
Raytheon Technologies faces significant penalties after settling a $950 million fraud and bribery case with the U.S. government, but the depth of their violations is just as stunning as the settlement itself.
At a Glance
- Raytheon to pay over $950 million due to defective pricing, bribery, and export violations.
- Engagements in bribery for securing military contracts resulted in a $230.4 million penalty.
- Deferred prosecution agreement includes a three-year compliance monitor.
- Department of Justice resolution addresses potential suspension as a federal contractor.
Major Penalties and Resolutions
Raytheon Company, a subsidiary of RTX, has agreed to pay more than $950 million to resolve investigations into defective pricing, foreign bribery, and export control violations. This substantial financial settlement with the U.S. government follows accusations that Raytheon defrauded the Department of Defense and engaged in bribery with a Qatari official for defense contracts.
In addition, Raytheon has admitted to causing harm to the Department of Defense through fraudulent activities involving defense systems such as PATRIOT missile systems. The conduct also violated the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA).
Raytheon Company to Pay Over $950M in Connection with Defective Pricing, Foreign Bribery, and Export Control Schemes
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— U.S. Department of Justice (@TheJusticeDept) October 16, 2024
Enhancements and Compliance Measures
To address these issues, Raytheon will enter into a three-year deferred prosecution agreement and employ an independent compliance monitor. The company will also enhance its internal compliance programs as part of the agreement.
“Government contractors have an obligation to be fully transparent about their cost and pricing data when they seek an award of a sole source contract,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division.
Alongside these internal measures, Raytheon will pay a criminal monetary penalty of $146.8 million, victim compensation of $111.2 million, and participate in deferred prosecution agreements in federal courts in Brooklyn and Massachusetts. An additional sum of approximately $49.1 million will address penalties related to an SEC investigation.
The Broader Implications
The DOJ coordinated with the SEC on this resolution, reflecting Raytheon’s widespread compliance failures. Additionally, the Department agreed on a lawsuit filed by a former Raytheon employee, who will receive $4.2 million.
While Raytheon has taken steps toward amelioration, the Justice Department’s resolution warns of potential suspension or debarment proceedings as a federal contractor. This case serves as a sober reminder of the importance of transparency and ethics in the defense sector.