October 16, New York – the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) announced (Foreign Corrupt Practices Act) FCPA charges against RTX Corporation and Raytheon Company.
The Allegations
The enforcement actions stem from Raytheon’s use of sham subcontracts to facilitate bribes totaling ~$2 million to Qatari military officials from 2011 to 2017. These payments were aimed at securing defense contracts within Qatar. Furthermore, between the early 2000s and 2020, Raytheon paid over $30 million to a Qatari agent who was related to the Emir of Qatar and claimed to assist Raytheon in navigating the complex Qatari defense contracting landscape. Notably, Raytheon proceeded with these payments despite identifying numerous red flags indicating potential corruption risks during its own due diligence processes.
Settlement Terms
The SEC required RTX to pay disgorgement of $37.4 million, along with $11.8 million in prejudgment interest, and a civil penalty of $75 million. Additionally, RTX will have to retain an independent compliance monitor for a three-year period.
Simultaneously, the DOJ entered into a deferred prosecution agreement (DPA) with both Raytheon and RTX, which will last three years. As part of this agreement, Raytheon will pay a criminal penalty of $230.4 million and forfeit $36.7 million related to the FCPA charges. This settlement also includes a separate violation of the Arms Export Control Act, resulting in an additional penalty of $21.9 million. Both companies will also hire an independent compliance monitor during the DPA period.
Cooperation and Future Oversight
Although both the DOJ and SEC acknowledged the companies’ cooperation and remediation efforts, they also pointed out that this cooperation came after an initial period of uncooperativeness.
These enforcement actions are part of a broader settlement encompassing multiple charges against Raytheon, including those related to the Arms Export Control Act, and various government contract fraud schemes. In total, Raytheon has agreed to pay over $950 million to settle all related charges.
The recent announcements conclude a comprehensive investigation into Raytheon and RTX that, according to some, began in 2020.
