Raytheon Will Pay Over $950 Million To Government in Fraud, Bribery Case

Raytheon Company has agreed to a $950 million settlement with the US government over allegations of fraud and bribery.

At a Glance

Raytheon Company will pay over $950 million over fraud and bribery allegations.
The case involves defective pricing, FCPA, and AECA violations.
The company will enhance its compliance program and report misconduct.
Raytheon admits to defrauding the DoD with PATRIOT missile systems.

Raytheon Agrees to Massive Settlement

Raytheon Company, a subsidiary of RTX, is set to pay a staggering settlement exceeding $950 million, resolving multiple investigations led by the Justice Department. These probes targeted the company’s pricing practices, violations of the Foreign Corrupt Practices Act (FCPA), and breaches of the Arms Export Control Act (AECA). The resolution of these cases reflects a significant step by the government to enforce accountability on defense contractors.

Department of Defense contracts were reportedly defrauded with inaccurate pricing data, particularly in deals involving critical military assets like the PATRIOT missile systems. The company also engaged in illicit activities aimed at obtaining defense contracts through bribery with a Qatari government official, raising national security concerns.

Raytheon Company to Pay Over $950M in Connection with Defective Pricing, Foreign Bribery, and Export Control Schemes

🔗: https://t.co/0NxyIbgWFk pic.twitter.com/0lro88d01R

— U.S. Department of Justice (@TheJusticeDept) October 16, 2024

Company’s Compliance Measures and Oversight

RTX has agreed to a deferred prosecution agreement (DPA) spanning three years, which includes retaining an independent compliance monitor. This agreement mandates the enhancement of internal compliance structures and reinforces RTX’s commitment to report any additional misconduct promptly. As part of the remedial measures, the company has terminated the employees responsible for the violations and has implemented significant improvements to its compliance program.

The involvement of multiple agencies underscores the severity and complexity of the investigation. Agencies such as the Defense Criminal Investigative Service (DCIS), the FBI, and Homeland Security Investigations (HSI) all played critical roles in America’s pursuit of justice.

Financial and Legal Implications

The settlement includes the obligation for Raytheon to pay criminal monetary penalties, victim compensation, and civil fines. Beyond the Justice Department’s involvement, coordination with the Securities and Exchange Commission (SEC) has resulted in an additional penalty of over $124 million for SEC-related charges. Some of the financial ramifications were offset by the DOJ settlement, reducing the total fiscal impact on RTX.

“International corruption in military and defense sales is a violation of our national security laws as well as an anti-bribery offense,” said Assistant Attorney General Matthew G. Olsen.

This settlement, among the largest of its kind, reflects the significant financial burden and reputational damage faced by RTX due to these allegations. Amidst these grave accusations, the company is strategizing to avert future misconduct through enhanced protocols and ongoing compliance requirements.