In August 1975 investigations by the United States government led Lockheed to admit it had made $22 million in secret payoffs.6 Subsequent Senate investigations in February 1976 made Lockheed's involvement with Japanese government officials public.7 Japan subsequently canceled their billion dollar contract with Lockheed.
In June 1979 Lockheed pleaded guilty to concealing the Japanese bribes from the government by falsely writing them off as "marketing costs."8 The Internal Revenue Code states in part, "No deduction shall be allowed . . . for any payment made, directly or indirectly, to an official or employee of any government . . . if the payment constitutes an illegal bribe or kickback."9 Lockheed was not charged specifically with bribery because the U.S. law forbidding bribery was not enacted until 1978. Lockheed pleaded guilty to four counts of fraud and four counts of making false statements to the government. Mr. Kotchian was not indicted, but under pressure from the board of directors, he was forced to resign from Lockheed. In Japan, Kodama was arrested along with Tanaka.