United Technologies Corporation has agreed to pay $13.8 million to the federal government after Pratt and Whitney Canada, a Canadian subsidiary of the Connecticut-based defense contractor, pleaded guilty to violating the federal Arms Export Control Act.
Pratt and Whitney Canada, based outside Montreal, pleaded guilty to illegal exports to China of U.S.-origin military software used in the development of China’s first modern military attack helicopter, the Z-10 and accepted fines of nearly $7 million.
According to the U.S. Department of Justice, Pratt and Whitney Canada delivered 10 of the development engines to China in 2001 and 2002.
The District of Connecticut, the Justice Department filed a three-count criminal information charging UTC, Pratt and Whitney Canada, and HSC with violating the Arms Export Control Act, to making false statements to the U.S. government in their belated disclosures relating to the illegal exports and with failure to timely inform the U.S. government of exports of defense articles to China, according to the U.S. Attorney’s Office.
Pratt and Whitney Canada pleaded guilty to violating the Arms Export Control Act, to making false statements to the U.S. government, but the Justice Department has recommended that prosecution on violating the Arms Export Control Act charges and failure to timely inform the U.S. government of exports of defense articles to Chinabe deferred for two years, provided the companies abide by the terms of a deferred prosecution agreement with the Justice Department.
As part of the agreement, the companies must pay $75 million and retain an Independent Monitor to monitor and assess their compliance with export laws for the next two years.
In addition, UTC, its U.S.-based subsidiary Hamilton Sundstrand Corporation, and PWC have all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department.
Roughly $20.7 million of this sum is to be paid to the Justice Department, according to the U.S. Department of Justice.
The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10.
Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures. As part of the settlement, the companies admitted conduct set forth in a stipulated and publicly filed statement of facts.
Speaking in federal court, Paul Beech of UTC, said that since 2006, the time of the violations, "failures addressed today cannot and will not recur."
