Raytheon Pays $950 Million to Resolve Fraud, FCPA, ITAR and False Claims Act Violations
Nov 18, 2024
A major defense contractor faces serious consequences for ethics violations. The recent $950 million settlement with the U.S. Justice Department reveals a web of fraudulent pricing and conduct breaches. The discussion highlights critical lessons about corporate governance and accountability. Delve into Raytheon’s schemes around the Foreign Corrupt Practices Act and Arms Export Control regulations. The implications of this case underscore the need for robust compliance and a cultural shift in high-stakes industries.
16:46
forum Ask episode
web_stories AI Snips
view_agenda Chapters
auto_awesome Transcript
info_circle Episode notes
question_answer ANECDOTE
Raytheon's $950 Million Settlement
Raytheon agreed to pay $950 million to resolve investigations into False Claims Act violations, FCPA violations, and ITAR violations.
This involved defective pricing on government contracts, bribery of a Qatari official, and undisclosed export licensing information.
insights INSIGHT
Raytheon's Cooperation and Penalties
The Justice Department cited Raytheon's cooperation and remedial measures in determining penalties.
However, initial cooperation was limited by slow document production.
insights INSIGHT
False Claims Act Settlement Details
Raytheon will pay $428 million for failing to provide truthful cost and pricing data, violating the Truth in Negotiations Act (TINA).
Raytheon misrepresented costs, overcharged the U.S., and even billed the same costs twice.
Get the Snipd Podcast app to discover more snips from this episode
What happens when a major defense contractor faces scrutiny for ethics and compliance violations? In this episode of Corruption, Crime, and Compliance, Michael Volkov dives into the high-stakes world of corporate accountability, exploring Raytheon's recent $428 million settlement with the U.S. Department of Justice. From fraudulent pricing to bribery and compliance lapses, we uncover the impact of these violations and the tough questions they raise about corporate governance, oversight, and ethical responsibility in high-stakes industries.
Hear Michael talk about:
Raytheon Company (Raytheon) -- a subsidiary of defense contractor, RTX (formerly known as Raytheon Technologies Corporation) — agreed to pay over $950 million to resolve the Justice Department’s investigations into three areas of violation.
The settlement addresses three main issues:
A major government fraud scheme involving defective pricing on certain government contracts
Violations of the Foreign Corrupt Practices Act (FCPA)
the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR)
As part of the settlement, Raytheon entered into a three-year deferred prosecution agreement (DPA) and agreed to the filing of criminal information in the District of Massachusetts charging Raytheon with two counts of major fraud against the United States. Raytheon admitted to engaging in two separate schemes to defraud the Department of Defense (DOD) relating to the provision of defense articles and services, including PATRIOT missile systems and a radar system.
Separately, Raytheon entered into a three-year DPA in connection with a criminal information in the Eastern District of New York charging Raytheon with two counts: conspiracy to violate the anti-bribery provision of the FCPA for a scheme to bribe a government official in Qatar and conspiracy to violate the AECA for willfully failing to disclose the bribes in export licensing applications with the Department of State as required by part 130 of ITAR.
The Justice Department’s FCPA and ITAR resolution is coordinated with the Securities and Exchange Commission (SEC). Both DPAs require that Raytheon retain an independent compliance monitor for three years, enhance its internal compliance program, report evidence of additional misconduct to the Justice Department, and cooperate in any ongoing or future criminal investigations. Raytheon also reached a separate False Claims Act settlement with the Justice Department relating to the defective pricing schemes.
Corruption Crime & Compliance