Unisys Near Accord in ‘Ill-Wind’ Case

Unisys Corp. is close to an agreement on what may become the most expensive Pentagon fraud settlement ever for its role in a bribery and influence-peddling scandal, a spokesman for the nation’s third-largest computer maker said Monday.

Separately, Unisys said it agreed to sell its Timeplex Inc. communications unit for $207 million as part of an ongoing effort to cut its heavy debt through asset sales.

Spokesman J. Peter Hynes said that Unisys was close to an agreement with the federal government on the fraud case but that a deal had not been sealed. He declined to discuss dollar amounts, but there are indications that the final figure will exceed $100 million.

An announcement could come this week or next, according to a government source.

The Wall Street Journal in its Monday edition quoted what it called persons familiar with the case as saying Unisys has agreed to plead guilty to fraud and other felonies and pay what may be a record $190 million.

The Journal account said a 100-page file of charges against Unisys spells out a pattern of illegal corporate activity. The case reportedly marks the climax of “Operation Ill Wind,’ the longest and most successful investigation of military procurement corruption in recent times.

Unisys, headquartered in the Philadelphia suburb of Blue Bell, Pa., is a leading computer manufacturer and defense electronics giant that gets a substantial part of its business from government work. The company resulted from the merger of Sperry and Burroughs several years ago.

Like other computer makers, Unisys has been hit hard by the recession, which has cut profit and sales. Unisys also is still suffering from internal problems associated with the Sperry-Burroughs merger.

It was unclear how severely the reported settlement price in the defense scandal would hurt the company.

On the Timeplex matter, Unisys said the voice, data and video transmission firm will be sold to a joint venture of Ascom Holding AG, a Swiss company, and Mercedes Information Technologies Ltd. of Johannesburg, South Africa.

Unisys said it expects the sale to close by Aug. 31, subject to the approval of regulators and Timeplex’s business partners. Unisys and Timeplex will still serve their customers through a joint marketing agreement.

Speaking of the asset sale, Unisys Chairman and Chief Executive James Unruh said “it is the first large business segment that has been sold since the (asset-sale) program began.

“Aggressive efforts to sell other selected businesses for an acceptable price continues,” he said in a statement.

Last year Unisys announced that it would reduce its debt by $1.2 billion. The Timeplex sale brought debt reduction to $500 million, the company said.

Spokesman Hynes said, “We will not report a loss on (the Timeplex) sale. It could result in a very modest gain.”

As of March 31, Unisys’ outstanding debt was $3.9 billion, much of which was incurred to finance the 1986 Sperry-Burroughs merger.