Dive Brief:
- RTX has agreed to pay more than $950 million in penalties resulting from government charges that it bribed a Qatari official with ties to the country’s royal family and defrauded the U.S. Defense Department in procurement contracts, the Justice Department said.
- RTX agreed on Oct. 16 to pay $574 million in an agreement with DOJ officials in Boston to settle allegations of overcharging in federal contracts, the DOJ said. That same day, the company in a federal court in Brooklyn agreed to pay approximately $300 million to settle allegations that it violated export control and bribery laws.
- “We rely on private contractors to help build our unparalleled defense technology, not to pull the wool over our eyes by convincing the government to shell out tens of millions more than what their technology is actually worth,” Jodi Cohen, special agent in charge of the FBI’s Boston Division, said in a statement.
Dive Insight:
The settlements with the DOJ pertain to “legacy legal matters” stemming from conduct at Raytheon “largely prior to 2020,” an RTX spokesperson said in a statement.
RTX, which was named Raytheon Technologies Corp. until last year, was formed after the merger of Raytheon Company and United Technologies Corp. in 2020.
The size of the federal penalties align with an RTX announcement in its July quarterly earnings report, the spokesperson said. “RTX is taking responsibility for the misconduct that occurred.”
The DOJ coordinated its investigation of RTX with the Securities and Exchange Commission, which imposed a $124 million penalty on the company.
The SEC alleged that Raytheon from 2011 until 2017 used bogus subcontracts with a supplier to pay bribes of nearly $2 million to a Qatari military and other officials to obtain Qatari defense contracts.
Also, for nearly two decades until 2020 Raytheon paid more than $30 million to a Qatari agent who was related to the Qatari Emir and lacked a background in defense contracting, the SEC said.
Raytheon worked with the agent despite a lack of sufficient documentation confirming the agent’s service and after several Raytheon employees flagged corruption risks, according to the SEC.
The company lacked adequate internal controls over payments to agents and suppliers, the SEC said, adding that as a result of its misconduct Raytheon was “unjustly enriched” by about $37 million.
The SEC penalty stems from "significant misconduct by Raytheon and the need for global companies to implement meaningful internal accounting controls that ensure that payments to intermediaries are not used to circumvent the” Foreign Corrupt Practices Act, Charles E. Cain, chief of the SEC Enforcement Division’s FCPA unit, said in a statement.
RTX has worked on remediation and continues to do so, the company spokesman said.
The company “is committed to maintaining a world-class compliance program, following global laws, regulations and internal policies, while upholding integrity and serving our customers in an ethical matter,” the spokesperson said.
