Cubic Denies Bribery Claims in Holders’ Suit
The chairman of Cubic Inc., the San Diego defense firm searched as part of the Pentagon procurement scandal, defended his company on Friday against charges made in a lawsuit that top officials illegally used two consultants to bribe Pentagon officials.
The lawsuit filed in San Diego on Thursday by two Cubic shareholders is “frivolous in nature and contains completely unsubstantiated allegations,” according to a statement issued Friday by Cubic Chairman Walter J. Zable.
The suit contends that Cubic’s top officials illegally used two consultants to bribe Pentagon officials “in return for secret information or favorable treatment” in order to win defense contracts.
Chairman Frustrated
Zable fired back, saying “there is no indication from anyone . . . that these particular contracts, or any others at Cubic, are, in fact, being investigated. In fact, no one has accused the company, its directors or any of its officers of any wrongdoing whatsoever.”
Zable, along with his son, Cubic Vice Chairman Walter C. Zable, controls about 33% of the company’s outstanding shares. Zable, who has remained silent during the course of the investigation, said he was frustrated because “Cubic, like the other contractors involved, has been restrained from telling our story. Attorneys have advised all concerned not to speak out until we have all the facts at hand.”
The suit was filed nearly two months after the FBI seized a six-inch stack of documents during a six-hour search of two offices at Cubic’s Defense Systems subsidiary. That search was part of the nationwide investigation into possible defense procurement fraud.
In a related development on Friday, Cubic released a quarterly report to the Securities and Exchange Commission that acknowledged the company’s role in the ongoing investigation. The SEC has reminded defense companies that they have an obligation to disclose to shareholders how the probe might affect their operations.
Cubic said in its SEC report that the Justice Department “has informed Cubic’s attorneys that at this time neither the company nor any of its employees are targets of the investigation.”
