Cubic Settles Bribery Suit by Shareholders

Cubic Corp. has agreed to settle a multimillion-dollar shareholder suit that alleges that executives at the San Diego-based defense contractor used defense industry consultants to bribe federal officials to win lucrative contracts.

The proposed settlement, described in a recent letter to Cubic shareholders, includes $1.2 million for plaintiffs’ attorney fees but no monetary award for the shareholders who filed suit in 1988. The settlement also calls for Cubic to adopt “business ethics initiatives” designed to teach employees, executives and board members about the “ethical considerations of defense contracting.”

U.S. Magistrate Harry R. McCue is scheduled to review the proposed agreement during a Dec. 17 hearing in U.S. District Court in San Diego. Approval of the settlement would not mean that Cubic is acknowledging wrongdoing, according to the agreement.

Disgruntled shareholders filed the lawsuit shortly after federal investigators searched an office in Cubic’s San Diego-based Defense Systems division during the ongoing “Ill Wind” probe into defense procurement fraud.

No federal criminal or civil charges have been brought against Cubic or its executives as a result of that ongoing investigation, but Ill Wind has resulted in 39 convictions of defense executives and consultants elsewhere in the country.

Cubic spokesman Jerry Ringer on Wednesday declined to talk about terms of the proposed settlement, and attorneys for the shareholders who filed the suit were not available for comment.

Times Staff Writer John Broder in Washington contributed to this story.