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Shareholders of Titan Approve Sale to Lockheed

SEC steps up scrutiny of bribery allegations involving the San Diego firm that could cause the deal to collapse.

June 08, 2004|Peter Pae | Times Staff Writer

Titan Corp. shareholders Monday approved the proposed sale of the San Diego-based defense contractor to Lockheed Martin Corp., even as federal regulators stepped up scrutiny of bribery allegations involving Titan that has put the deal at risk of collapsing.

The allegations have twice delayed the acquisition and led Lockheed to drop its purchase price from $1.8 billion to $1.66 billion.

On Friday, Titan also disclosed that it was informed by the Securities and Exchange Commission that the agency was reviewing the bribery allegations and might recommend civil penalties against the company.

Despite the latest disclosure, Lockheed and Titan executives said Monday that the two companies were still looking forward to consummating the deal, contingent upon Titan resolving the allegations.

"We are working with Lockheed to close this deal on schedule, but there are some issues outside the control of Lockheed and us," Titan Chief Executive Gene Ray told Bloomberg News after the vote.

Lockheed spokesman Tom Jurkowsky said the so-called Wells notice issued by the SEC was a "normal procedure" and involved Titan responding to SEC questions about the allegations as the agency considers taking civil action against the company.

"We are still interested in the acquisition as long as all the conditions of the agreements are met," he said.

Lockheed has told Titan that it has until June 25 to reach a plea agreement to resolve the probe by the Justice Department, which has been investigating allegations that Titan consultants made unlawful payments to government officials in Asia, Saudi Arabia and the African nation of Benin.

In addition, Lockheed has set a final deadline of Sept. 25 for Titan to complete its settlement with the Justice Department over its probe, or Lockheed can walk away from the deal.

Justice Department officials have declined to comment on the investigation, or whether there could be charges or a settlement. In March, Titan set aside $3 million to cover potential fines from the government probe.

Bethesda, Md.-based Lockheed, the nation's largest defense contractor, has been particularly interested in acquiring Titan because of its large pool of employees with government clearances to work on classified programs, a growth area within the defense industry.

But in recent months Titan has been hit by some unwelcome publicity. In addition to the bribery allegations, the firm has been locked in a billing dispute with the Army related to translation work in Iraq. And at least one Titan employee has been linked to abuse of Iraqi prisoners at Abu Ghraib prison near Baghdad.

Titan's stock closed Monday at $19.05, down 14 cents. Lockheed's shares rose 50 cents to $49.80. Both trade on the New York Stock Exchange.

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