Raytheon To Pay Over $950 Million In Settlement Over Fraud, Qatari Bribery, And Export Violations

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

Raytheon, a subsidiary of defense contractor RTX, has agreed to pay more than $950 million to resolve federal investigations into government contract fraud, as well as violations of anti-corruption and export control laws.

The Raytheon stand at the 53rd International Paris Air Show at Le Bourget Airport near Paris, France, on June 21, 2019. Pascal Rossignol/Reuters

The settlement, announced by the Department of Justice (DOJ) on Oct. 16, addresses allegations involving defective pricing on military contracts with the U.S. government, as well as illegal bribes to a Qatari official, with the resolution involving both civil and criminal penalties.

An RTX spokesperson confirmed the settlement, telling The Epoch Times in an emailed statement that the company acknowledges responsibility for the misconduct and has cooperated with investigators. The company also emphasized its commitment to bolstering its compliance and ethics programs.

Raytheon has admitted to two major fraud schemes affecting Department of Defense (DoD) contracts, including the provision of PATRIOT missile systems and radar systems.

In the first case, Raytheon employees provided defective pricing information, leading the DoD to overpay on two contracts by roughly $111 million between 2012 and 2018.

In a separate scheme, Raytheon failed to provide accurate cost or pricing data for numerous DoD contracts, including a weapons maintenance agreement, leading to further inflated payments.

Under the terms of a three-year deferred prosecution agreement, Raytheon will pay a criminal monetary penalty of $146.8 million and $111.2 million in victim compensation and retain an independent compliance monitor for three years.

The company received a 25 percent reduction in penalties for taking remedial actions, such as firing employees responsible for the misconduct and implementing new controls to prevent future fraud.

Additionally, Raytheon has agreed to pay $428 million to settle False Claims Act allegations related to providing false data during contract negotiations with the DoD. As part of the settlement, Raytheon admitted it misrepresented labor and material costs for weapon systems and double-billed on a radar station contract.

“The department is committed to holding accountable those contractors that knowingly misrepresent their cost and pricing data or otherwise violate their legal obligations when negotiating or performing contracts with the United States,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the DOJ’s Civil Division, said in a statement.

Bribery Scheme in Qatar

Raytheon also faced charges under the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA) for a bribery scheme in Qatar.

The company was accused of paying nearly $2 million in bribes to Qatari military officials between 2011 and 2017 to secure lucrative defense contracts through sham subcontracts.

From the early 2000s to 2020, Raytheon also paid more than $30 million to a Qatari agent, a royal family member with no military contracting experience, despite numerous internal warnings about corruption risks.

In this case, which involved a parallel investigation by the Securities and Exchange Commission (SEC), Raytheon was accused of failing to adequately document the agent’s services while continuing to rely on this relationship to obtain defense contracts.

As part of a settlement with the SEC, Raytheon agreed to pay $124 million in penalties, with $22.5 million of that amount offset by a parallel DOJ fine.

In addition, Raytheon entered into a separate deferred prosecution agreement with the DOJ for the bribery violations, which includes a $230.4 million criminal fine and a $37 million forfeiture. The company will also retain an independent compliance monitor for three years.

“Raytheon willfully failed to disclose bribes made in connection with contracts that required export licenses,“ Matthew Olsen, Assistant Attorney General of the DOJ’s National Security Division, said in a statement. ”Today’s resolution should serve as a stark warning to companies that violate the law when selling sensitive military technology overseas.”

RTX has expressed its commitment to taking responsibility for the violations and implementing reforms.

“We have worked diligently during the investigations to remediate that misconduct and continue to do so,” an RTX spokesperson told The Epoch Times in an emailed statement. “We are committed to working closely with the incoming independent monitor to improve and further enhance our ethics and compliance program.”

The spokesperson also reaffirmed the company’s commitment to maintaining a robust compliance program that adheres to global laws and regulations “while upholding integrity and serving our customers in an ethical matter.”