RTX Corp. Fined $200 Million for Export Control Violations, Potentially Compromising U.S. Military Secrets

RTX Corp., the parent company of Raytheon, has agreed to pay $200 million in fines and remediation costs to resolve numerous export control violations that resulted in the disclosure of sensitive U.S. military secrets. The settlement, detailed in a consent agreement between RTX and the U.S. State Department, addresses 750 violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). These violations, committed by Raytheon and several of its subsidiaries, took place between 2017 and 2023.

The State Department stated that RTX self-reported the violations, cooperated with the investigation, and implemented “numerous” compliance reforms to mitigate the issues identified during the probe. As part of the agreement, RTX will appoint a special compliance officer to oversee the company's adherence to the terms outlined in the consent agreement. RTX did not respond to requests for comment regarding the settlement.

This $200 million agreement with the State Department may be only the first in a series of costly settlements for RTX. In July, the company disclosed that it had set aside $1.2 billion to cover potential legal liabilities stemming from ongoing criminal and civil investigations conducted by the U.S. Department of Justice and the Securities and Exchange Commission. These investigations cover a range of issues, including improper payments made in the Middle East and a False Claims Act case involving defective pricing claims.

RTX is not alone in facing consequences for mishandling military secrets. In recent years, several companies have found themselves under scrutiny by the U.S. government. Boeing, for instance, was fined $51 million in March for similar violations. Island Petrochemicals was fined $850,000 in August 2023, and 3D Systems paid $20 million in fines in February 2023.

The consent agreement between RTX and the State Department outlines a series of compliance failures that led to the unauthorized disclosure of sensitive technical data related to military aircraft and missile systems to 32 countries, including China. Many of these breaches were linked to Rockwell Collins, a subsidiary acquired by RTX in 2020 as part of its purchase of United Technologies Corporation. Rockwell Collins misclassified sensitive technical data, failing to apply the necessary export controls. According to the State Department’s charging letter, these unauthorized disclosures continued through 2023, until Rockwell Collins was fully integrated into RTX’s classification programs.

In two specific incidents, a Chinese manufacturer was able to produce parts for U.S. military airplanes, helicopters, and unmanned aerial vehicles using the improperly disclosed data. The charging letter highlighted the gravity of these lapses, stating, “The U.S. government reviewed copies of the technical data that respondent exported without authorization and concluded that certain exports to the PRC (China) harmed U.S. national security.” It further explained that the unauthorized disclosures provided China with “insight into design methodology, design analysis, and manufacturing know-how” related to environmental control systems for F/A-18 E/F Super Hornet and EA-18G Growler military aircraft. These insights, according to the U.S. government, compromised military programs and gave China capabilities it had not previously possessed.

Additional compliance violations involved RTX employees traveling with company laptops or cell phones containing military technical data during personal trips to Lebanon, Russia, and Iran, further risking exposure of sensitive information to foreign agents.

The State Department also noted that this was not the first time RTX, formerly Raytheon, had encountered such issues. In 2012 and 2013, the company similarly disclosed military data breaches and entered into consent agreements to address the problems.

With this latest settlement, RTX’s compliance efforts will now be closely monitored as the company continues to work through other legal challenges related to its handling of sensitive information.

By fLEXI tEAM