Titan Pleads to Bribery Charge

The San Diego company will pay $28 million to settle charges it paid off a Benin politician.
By Matthew Goldstein ,

Defense contractor

Titan

(TTN)

pleaded guilty Tuesday to violating a federal law that bars U.S. companies from paying bribes to foreign officials.

The San Diego, Calif.-based company, in pleading guilty to a single felony count, agreed to pay $28 million in fines to federal prosecutors and securities regulators.

Titan, which illicitly funneled $2 million to the election campaign of an African politician, was found guilty of violating provisions of the Foreign Corrupt Practices Act. Titan made the payments in order to win support of the government of Benin for a telecommunications project the company was working on in the West African nation.

The joint investigation by the Department of Justice and the

Securities and Exchange Commission

ultimately scuttled a deal for

Lockheed Martin

(LMT) - Get Report

to acquire Titan. Lockheed formally called off the proposed $1.6 billion acquisition last summer, after Titan had been unable to negotiate a plea bargain with federal prosecutors in a timely fashion.

Shares of Titan rose sharply after the plea agreement with prosecutors was announced. In midafternoon trading, the stock rose $1, or 6%, to $17.62. Lockheed had proposed buying Titan for about $20 a share.

The settlement with the Justice Department and the SEC includes a $13 million criminal penalty and $15 million in disgorgement of profits.

In bringing its action against Titan, the SEC alleged that the company's proposed merger agreement with Lockheed was misleading because Titan said it had not violated any provisions of the anti-foreign-bribery law.

The SEC said the action against Titan should serve as a warning to other companies that they can be held liable for making misleading statements in contractual agreements.

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