Loss of contract took Semtek by surprise

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A senior executive at the Massachusetts startup that’s suing Bethesda-based aerospace giant Lockheed Martin Corp. for allegedly interfering with a contract it had signed with a Russian company spoke yesterday in court about how he found out that his firm had been frozen out of the multimillion dollar project.Giving evidence for the plaintiffs on the second day of trial at Baltimore City Circuit Court, James L. Newkirk, executive vice president of Semtek International Inc., explained how his company had signed several agreements in the early 1990s with Merkuriy Ltd., the firm that controls Russia’s military satellites.Semtek’s plan was to lease access to Russian satellites to Western commercial interests at a time when the former Eastern Bloc was first opening up to foreign investors.“We intended to do long-term business with the company,” Newkirk testified. “We thought it would be profitable for both parties.”However, in mid-1994, Newkirk alleged, Martin-Marietta (which a year later merged with Lockheed to form Lockheed Martin) entered onto the scene, negotiating with the Russians through another company, Transworld Communications Inc.Newkirk said he first heard Martin-Marietta mentioned in May 1994, several months after Semtek began preparing a business plan and talked to potential investors and consultants about its joint venture with Merkuriy.Initially, Newkirk testified, Semtek was told by Pyotr Sivirin, the executive director of Merkuriy, that Martin-Marietta would only be an investor. Semtek did not realize the deal was in jeopardy, even when Sivirin postponed a meeting in July 1994, saying he had been unable to obtain a visa.Semtek finally approached Martin-Marietta to ascertain its position and several meetings were held in July of that year.Newkirk said it was at this point that Richard Millman, who runs Transworld, told Semtek that he had a contract with Merkuriy.“There was a direct conflict,” said Newkirk.Finally, on August 18, 1994, Sivirin told Semtek the deal was off, Newkirk said.“I received a fax … in which he appeared to repudiate our agreements,” he said.Martin Marietta maintains that it had no direct contact with the Russians and was only involved through its relationship with Transworld.Newkirk was still testifying at press time yesterday and is expected to face cross-examination from Lockheed’s lawyers today.The trial is expected to take three weeks.