Unisys Corp., the nation's fourth-largest computer manufacturer, agreed Friday in federal court to pay a record $190 million in fines for having bribed its way to hundreds of millions of dollars worth of defense contracts.
The settlement, the largest of its kind in a government procurement fraud case, represents the high point of a federal investigation into illegal Pentagon contracting practices that burst onto the public scene in June 1988 when agents searched numerous corporate offices and private homes in a dozen states.As part of the settlement, the Pennsylvania-based firm pleaded guilty to eight criminal counts involving conspiracy, bribery, conversion of government property, filing false statements with the Federal Election Commission and illegally overbilling the government.
Unisys is the sixth corporation to plead guilty in what investigators have dubbed Operation Ill Wind. The investigation also has resulted so far in convictions against 45 individuals and reaped $225 million in fines.
Assistant U.S. Attorney Joseph J. Aronica, the prosecutor in charge of the case, called Friday's plea "a landmark, not just because it is the largest procurement settlement ever, but because it exposes a reprehensible pattern of corruption directed at the executive and legislative branches of our government."
James A. Unruh, chairman of Unisys, said Friday that the fines will not endanger the company, which posted revenue in 1990 of $10.1 billion and a net loss of $437 million. Because the payout is to be spread over seven years and because much of it is made up by profits the company will sacrifice on existing contracts, the cash impact on Unisys will be less than $10 million this year.
The $190 million payment is made up of $162 million in civil damages, $18 million in forfeitures, $5 million in criminal fines and $5 million as reimbursement for the cost of the investigation. About $90 million is contingent on future profits through 1997 and could be waived if the company loses money during that period. Unisys is trying to erase a $3.2 billion debt by selling some of its subsidiaries.
Unruh added in a prepared statement that the resolution of the case will "have a positive impact" on his company's business and noted that most of those responsible for the corruption were former executives of the Sperry Corp., which was acquired by Unisys in 1986.
"All of us at Unisys have been angered and frustrated that the actions of a few have cast a cloud over a very dedicated, ethical work force," Unruh said.
Six former Unisys executives and seven consultants to the company have pleaded guilty in the case, admitting that they bribed government employees and secretly obtained confidential government documents. The information and influence obtained was used to give the company an edge against competitors for a Marine air traffic control system, portions of the Navy's sophisticated Aegis anti-air warfare system, several Air Force research projects and other huge defense systems.