Titan Pleads Guilty in Bribery

San Diego-based defense contractor Titan Corp. pleaded guilty Tuesday to three felony counts and agreed to pay $28.5 million to settle allegations that it tried to influence elections in the West African nation of Benin.

Titan pleaded guilty to one count of bribery under the Foreign Corrupt Practices Act, one count of falsifying company books and one count of filing a false tax return, the U.S. attorney’s office in San Diego said.

The contractor will pay a criminal fine of $13 million and serve three years of supervised probation. It also agreed to pay $15.5 million to settle a related civil suit filed by the Securities and Exchange Commission. Titan neither admitted nor denied guilt in the SEC case.

The size of the combined penalty, which prosecutors called the largest ever for violating the Foreign Corrupt Practices Act, “demonstrates both the severity and scope of the misconduct in this case,” U.S. Atty. Carol C. Lam said. “All United States companies should take note that attempting to bribe foreign officials is criminal conduct and will be appropriately prosecuted.”

In a statement, David W. Danjczek, Titan’s vice president for compliance and ethics, said that “we are relieved that this chapter in the company’s history is drawing to a close.”

The SEC said a former senior officer of Titan funneled $2 million to the election campaign of Benin’s president, Mathieu Kerekou, in 2001. Some of the money paid for T-shirts bearing Kerekou’s likeness and instructions to vote for him in the coming election.

At the time, Titan was developing a wireless telephone network in Benin. In exchange for the payments, which were falsely invoiced as consulting services, the government agreed to increase Titan’s management fee on the project from 5% to 20%, the SEC said. The company later said the 20% fee was worth at least $9.1 million.

Kerekou, who was reelected in a landslide, is believed to have known nothing of the payments.

The investigation into the illegal payments first came to light more than a year ago when Bethesda, Md.-based Lockheed Martin Corp. was reviewing Titan’s books as part of a planned acquisition of the company, which is the largest supplier of translators to the U.S. Army.

As the bribery probe dragged on without a settlement, Lockheed’s initial $1.8-billion offer for Titan was whittled down to $1.66 billion. The deal was eventually scrapped in June, when Titan failed to meet a deadline with the Justice Department.

It’s not clear whether Tuesday’s settlement would revive Lockheed’s interest in Titan or perhaps attract another bidder. Lockheed executives couldn’t be reached for comment.

Titan shares rose 75 cents, or 4.5%, to $17.35 on the New York Stock Exchange on Tuesday.

“This was something that Titan needed to resolve,” said Cynthia Coulton, an analyst at RBC Capital Markets. “Now it’s back to business as usual, the way things were before Lockheed came along.”

The Foreign Corrupt Practices Act prohibits public companies from making illicit payments to foreign government officials and political candidates and requires them to adopt measures to discourage bribery by their employees or agents.

Titan’s penalty under the act surpasses the previous record of $24.8 million paid by Lockheed after it admitted guilt in 1995 for trying to bribe an Egyptian politician to win an order for transport planes.

Times wire services were used in compiling this report.