RTX (previously known as Raytheon) a major defense contractor‚ has agreed to pay more than $950 million to settle charges related to inflated federal contracts and foreign bribery‚ the Justice Department announced on wednesday. The company confessed that its employees provided fake information to the Army‚ leading to $111 million in overpriced contracts for Patriot air-defense systems and a radar system roughly 11 and 6 years ago
Employees of RTX also took part in a scheme to bribe a high-ranking Qatari air force official between 2012 and 2016 violating the Foreign Corrupt Practices Act. Kevin Driscoll‚ deputy assistant attorney general in the Justice Departments criminal division‚ stated: “Such corrupt and fraudulent conduct especially by a publicly traded US defense contractor erodes public trust“
RTX didnt dispute the allegations and said it would work closely with an independent monitor for three years under a deferred prosecution agreement. Chris Johnson‚ RTX spokesperson‚ said in an email: “RTX is taking responsibility for the misconduct that occurred. We have worked diligently during the investigations to remediate that misconduct and continue to do so“
RTX – formed about 4 years ago through a merger of Raytheon and United Technologies Corporation – is one of the Big Five defense contractors‚ alongside Lockheed Martin Boeing‚ General Dynamics and Northrop Grumman
The bulk of the fraud case involved Raytheons sale of its Patriot missile systems to the Army roughly 11 years ago. The Army couldnt conduct competitive bidding‚ as Raytheon is the only company that makes the sophisticated defense system (which involves surface-to-air guided missiles that can shoot down incoming missiles and aircraft providing blanket protection to troops and civilians). Instead‚ the Army had relied on Raytheons own declarations of its costs for making the system
Prosecutors told a district court in Massachusetts that Raytheon employees knowingly inflated their cost declarations‚ resulting in the Army awarding it a Patriot missile systems contract for $619 million‚ with a fraudulent inflation of $100 million. For another contract about 7 years ago‚ Raytheon employees falsely inflated the salary projections of employees maintaining a surveillance radar system for the US Air Force‚ resulting in a contract price $11 million higher than it should have been
The foreign bribery charges‚ meanwhile had been filed separately in a New York district court. Prosecutors said that Raytheon employees had paid nearly $2 million through sham contracts to benefit a Qatari official in the hopes of securing government defense contracts. These payments were supposedly made for three air-defense studies‚ but Raytheon employees knew “that the Qatari Entities did not perform any work on or incur any cost for the studies‚“ prosecutors told the court in a filing
The Justice Departments announcement follows a separate State Department settlement with RTX about 2 months ago‚ in which the company agreed to pay $200 million to resolve export control violations. RTX‚ which is listed on the New York Stock Exchange‚ disclosed in a filing roughly 3 months ago that it had reserved $124 billion to resolve legal issues with federal regulators. Investors were apparently relieved that the fines were not higher: RTXs stock closed up 1 percent on wednesday