U.S. defense contractor Titan Corp. has pleaded guilty to making illegal payments to a presidential election campaign in Benin in hopes of winning higher fees for a project it was developing in the West African nation, federal regulators said Tuesday.
The San Diego-based company has agreed to pay a total of $28.5 million to settle both criminal proceedings brought by the Department of Justice and civil charges by the Securities and Exchange Commission, regulators said.
The case prompted the SEC to issue general guidance to all companies about anti-bribery and other issues dealing with the Foreign Corrupt Practices Act, putting companies on notice that enforcement action can result if disclosures don't measure up.
According to the SEC, Titan in 2001 funneled about $2 million through an agent to the election campaign of Benin's then-incumbent president, Mathieu Kerekou.
At the time, Titan was developing a telecommunications project in the former French colony and was seeking government consent for a project management fee hike.
A former Titan officer directed the agent to invoice the the payments falsely as consulting services and arranged for them to be spread over time in small increments, the SEC said.
The SEC said its probe is continuing.
Titan and its attorneys could not immediately be reached for comment.
Titan shares closed 75 cents higher, or 4.5 percent, at $17.35 on the New York Stock Exchange on Tuesday.
Titan was accused by authorities of failing to properly check the background of the agent, who was business adviser to the Benin president.
Some of the funds paid to the agent went to reimbursing him for buying T-shirts with the president's picture and instructions to vote for him in the election, the SEC said.
Titan from 1999 to 2003 improperly recorded payments, directed agents to falsify invoices and failed to maintain an effective system to detect Foreign Corrupt Practices Act violations, even though the company uses more than 120 agents and consultants in more than 60 countries, the SEC said.
In addition to the Benin matter, Titan was accused of falsifying documents in Nepal, Bangladesh and Sri Lanka, according to the SEC complaint.
Titan agreed to pay a $13 million criminal fine and another $15.5 million to settle SEC allegations, without admitting or denying any wrongdoing.
The SEC cited a September 2003 merger agreement between Titan and Lockheed Martin Corp., in which Titan said it was not in violation of the Foreign Corrupt Practices Act. The proxy statement was amended after authorities found potential violations.
Lockheed terminated the merger in June 2004.
