UTC resolves charges on 576 arms export violations

Washington DC
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United Technologies (UTC) must pay $75 million in penalties to settle a total of 576 arms export violations involving thousands of illegal technology transfers to China, Venezuela and dozens of other countries over the past 12 years.

UTC admits knowingly supplying China with a Pratt & Whitney Canada engine for the AVIC Z-10 military helicopter and then covering it up.

Meanwhile, a sweeping internal review uncovered hundreds of violations over the past decade involving protected engine and power technologies for the Lockheed Martin F-22 and F-35 and Saab Gripen fighters, as well as the Airbus Military A400M and Lockheed C-5 transports, according to court documents.

P&W, a UTC subsidiary, must pay $20.7 million in fines to the US Department of Justice and another $55 million to the Department of State. Of the latter, $20 million will be suspended as long as UTC invests that amount in internal efforts to comply with arms export regulations.

The government's 19-page charging document reveals a "systemic" failure of compliance across UTC's major business divisions, including P&W, Hamilton Sundstrand and Sikorsky.

Hamilton Sundstrand disclosed to State officials in July 2006 that it had supplied a protected electronic engine control unit for the P&WC engine powering China's Z-10.

But Hamilton Sundstrand officials failed to disclose at that time that its employees were aware of China's plans to use the Z-10 as a military helicopter as early as 2003, while P&WC employees knew of the armed configuration even earlier.

"We accept responsibility for these past violations and we deeply regret they occurred," says Louis Chenevert, UTC chief executive.