March 2, 2005
Titan Corp. to Pay $28.5 Million in Fines for Foreign Bribery
By TIM WEINER, NY TIMES

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The Titan Corporation, a leading military and intelligence contractor, will pay $28.5 million to settle criminal and civil charges that it bribed the president of Benin, government officials said yesterday.

The combined penalties are the largest imposed on a company in the history of the Foreign Corrupt Practices Act. That 1977 law bars American companies from bribing presidents, princes and potentates in the pursuit of overseas contracts.

Titan, with $2 billion in annual sales, mainly from military, intelligence and homeland security contracts with the United States government, pleaded guilty to three felonies before a federal judge in San Diego and will pay a criminal fine of $13 million. It also agreed to a $15.5 million settlement with the Securities and Exchange Commission.

The commission said Titan funneled about $2 million to the 2001 election campaign of Benin's incumbent president "at the direction of at least one former senior Titan officer based in the United States." It said Titan paid the money "to assist the company in its development of a telecommunications project in Benin."

Titan, which is based in San Diego and has about 12,000 employees, said in February 1999 that its president and chief executive officer, Gene W. Ray, had met with the president of Benin, Mathieu Kerekou, to announce plans for "a state-of-the-art communications system" for the country. Mr. Ray, 66, has been Titan's chief executive since the company was founded in 1981.

Mr. Kerekou, 71, took power in a coup in 1972. Benin, an emerging democracy in West Africa with a population of about seven million, has a per capita gross national product of about $400.

The S.E.C.'s complaint said that, from 1999 to 2001, $3.5 million flowed from Titan "to its agent in Benin, who was known at the time to Titan to be the president of Benin's business adviser." About $2 million went to the president's election campaign, the commission said, some of it to buy T-shirts bearing the president's picture. President Kerekou was re-elected in March 2001 with 84.1 percent of the vote in a race against his own minister of state. The S.E.C. said yesterday that Titan's misconduct was global: though Titan does business in more than 60 countries, the company has had no policy on overseas bribery and has failed to oversee its 120 international agents. It said Titan had falsified documents filed with the United States government, underreporting commission payments in its business dealings in France, Japan, Nepal, Bangladesh and Sri Lanka.

Paul R. Berger, an associate director at the S.E.C.'s enforcement division, said in an interview that the evidence in the case showed "the virtually complete lack of internal controls" at Titan, along with the company's inability to operate with policies and procedures that would help them detect and deter such problems.

David W. Danjczek, Titan's vice president for compliance and ethics, said: "We are relieved that this chapter in the company's history is drawing to a close." Titan said it hired Mr. Danjczek in September to instill ethical behavior at the company after the wrongdoing was discovered.

Titan's stock soared eightfold to more than $40 in the telecommunications boom, but was battered in the bust, and since the 2001 attacks on the United States the company has concentrated on contracts with American military, homeland security and intelligence agencies, including supplying translators at the Abu Ghraib prison in Iraq.

Shares of Titan rose 75 cents, to $17.35. Titan Wireless, the unit that operated in Benin, is now defunct.

Titan said last year that it would set aside up to $32 million to resolve the S.E.C. and Justice Department inquiries, compared with the $3 million it originally reserved.

The bribery investigation forced the Lockheed Martin Corporation to scuttle its plans to acquire Titan. Although the bribery in Benin ran from 1999 to 2001, the commission said, Titan affirmed in a merger agreement with Lockheed on Sept. 15, 2003, that it had not violated the Foreign Corrupt Practices Act.

Until yesterday, the biggest penalty imposed under the act was the one imposed on the Lockheed Corporation, Lockheed Martin's predecessor, which pleaded guilty in 1995 to a felony count of conspiracy for bribing an Egyptian legislator. It agreed to pay a $24.8 million penalty, including a $21.8 million fine and a $3 million civil settlement.

The Titan Corporation Website

The Titan Corporation Reports Record Revenues

In re Titan, Inc. Securities Litigation