Raytheon Company to Pay Over $950 Million in Settlements
Raytheon, a subsidiary of RTX, has agreed to pay more than $950 million to settle investigations by the Justice Department related to:
- Defective pricing on government contracts.
- Violations of the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA).
Key Points of the Settlement
- Deferred Prosecution Agreement (DPA): Raytheon will enter a three-year DPA in two criminal cases:
- In Massachusetts: Charged with defrauding the Department of Defense (DOD) through false pricing of defense articles and services, including PATRIOT missile systems.
- In New York: Charged with conspiracy to violate FCPA by bribing a Qatari official and violating AECA by failing to disclose bribes in export licenses.
- Penalties:
- Raytheon will pay a criminal monetary penalty of $146.8 million, plus $111.2 million in victim compensation for the defective pricing scheme.
- The company will also pay $230.4 million in fines and $36.7 million in forfeiture for the FCPA and AECA violations.
- False Claims Act Settlement: Raytheon settled for $428 million related to providing inaccurate cost data to the DOD, making this the second-largest government procurement fraud recovery.
- Independent Compliance Monitor: Raytheon will implement a three-year compliance monitoring program to prevent future misconduct.
Misconduct Highlights
- Raytheon admitted to schemes to defraud the DOD by providing false pricing information, leading to inflated contract payments.
- Between 2012 and 2016, Raytheon bribed a high-ranking Qatari official to win defense contracts in Qatar, concealing bribe payments through falsified documents.
“Raytheon engaged in criminal schemes to defraud the U.S. government in connection with contracts for critical military systems and to win business through bribery in Qatar,” said Deputy Assistant Attorney General Kevin Driscoll of the Justice Department’s Criminal Division. “Such corrupt and fraudulent conduct, especially by a publicly traded U.S. defense contractor, erodes public trust and harms the DOD, businesses that play by the rules, and American taxpayers. Today’s resolutions, with criminal and civil recoveries totaling nearly $1 billion, reflect the Criminal Division’s ability to tackle the most significant and complex white-collar cases across multiple subject matters.”
Cooperation and Remedial Measures
- Raytheon received some credit for cooperation with the investigations, but their response was initially slow.
- The company has since taken corrective actions, including employee terminations, improved compliance programs, and strengthening internal controls.
Broader implications, according to the Department of Justice:
- Raytheon may face suspension or debarment from federal contracts, as the Justice Department has referred the case to the Interagency Suspension and Debarment Committee (ISDC).
- This resolution warns defense contractors about the serious consequences of fraud and corruption in government contracts.
These actions underscore the Justice Department’s commitment to tackling corruption and protecting U.S. taxpayers from fraudulent practices in defense procurement.