On February 27, 2003, the U.S. Department of
State, the U.S. Customs Service and the U.S. Attorney's Office for
the District of Massachusetts signed a settlement agreement with
Raytheon Company, dismissing a civil complaint against Raytheon for
violations of U.S. export control laws. The complaint, which had
been filed on February 27 in U.S Federal Court in Boston, charged
Raytheon with committing fraud against the Customs Service and the
State Department in a scheme to export military communications
equipment to Pakistan from 1990 to 1997 without a license to do so
from the State Department. Export of the equipment in question is
controlled by the State Department under the Arms Export Control
Act and the International Traffic in Arms Regulations (ITAR).
Attempted End Run?
Raytheon originally submitted an application to export these
items to Pakistan in 1993; however, that application was denied by
the State Department's Directorate of Defense Trade Controls as
exports of military equipment to Pakistan were prohibited at that
time due to sanctions under the Pressler Amendment. As detailed in
the settlement agreement, Raytheon subsequently made arrangements
to assemble and sell essentially the same military communications
equipment to Pakistan through its Canadian subsidiary. This was a
misuse of the Canadian exemption to the International Traffic in
Arms Regulations (ITAR) that permits, under certain circumstances,
the export of defense articles and services controlled under the
ITAR through the U.S. Munitions List to Canada without an export
license.
Government Would Rather Take the Money Than Prosecute; An Offer
They Could Not Refuse
Under
the terms of the settlement, Raytheon will pay a $25 million civil
penalty. $20 million of this penalty will go to the U.S. Customs
Service in lieu of forfeiture claims and $3 million will go to
settle the administrative charges levied by the Department of
State. The remaining $2 million must be used by Raytheon for
remedial compliance measures. The settlement also requires the
appointment of a Special Compliance Official to oversee Raytheon's
military communications business and its export control practices
generally.
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