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LITTON PLEADS GUILTY TO FELONIES; FIRM FINED $18.5 MILLION.

Byline: Gregory J. Wilcox Staff Writer

In one of the largest settlements of its kind ever, Litton Industries Inc. on Wednesday pleaded guilty to federal felony charges and agreed to pay $18.5 million in penalties for concealing commissions paid to foreign consultants.

The plea by two units of the Woodland Hills-based defense contractor had been rumored for several weeks and concludes an eight-year federal investigation into deals with Taiwan and Greece valued at about $200 million.

Litton's Applied Technology Division of San Jose pleaded guilty to one count of conspiring to defraud the government. Litton Systems Canada, Ltd., of Toronto also entered a guilty plea to that charge and one count each of mail fraud and causing a false statement to be made to the government.

The company must make restitution in five business days.

Randy Belote, Litton's spokesman, said that settling was the most expeditious course for the company to take.

``This action allows the company to put this matter behind us and focus on serving our customers and shareholders,'' he said.

He also claimed that the case was not about making illegal payments to foreign government officials but rather about financial reporting and accounting inaccuracies.

``There have been recent press reports that said Litton engaged in making illegal commission payments to foreign consultants and or bribing foreign government officials and that is not the case,'' he said.

However, federal prosecutors disputed Litton's claim.

``The guilty pleas demonstrate that this is not a technical violation. This is not a gray area. . . . This is a calculated, long-range conspiracy to defraud agencies of the government,'' said Assistant U.S. Attorney Patricia A. Beaman.

Litton's plea was unsealed in U.S. District Judge Richard A. Paez's courtroom Wednesday afternoon.

It calls for the government of Taiwan to receive $737,000.

Litton also agreed to a compliance plan, which puts in place guidelines for the company to follow in regard to training employees in regulations governing dealings for foreign military sales.

The contractor is paying $16.5 million in criminal fines plus $2 million in restitution and investigative costs.

The case focused on $16 million in commissions Litton paid to agents who helped the company win Greek and Taiwanese contracts.

Beaman said that Litton paid in excess of $12 million to four Greek agents who helped the company get about $150 million worth of aircraft electronics business. And the company paid about $4 million to Yu-Ming Hei, also known as Richard M. Hei, a former Taiwanese Air Force pilot who worked securing three contracts worth about $40 million.

After he was prosecuted in the United States on tax evasion charges Hei aided the government in its case against Litton.

Hei said he was paid commissions ranging between 5 percent and 10 percent on business he secured for Litton. He said his largest take was $3.2 million for a $32 million contract that Litton won to upgrade Taiwan's anti-submarine aircraft.

Litton's Belote declined to explain why the company did what it did or whether the individuals involved still work at the company or were disciplined.
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Jul 1, 1999
Words:513
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