American Defence Contractor
Raytheon Fined $200mn in Settlement for Export to China
RTX
Corporation, the defense contracting roll-up has
entered into a settlement agreement with the State Department following a
comprehensive investigation into violations of the Arms Export Control Act and
the International Traffic in Arms Regulations.
The
company, created in a 2020 merger of Raytheon and United Technologies, settled
a boggling array of allegations that it violated the ITAR in connection with
unauthorized exports of defense articles: the failure
to establish proper jurisdiction and classification; unauthorized exports of defense articles, including classified defense
articles; unauthorized exports of defense articles by
employees via hand-carry to proscribed destinations listed in ITAR § 126.1; and
violations of terms, conditions, and provisos of DDTC authorizations.
By
paying $100 million in fines and promising to spend another $100 million on
compliance programs, the firm avoids debarment and further criminal or civil
action.
The
investigation covered activities from August 5, 2017, to September 29, 2023,
and identified multiple unauthorized exports and reexports of defense articles, including classified defense
articles, to destinations such as China, Russia, Iran and Lebanon.
As
United Tech and Raytheon had recently completed remedial agreements with State,
the charging documents highlighted “historical systemic failures in Rockwell
Collins’ export control compliance program.”
“While
all of Respondent’s affiliates committed a substantial number of violations,”
the complaint states, “pervasive ITAR compliance weaknesses at Rockwell Collins
resulted in many of the most egregious violations such as unauthorized exports
of technical data to the PRC to facilitate procurement of defense
articles from Chinese entities.”
These
violations involved the unauthorized transmission of technical data, defense articles, and classified materials to entities that
were not approved by the US government, violating strict export controls
designed to protect US national security interests.
Many
of the violations stemmed from historical systemic failures in the export
control compliance program of Rockwell Collins, a company acquired by RTX in
2018. Rockwell Collins, before its acquisition, had significant weaknesses in
its ITAR compliance, leading to numerous unauthorized exports of technical data
to countries like China.
These
compliance issues were characterized by misclassifications and failure to
establish proper jurisdiction over defense articles
and technical data.