But it is not only the diplomatic establishment which has to change traditional attitudes. The Lockheed scandal presented dilemmas for the Congress as well. The Senate Subcommittee, which I chaired, was charged with investigating the global role of multinational corporations and its impact on our foreign policy. Lockheed's misconduct, if revealed, might severely strain relations with Japan. Yet, Lockheed's pay-offs, and those of Northrop, Exxon, Gulf and others, convinced the subcommittee that legislation was essential if the wrongs we discovered were to be effectively inhibited. In order to provide a basis and secure the necessary support for legislation, the subcommittee concluded, in the Lockheed case, as with Gulf, Northrop and Exxon, that public hearings were mandatory.

But it was also apparent that disclosure of such widespread bribery abroad could disrupt many a government--including such frontline allies as Japan, the Netherlands and Italy, as well as certain key governments in the Middle East. We had to reconcile the need for obtaining public and congressional support for corrective legislation with a recognition that the foreign government potentially involved must be treated with fairness and restraint.

In the Japanese case, Lockheed's intention to pay Japanese officials in order to advance the sale of the Tristar was clear from the sworn testimony and documentary record in the subcommittee's possession. But because of the absence of incontrovertible proof that payments had actually been received by the intended officials, the subcommittee had to proceed with caution. Special procedures were devised.

From the beginning of the inquiry, the subcommittee had adopted the view that maximum public disclosure would be the rule, but that it would not reveal the names of foreign government officials accused of receiving the money. However, the identity of the country in which the payments were made would be disclosed. If the foreign government wished to pursue the matter, the subcommittee stood willing to cooperate. But, since a congressional committee should not deal directly with a foreign government, we decided to transmit requested documents and testimony through the Department of State.

In the Lockheed case, the subcommittee specifically informed then-Under Secretary Robert Ingersoll, a former U.S. Ambassador to Japan, that it intended to reveal in public hearings the identity of Kodama, Lockheed's secret agent in Japan, as well as the fact that certain unnamed Japanese officials were alleged to have received payments. Ingersoll stated that the Department of State had no objection to these disclosures and did not wish to be heard on the subject.

The subcommittee proceeded with public hearings on February 4 and 6; Mr. Kotchian testified to payments by Lockheed to Kodama and Japanese government officials, as well as payments intended for high government officials in the Netherlands and Italy. In line with its policy, the subcommittee did not make public the names of the intended recipients. But, on the request of Japan and the other governments involved, the evidence in the subcommittee's possession was transferred to the State Department which used as its agent in negotiating with the foreign governments the Department of Justice.

The results, I suggest, have been salutary. Reacting to the disclosures in the Lockheed hearings, Congress passed a Foreign Military Sales Bill, which incorporated provisions Senator Percy and I authored, requiring public disclosure of all commissions, fees and other payments to foreign agents engaged in promoting the sale of arms. In addition, the Senate passed a bill sponsored by Senator Proxmire, making the payment of a bribe abroad a crime under U.S. law. Although Congress adjourned before the House had an opportunity to consider the bill, it seems certain of passage in the next session.

Moreover, the New York Stock Exchange has proposed a requirement that listed companies have audit committees composed of outside directors to review, among other matters, questionable overseas payments, a proposal which the Wall Street Journal, in an astonishing editorial, implied was Marxist when Senators Pearson, Clark and I first proposed it.

In the Japanese case, fears were expressed that disclosure of Lockheed's misconduct in that country would endanger its internal political stability and longstanding friendship with the United States. But this paternalistic view underestimated the vitality of Japanese democracy. As the well-known columnist Joseph Kraft wrote recently:

When Lockheed surfaced there was a school at the State Department that sought to suppress, or at least muffle, the scandal. The belief was that Japan could not take an exportation of American morality without falling back into the bad old ways.

In fact, nothing of the sort has occurred. The Japanese have handled the prosecution in a careful way. Newspapers and T.V. have done their stuff as guardians of the national morality. The public opionion polls show that ordinary people support the governments' effort to get at the truth. There have even been moves toward writing a new campaign finance law.

Let me close with a final reflection upon the Lockheed affair. What I have tried to describe to you is the way in which the Lockheed case illustrates a web of entanglement: a major U.S. defense contractor seeks its financial salvation in sales abroad; it penetrates and corrupts the internal politics of major allies of the United States; our own government admits that this fraudulent and corrosive behavior has taken place outside its knowledge and control; and, when a congressional committee proposes to expose the sordid facts and legislate to prevent their repetition, we are told that to do so would endanger the security of the United States.

The Lockheed case was, indeed, a sensation, more so in Japan and Western Europe than in the United States. We do live in an interdependent world. But that is no reason to tread lightly in cleaning up the corrupt practices of multinational corporations. There is every indication that instead of incurring the animosity of other peoples, our investigation, disclosure and enactment of remedial legislation engendered admiration abroad. Japan, the Netherlands and others opened their own investigations based upon the initial disclosures of our subcommittee. The results have not been destructive, but regenerative, for nothing saps the confidence of people in their government more than the conviction that official corruption is a way of life, never to be revealed or remedied.

The Lockheed case tells us that the international community is far more durable and mature than some would have us believe and that America does best when it follows its own best instincts.

Sen. Frank Church [D-Idaho], chairman of the Senate subcommittee on multinational corporations, spoke to a group of corporate executives and Harvard faculty from these prepared remarks.