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topicnews · October 16, 2024

Defense firm Raytheon agrees to pay a 2 million fine to resolve Qatar bribery allegations

Defense firm Raytheon agrees to pay a $252 million fine to resolve Qatar bribery allegations

  • Jake Offenhartz and Michael R. Sisak, The Associated Press

RTX Corporation, the defense contractor formerly known as Raytheon, has agreed to pay the U.S. government $252 million to resolve criminal charges that it paid bribes to secure contracts with Qatar, federal prosecutors said Wednesday.

The company entered into a deferred prosecution agreement for violating the anti-corruption provisions of the Foreign Corruption Practices Act and the Arms Export Control Act.

The company also agreed to pay a $52.5 million civil penalty to resolve a parallel Securities and Exchange Commission investigation and must forfeit at least $37 million to complete both investigations.

At a brief hearing in federal court in Brooklyn, RTX’s lawyers waived their right to an indictment and pleaded not guilty to both counts. They did not object to the allegations in court documents filed in connection with the agreement.

According to the agreement, the company must demonstrate good behavior and promote a culture of ethics and compliance with anti-corruption laws over the next three and a half years.

Messages seeking comment were left for RTX Corporation and the Qatari Embassy in Washington.

RTX said in a regulatory filing in July that it had committed $1.24 billion to resolve pending legal and regulatory matters. The company’s president and CEO, Christopher Calio, told investors that the investigations largely related to issues that predated the Raytheon-United Technologies merger that created the current company in 2020.

“These matters arose primarily from predecessor company Raytheon Company and Rockwell Collins prior to the merger and acquisition of those companies,” Calio said. “We have already taken effective corrective actions to address the existing gaps that led to these issues.”

According to court documents, between 2012 and 2016, Raytheon employees and agents offered and paid bribes to a foreign official to gain an advantage in obtaining lucrative business deals with the Qatar Emiri Air Force and the Qatar Armed Forces.

The company then managed to secure four additions to an existing contract with the Gulf Cooperation Council – a regional coalition of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates – as well as a sole contract worth $510 million for the To secure construction of a joint-operations center for the Qatari military, the court documents say.

Raytheon made a profit of about $36.7 million from the Gulf Cooperation Council contract extensions and expected a profit of more than $72 million for the Joint Operations Center, but the Qatari government ultimately did not follow through on the deal, prosecutors said.

Wednesday’s penalty is just the latest legal consequence of RTX’s business dealings.

According to court and regulatory filings, the company is expected to soon enter into another deferred prosecution agreement to resolve civil and criminal investigations in Massachusetts over deficient pricing claims for Raytheon contracts from 2011 to 2017.

In August, the company agreed to pay $200 million to the State Department after voluntarily disclosing more than two dozen suspected violations of the Arms Export Control Act and international arms trade regulations. The allegations included that the company passed classified military aircraft data to China and that employees took company-issued laptops containing information about missiles and aircraft to Iran, Lebanon and Russia.

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