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3/7/2006
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ACS Adds SEC Investigation To Bribery Charges, Other Woes

The commission is investigating stock option grants the company made from October 1998 through March 2005. ACS says it intends to cooperate with SEC investigators.

IT services and outsourcing firm Affiliated Computer Services, already facing bribery charges in Canada and questions over links between its chairman and a Dallas-based aircraft leasing firm, now says it's under investigation by the Securities and Exchange Commission.

In a public filing Monday, ACS said the SEC is "conducting an informal investigation into certain stock option grants" the company made from October 1998 through March 2005. The company said that it intends to cooperate with SEC investigators. Last month, Canadian prosecutors in Alberta charged ACS with bribing police officers there to secure help winning a contract to provide the province with photo radar traffic enforcement systems. Two Canadian police officers were also charged.

ACS also recently said it plans to sell a corporate jet it originally purchased from a firm owned by ACS founder and chairman Darwin Deason. The firm, DDH Aviation, has fallen under the scrutiny of the Federal Aviation Administration as part of an investigation into a February 2005 crash at New Jersey's Teterboro Airport that injured 20 people. The jet is owned by DDH.

Amidst it all, ACS plans to cut up to 1,700 jobs and reduce operations in its Mexican near-shore services center in favor of a lower cost location, according to a document the company filed last month with the SEC. The filing also reveals that former ACS CEO Jeffrey Rich, who resigned last year, will receive a payout of $4 million and several other lucrative benefits.

ACS provides IT and business services to a number of major corporate and government clients, including Aetna, GlaxoSmithKline, and the states of Louisiana, Maryland and Georgia. ACS officials in January terminated talks with a group of private equity firms aiming for a buyout of the company.

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