US firm admits guilt in bribery probe connected to Benin president

An American defence contractor, accused of pumping $2 million into the re-election campaign of President Mathieu Kerekou of Benin, has pleaded guilty to charges of overseas bribery. US regulators said Titan Corp made the payments in 2001 at a time when the company was seeking a four-fold increase in the fees it charged for managing a telephone network in the West African country. The California-based company agreed on Tuesday to pay $28.5 million in fines to settle criminal and civil proceedings brought against it by the US Department of Justice and the Securities and Exchange Commission (SEC) in respect of the Benin payments and several other charges of falsifying documents in Nepal, Bangladesh and Sri Lanka. It was the largest penalty ever imposed under the US Foreign Corrupt Practices Act, which came into law in 1977 to stop American companies in pursuit of overseas contracts from bribing presidents, princes and government officials. Titan pleaded guilty in a Californian court to violating the anti-bribery provisions of the act, as well as falsifying its books, but did not confirm or deny any of the specific allegations made against it. The SEC, which regulates the activities of companies whose shares are traded on US stock exchanges, said Titan paid cash straight into Kerekou's campaign coffers in 2001 at a time when the president was seeking re-election for a second five-year term. SEC documents said some of the money was actually used to pay for T-shirts emblazoned with Kerekou's portrait and messages urging people to vote for him. Kerekou won the election in March 2001 with 84 percent of the vote in a lopsided second-round run-off. His two main challengers pulled out of the race in protest at alleged irregularities in the first round of voting, where Kerekou emerged as the front-runner. Their withdrawal left only one minor opposition candidate to oppose him in the second round of the election. The former army major originally seized power in a 1972 coup. He ran Benin as a Marxist one-party state until 1990 when he bowed to pressure for a return to multi-party politics. Kerekou was knocked out of power in the 1991 presidential election, but was elected head of state in 1996 after ditching Marxism to become a born-again Christian. SEC documents allege that in 2001 Titan money was funnelled into Kerekou's re-election campaign through the president's business advisor, who was simultaneously working as the US company's agent in Benin. The US authorities did not name the go-between, referring to him simply as 'the Titan Benin Agent.' "The complaint does not allege that the then-incumbent President knew of the payments," the SEC said in a statement. No-one at the president's office in Cotonou was immediately available to comment on the affair. Titan, which has large contracts with the US Department of Defence, signed a deal with Benin in 1996 to develop a rural telephone network in the former French colony of 6.5 million people. Two years later, it established a joint venture company, known as Afronetwork Benin, to build a satellite-based telephone system in the country. In late 2000, Titan demanded an increase in the fees it charged for managing the project from five percent to 20 percent, but this was turned down by the state telecommunications office. In early 2001, during the run-up to presidential elections held in March that year, the US company began to make what it called 'social payments' in Benin. These payments had been provided for in the company's 1996 contract as a way of helping to improve roads, schools and hospitals in Benin, where the World Bank estimates the average person earns just $440 a year. However, they were only supposed to fall due when Titan's joint venture in Benin started generating profits. At the time the money was paid out, its local subsidiary was still making a loss. "Virtually all of the 'social payments'... were funnelled to the re-election efforts," the SEC charge sheet said. It noted that Titan never recorded these cash transfers as 'social payments,' writing them off instead as 'consulting services'. The SEC said that shortly after Kerekou secured re-election, government officials agreed to Titan's request for a quadrupling of its project management fees in Benin - a move that should have led to extra revenue of $6 million per year. "Titan obtained the increased management fee by making the majority of the approximately $2 million in 'social payments' prior to the re-election of the President of Benin, as instructed by the Titan Benin Agent," it said. The company withdrew from Benin in 2002, the SEC noted.