DASA/Alenia.

Raytheon spokesman Barry French said in a phone interview that within two to three months, Raytheon will finalize all its agreements with subcontractors -- including Infranav, Embraer and IBM do Brasil -- and begin the civil works part of the project, preparing physical sites for the installation of equipment. Besides keeping tabs on illegal mining, logging and drug smuggling, SIVAM also promises to improve air safety, increase the accuracy of weather forecasting, help control epidemics and assist in land management.

French said that SIVAM became controversial "because it was highly competitive program and because a huge amount of money was at stake. That often generates all kinds of completely unsubstantiated allegations, which is extremely unfortunate.

"Our program was reviewed and investigated by a number of bodies in Brazil, including the Chamber of Deputies, the Senate and the Federal Audit Commission," he added. "All of them said there is no reason why the program should not go forward, and gave it a clean bill of health. We in the program itself have been scrutinized over and over, and there's been absolutely no evidence that anybody at Raytheon did anything wrong."

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