US defence contractor RTX to pay nearly $1B to settle bribery allegations

RTX Corporation, the defence contractor formerly known as Raytheon, has agreed to pay $950 million to resolve allegations that it defrauded the US government and paid bribes to secure business overseas.

The company entered into deferred prosecution agreements in separate cases in federal court in Brooklyn and Massachusetts, agreed to hire independent monitors to oversee compliance with anti-corruption and anti-fraud laws and must show good conduct for three years.

The money the company owes includes penalties in criminal cases, as well as civil fines, restitution, and the return of profits it derived from inflated Defense Department billing and business derived from alleged bribes.

Pit of allegations

At a brief hearing in federal court in Brooklyn, lawyers for RTX waived their right to an indictment and pleaded not guilty to charges that the company violated the anti-bribery provision of the Foreign Corruption Practices Act and the Arms Export Control Act.

RTX said in a statement that it is "taking responsibility for the misconduct that occurred" and is "committed to maintaining a world-class compliance program, following global laws, regulations and internal policies, while upholding integrity and serving our customers in an ethical matter."

Raytheon allegedly lied to the government about the costs it would incur in building three Patriot missile firing units — also known as missile batteries — leading the US Army to agree to a $619 million contract.

In a 2013 email cited in court papers, a Raytheon employee told a Pentagon official that the company's expected costs had increased when, according to prosecutors, they had actually gone down. Prosecutors said the government overpaid for the weapons by about $100 million.

Misleading the Air Force

Raytheon was also accused of misleading the US Air Force about the costs associated with operating and maintaining a radar surveillance system, including by arguing that it needed to give employees lucrative compensation packages to maintain adequate staffing.

In August, the company agreed to pay $200 million to the State Department after voluntarily disclosing more than two dozen alleged violations of the Arms Export Control Act and International Traffic in Arms Regulations.

Among the allegations were that the company provided classified military aircraft data to a foriegn country and that employees took company-issued laptops containing information about missiles and aircraft into Iran, Lebanon, and Russia.