San Diego The West African nation of Benin is best known as the birthplace of voodoo. More than two-thirds of the residents still practice voodoo, with its ecstatic trances and magical dances.
Benin (pronounced behneen) is also notorious for institutionalized corruption. Its national anthem might well be "Here Comes the Bribe."
The big question is whether San Diego's Titan Corp., which wants to be purchased by the big aerospace company Lockheed Martin, has contributed to Benin's corruption. Two years ago, Titan abandoned a widely touted program to provide modern telecom services to the poverty-stricken country.
Titan's corporate behavior in Benin could be critical to the company's chance to consummate its marriage to Lockheed Martin. Titan shareholders are supposed to vote on the deal March 16.
Late last year, an anonymous note was sent to the Federal Bureau of Investigation, the U.S. Attorney's office, and the Reader. Said the note, "The Titan Corporation made multiple violations of the foreign corrupt practices act during the period 1997 to 2001 by making payments directly to an agent of the Government of Benin. The payments were used to secure favorable terms for contract work carried out by the Titan Wireless Division during this period. Revenue from this activity fueled [Titan] performance to be the leading price gainer on the [New York Stock Exchange] in 1999.
"To conceal these activities, the division was liquidated in 2001. The remainder of [Titan] is to be acquired by Lockheed Martin."
I do not know -- and still don't know -- if the unsigned message is accurate. (The 2001 date is a year off.) Upon receiving the missive, I checked briefly into the matter and concluded I could go no further. Columnists do not have subpoena power. I hoped to get a later angle on the story.
One came on Friday, February 13. (Was it voodoo?) Titan and Lockheed Martin announced that they had initiated meetings with the Department of Justice and the Securities and Exchange Commission to advise the governmental bodies "of an internal review relating to certain agreements between Titan and international consultants and related payments in foreign countries," the two companies said in a carefully worded news release. "Titan is not aware of any unlawful payments by Titan," added the release.
Ever since the 1977 passage of the Foreign Corrupt Practices Act, companies -- particularly in aerospace/defense -- have been very sensitive about getting caught passing any money under the table in foreign countries. Lockheed Martin's predecessor, Lockheed, got fined heavily nine years ago for bribing an Egyptian official.
"Throughout the process of doing mergers and acquisitions, we have very, very rigorous processes and procedures in place," says Jeff Adams, Lockheed Martin spokesman in Bethesda, Maryland. "We noticed that Titan had contracts in countries that historically have been associated with international payment issues." Lockheed Martin took the matter to Titan, and both companies then alerted the two federal government bodies.
Titan spokesman Wil Williams strongly denies that the investigation has anything to do with the now-defunct Titan Wireless, which was putting together the advanced telecom system for Benin. Williams says that only 2 percent of Titan's current sales are overseas. The largest part of that is an enterprise that makes radios for handheld or console use, he says, but he won't say that this is the focus of the investigation.
I read to Adams the anonymous letter about alleged Benin payoffs. He would not confirm that the investigation focuses on current Titan business. Nor would he say whether Titan's past involvements would bother Lockheed Martin, although Titan and Benin haven't finished their business: the country's postal and telecommunications office still owes Titan a slug of money.
Whether the letter writer's specific allegations are true, two things are clear: Benin is infamous for corruption, and Titan used its then-successful Benin adventure to tout its stock. Titan is well known for pumping up its stock, and the Benin project in its heyday was a handy vehicle.
Benin, slightly larger than Virginia, has a population of only 6.5 million people, but it loses $75 million a year as a result of corruption, according to scholars. Benin borders Nigeria, which is consistently ranked among the three most corrupt nations in the world. (Benin is too small to be among the 100-plus countries annually ranked in the Global Corruption Report.)
The notorious Nigerian scam letter has found its way to Benin and many other countries such as Ivory Coast. Nearly every Benin customs officer has a klebe or "banknote ripper" working for him. They are the middlemen between bribers and bribees. The klebes help the export agents take a 10 percent rake-off on material moving across borders and also extort an illegal toll on those wanting to move goods through customs. There are 400 klebes along the Nigerian border.
"There is a specific logic to the corruption in Benin that keeps it thriving," says a report on corruption in West Africa. "Official procedures are bureaucratic, and delays are costly for entrepreneurs." So they grease the skids with baksheesh. "Those involved say government inefficiency justifies corruption."
This year, the Benin government charged 27 of its judges with embezzling millions of dollars of state funds. The judges are part of a group of 99 court and finance ministry officials charged with illegally pocketing more than $15 million over four years. In 2001, a woman ran for president for the first time in history. Her target: "corruption and racketeering at the highest levels of government." She lost.
Beginning in the 1990s, Titan began providing satellite- and wireless-based communications services to developing nations, including Indonesia and Nigeria, which regularly are ranked near the bottom in the annual Global Corruption Reports.
Titan pointed to Benin as Titan Wireless's greatest achievement. In the second paragraph of the annual report for 1999, Titan chief executive Gene W. Ray boasted that revenues at Titan Wireless had zoomed by 300 percent in 1999. Telecom stocks were then sizzling hot. "Titan's common stock was the number one market gainer on the New York Stock Exchange in 1999," bragged Ray, predicting that Titan Wireless would continue its rapid expansion.