RTX to pay $950 million over defense fraud and foreign bribery charges

RTX (previously known as Raytheon Technologies) has consented to pay almost $950 million to settle federal accusations of defrauding the U.S. Department of Defense and bribing a Qatari official. The companys Raytheon unit entered into two deferred prosecution agreements with the Department of Justice to resolve criminal charges filed in federal courts in Boston and Brooklyn

The Arlington Virginia-based company also settled civil claims arising from a whistleblower lawsuit and agreed to resolve a related foreign bribery case with the U.S Securities and Exchange Commission. Under the accords prosecutors have agreed to dismiss criminal charges against the company after three years if it complies with the terms of the deferred prosecution agreements which call for hiring an independent compliance monitor

The investigations had been looming over RTX since roughly five years ago. The company merged with United Technologies about four years ago and changed its name to RTX last year. Prosecutors in Boston alleged that Raytheon from 6-12 years ago defrauded the Defense Department into paying over $111 million more than it should have in two contracts to purchase Patriot missile systems and operate a radar system

Raytheon will pay a $146.8 million criminal penalty to resolve that criminal fraud case and another $428 million to resolve related civil claims brought under the False Claims Act. In Brooklyn prosecutors alleged that Raytheon from 8-12 years ago conspired to pay bribes to a high-level official with Qatars air force in exchange for assistance obtaining and retaining business from the Gulf countrys military branch

The company had previously said it had set aside $959 million to cover settlements it expected to enter into with the Justice Department and the SEC

Raytheon was charged with conspiring to violate the Foreign Corrupt Practices Act and conspiring to violate the Arms Export Control Act. It has agreed to pay a criminal penalty of $252.3 million and forfeit $36.7 million though it would get a $7.4 million credit against the expected related settlement with the SEC

Under that settlement the company would pay a $75 million penalty for which it would receive a $22.5 million credit based on the criminal penalty and disgorge another $37.4 million according to Raytheons agreement with the Justice Department. Prosecutors have agreed to dismiss those charges after about three years if it complies with the terms of the deferred prosecution agreement. The company must retain an independent compliance monitor during that time