Risk & Compliance

Bribery Probes for Titan, Halliburton

Titan agrees to plead guilty regarding a presidential election campaign in Benin; the DoJ and SEC look into possible illicit payments connected to ...
Stephen TaubMarch 3, 2005

On Tuesday, defense contractor Titan Corp. agreed to plead guilty to criminal and civil charges and pay $28.5 million in fines stemming from payments to a presidential election campaign in the West African nation of Benin.

The U.S. Attorney’s Office for the Southern District of California and the U.S. Department of Justice, Fraud Section filed criminal charges under the Foreign Corrupt Practices Act (FCPA) and a tax charge against Titan. The company agreed to plead guilty to three felony counts and to pay a criminal fine of $13 million.

Titan also agreed to settle charges by the Securities and Exchange Commission that the company violated the anti-bribery, internal controls, and books-and-records provisions of the FCPA. The commission’s complaint alleged, among other things, that the San Diego-based company funneled about $2 million, via its agent in Benin, toward the election campaign of that country’s then-incumbent president.

Without admitting or denying the SEC’s allegations, Titan agreed to pay about $15.5 million in disgorgement and prejudgment interest. The company also agreed to retain an independent consultant to review its FCPA compliance and procedures and to implement the consultant’s recommendations.

Yesterday, Titan also announced that it reached an administrative settlement with the U.S. Navy, which will allow Titan to continue to bid, receive, and perform on U.S. government contracts.

Meanwhile, Halliburton revealed in its annual report that the Department of Justice and the SEC have broadened their investigations into the possible bribery of officials in another African nation.

The investigation concerns the construction and expansion of a natural-gas liquefaction complex and related facilities at Bonny Island, Nigeria, by a private limited liability company named TSKJ, which is 25 percent owned by Halliburton unit Kellogg Brown & Root.

Halliburton stated in its report that the SEC has issued a subpoena to A. Jack Stanley, who most recently served as a consultant and chairman of Kellogg Brown & Root, and to other current and former KB&R employees. The company stressed that in June 2004, it terminated all relationships with Stanley and another consultant and former employee of M.W. Kellogg Ltd.

“On the basis of this information, we and the Department of Justice have broadened our investigations to determine the nature and extent of any improper bidding practices, whether such conduct violated United States antitrust laws, and whether former employees may have received payments in connection with bidding practices on some foreign projects,” Halliburton stated in the filing.