By NEIL GORDON
The Justice Department announced Thursday that aerospace and defense giant United Technologies Corporation (UTC) and two of its subsidiaries, Pratt & Whitney Canada and Hamilton Sundstrand, paid the federal government more than $75 million to settle criminal and civil charges of violating export control laws. The Project On Government Oversight has obtained documents filed by the government in the case, including a statement of the charges, the guilty plea, and the deferred prosecution agreement.
The government says that between 2002 and 2005, Pratt & Whitney Canada sold engine-control software made by Hamilton Sundstrand to China, which Pratt knew China was using to develop its first modern military attack helicopter, the Z-10. American exports of defense articles to China are prohibited under a 1989 embargo. The government also alleged that UTC, Pratt, and Hamilton Sundstrand failed to disclose the illegal exports for several years, and when they did, their disclosures contained numerous false statements.
Pratt & Whitney Canada pleaded guilty to violating the Arms Export Control Act and making false statements. The three companies also entered into a two-year deferred prosecution agreement and paid a total of $75.7 million in fines and penalties ($20 million of which was suspended on the condition that UTC will apply that amount toward remedial compliance measures, including hiring a corporate monitor).
UTC released a public statement in which it accepted responsibility for the violations, which it says it “deeply regrets.” The company claims to have invested more than $30 million since 2006 to strengthen its export compliance infrastructure.
Nevertheless, news coverage of the settlement harps on the relative leniency of the punishment. According to this article, UTC has annual revenues of $58.1 billion – enough to cover the amount of the penalty more than 760 times over. Its sales in China alone accounted for almost $10 billion last year, according to the article.
UTC was the fifth largest federal contractor in fiscal year 2011 with $7.9 billion in contracts. According to our Federal Contractor Misconduct Database, UTC has 17 resolved misconduct instances and $465.9 million in misconduct penalties since 1995. This week’s settlement is UTC’s second-largest penalty, behind the $295 million UTC’s Otis unit was fined in 2007 for participating in an illegal cartel involving the installation and maintenance of elevators and escalators in Europe.
Neil Gordon is POGO investigator.
The top five UT execs should be individually and personally prosecuted. Guys like this need to go to the slammer in order to keep the greed and lack of patriotism--by big time defense contractors--from getting more out of hand. Shouldn't the government try to do less business with these creeps, eh?
Posted by: Gargantua | Jun 29, 2012 at 03:53 PM
Those fines look like cuts to me.
The only crime they really committed was not giving the godfather his piece of the action.
Do your dirty shit, but pay the don.
Posted by: Anonymouswatcher | Jun 29, 2012 at 02:50 PM