PENTAGON STOPS NEW BUSINESS WITH TOSHIBA
The Pentagon has stopped approving
any new military contracts to Japan's Toshiba Corp <TSBA.T>
over a Toshiba subsidiary's transfer of submarine technology to
the Soviet Union, a senior defense official said.
    "We are not approving any new contracts (with Toshiba)
pending a satisfactory resolution of this entire matter," Deputy
Assistant Defense Secretary Stephen Bryen told Reuters,
confirming published reports on the matter.
    The temporary ban, which Bryen said has been in effect
unofficially since April, could cost Toshiba hundreds of mlns
of dlrs in electronics business with the Pentagon, including a
pending 100 mln dlr Air Force deal for small computers.
    Bryen said the U.S. military services have not signed any
contracts with Toshiba since April, when publicity arose over
subsidiary Toshiba Machine Co's alleged sale to Moscow of
milling machines which will grind silent submarine propellers.
    The Japanese government has been investigating the case and
it was previously reported that Toshiba Machine sold four large
milling machines to the Soviet Union in late 1983 or early 
1984.
    But Bryen told Reuters in an interview that the Pentagon
has now been informed by Japanese police that at least four
more smaller machines capable of making such precision
propellers were also sold to the Kremlin, apparently in 1984.
    "There may be even more beyond that. I don't know yet," Bryen
said.
    Toshiba is known to be seeking a U.S. Air Force contract
for 90,000 lap-top computers worth some 100 mln dlrs. The Air
Force has called for new bids on that contract, partly because
of the Toshiba investigation, Pentagon officials said.
    The officials, who asked not to be identified, said the
computer contract is also being re-advertised for bidding
because of changes in the dlr-yen ratio and questions raised by
U.S. import restrictions on some Japanese micro-electronics.
    Two days ago, three U.S. senators said they wanted a
temporary ban on all U.S. imports of Toshiba Corp products,
including television sets and videotape recorders.
    Senators Jake Garn of Utah, Richard Shelby of Alabama and
John Heinz of Pennslvania said they might seek an amendment to
a major trade bill being considered by the Senate this summer.
    The Navy is reported to be furious over the technology
transfer, and Pentagon officials have told Reuters that some of
the state-of-the-art propellers have already been mounted on
Soviet attack submarines.
    The Japanese government has already prohibited Toshiba
Machine Co from doing any business with the Soviet Bloc for one
year.
    The Norweigan state-own firm Kongsberg Vaapenfabrikk was
involved in the original technology transfer, providing vital
computer software to be used with the Japanese milling
equipment.
    But the Norweigan firm is now being reorganized and Bryen
said that it apparently was not involved in the alleged more
recent transfer of Toshiba Machine equipment.
 Reuter
