Raytheon Technologies subsidiary agrees to pay over $950 million to settle fraud, bribery, and export control violations.
At a Glance
- Raytheon Company will pay over $950 million to resolve investigations involving defective pricing, foreign bribery, and export control violations.
- The company admitted to defrauding the Department of Defense and bribing a Qatari official to secure defense contracts.
- Raytheon will enter a three-year deferred prosecution agreement and enhance its compliance program.
- The settlement includes penalties for False Claims Act violations and SEC charges.
- The case highlights the importance of transparency and ethical conduct in government contracting.
Raytheon’s Massive Settlement with U.S. Government
Raytheon Company, a subsidiary of RTX (formerly Raytheon Technologies), has agreed to pay over $950 million to settle multiple investigations by the U.S. Department of Justice. The investigations uncovered a range of violations, including defective pricing on government contracts, foreign bribery, and export control breaches. This settlement marks one of the largest penalties imposed on a defense contractor in recent years.
The company admitted to defrauding the Department of Defense in connection with defense articles and services, including PATRIOT missile systems. This admission has raised serious concerns about the integrity of government contracting processes and the potential impact on national security.
Bribery Scheme and False Claims
One of the most alarming aspects of the case is Raytheon’s involvement in a bribery scheme with a Qatari official to secure defense contracts. This violation of the Foreign Corrupt Practices Act (FCPA) has resulted in a $230.4 million penalty and $36.7 million forfeiture. The company also failed to disclose these bribes in export licensing applications, violating International Traffic in Arms Regulations (ITAR).
“Raytheon engaged in criminal schemes to defraud the U.S. government in connection with contracts for critical military systems and to win business through bribery in Qatar,” said Deputy Assistant Attorney General Kevin Driscoll of the Justice Department’s Criminal Division
In addition to the bribery charges, Raytheon reached a separate False Claims Act settlement related to defective pricing schemes. The company will pay $428 million for providing untruthful cost or pricing data, further highlighting the extent of the fraudulent practices.
Consequences and Compliance Measures
As part of the settlement, Raytheon will enter into a three-year deferred prosecution agreement (DPA) for major fraud against the U.S. and conspiracy to violate the FCPA and Arms Export Control Act (AECA). The company is required to retain an independent compliance monitor for three years and enhance its internal compliance program.
“Government contractors have an obligation to be fully transparent about their cost and pricing data when they seek an award of a sole source contract,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division
The Justice Department’s resolution includes potential suspension or debarment proceedings for Raytheon as a federal contractor. This measure underscores the severity of the violations and the government’s commitment to maintaining integrity in its contracting processes.
Broader Implications for Defense Industry
This case serves as a stark reminder of the importance of ethical conduct and transparency in the defense industry. The violations committed by Raytheon not only undermine public trust but also pose significant risks to national security and fair market competition.
“International corruption in military and defense sales is a violation of our national security laws as well as an anti-bribery offense,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division
The settlement with Raytheon sends a clear message to other defense contractors about the consequences of engaging in fraudulent practices and foreign bribery. It highlights the need for robust compliance programs and ethical business practices in an industry that plays a crucial role in national defense and international relations.
As the defense industry continues to evolve, this case underscores the ongoing need for vigilance, transparency, and accountability in government contracting. The substantial penalties imposed on Raytheon serve as a deterrent to other companies and reinforce the government’s commitment to protecting taxpayer interests and maintaining the integrity of the defense procurement process.
Sources:
- https://www.justice.gov/opa/pr/raytheon-company-pay-over-950m-connection-defective-pricing-foreign-bribery-and-export
- https://www.reuters.com/world/us/rtx-agrees-resolve-us-foreign-bribery-investigation-2024-10-16/
- https://www.justice.gov/usao-edny/pr/raytheon-company-pay-over-950-million-connection-foreign-bribery-export-control-and
- https://www.cnbc.com/2024/10/16/rtx-subsidiary-raytheon-to-pay-more-than-950-million-to-settle-foreign-bribery-export-control-fraud-probes.html
- https://www.newsweek.com/defense-contractor-pay-millions-resolve-bribery-fraud-allegations-1970311
- https://apnews.com/article/raytheon-defense-contractor-qatar-bribery-3d495d19979bd17740a68fecdeda2f36
- https://www.wsj.com/articles/rtx-agrees-to-more-than-280-million-in-penalties-to-settle-qatar-bribery-arms-control-violations-7368bf98
- https://www.bostonherald.com/2024/10/16/raytheon-agrees-to-950m-fraud-settlement/
- https://www.washingtonpost.com/technology/2024/10/16/raytheon-fraud-qatar-bribery/
- https://www.usnews.com/news/us/articles/2024-10-16/defense-contractor-raytheon-agrees-to-pay-252m-penalty-to-resolve-qatar-bribery-charges