Quick Overview

  • The U.S. Department of Justice said RTX has agreed to pay more than $950 million in fines to resolve allegations that it bribed an official linked to Qatar's royal family and defrauded the U.S. Department of Defense in procurement contracts.
  • On October 16, RTX agreed to pay $574 million to Justice Department officials in Boston to settle allegations of overcharging on federal contracts; on the same day, the company agreed in a Brooklyn federal court to pay approximately $300 million to settle allegations of violating export control and anti-bribery laws.
  • "We rely on private contractors to build our unmatched defense technology, not to deceive us and convince the government to pay tens of millions of dollars more than their technology is actually worth," said Jodi Cohen, special agent in charge of the FBI's Boston Division, in a statement.

In-Depth Analysis

An RTX spokesperson said in a statement that the settlements with the Justice Department involve "legacy legal matters" stemming from Raytheon's conduct "primarily before 2020." RTX, renamed last year from Raytheon Technologies Corp., was formed by the 2020 merger of Raytheon Company and United Technologies Corporation.

The spokesperson said the size of the federal fines aligns with what RTX disclosed in its July quarterly earnings report. "RTX is taking responsibility for the misconduct that occurred."

The Justice Department coordinated its investigation of RTX with the Securities and Exchange Commission (SEC), which fined the company $124 million. The SEC alleged that between 2011 and 2017, Raytheon used sham subcontracts with suppliers to pay nearly $2 million in bribes to Qatari military and other officials to secure defense contracts in Qatar.

Additionally, the SEC said that over nearly two decades through 2020, Raytheon paid more than $30 million to a Qatari agent who was related to the Emir of Qatar and lacked a background in defense contracting. According to the SEC, despite insufficient documentation of the agent's services and warnings from multiple Raytheon employees about corruption risks, Raytheon continued to work with him.

The SEC said the company lacked adequate internal controls over payments to agents and suppliers, and stated that due to the misconduct, Raytheon "improperly profited" by approximately $37 million. "The SEC's action stems from Raytheon's significant misconduct and the need for global companies to implement meaningful internal accounting controls to ensure that payments to intermediaries are not used to circumvent" the Foreign Corrupt Practices Act, said Charles E. Cain, chief of the FCPA unit in the SEC's Division of Enforcement, in a statement.

An RTX spokesperson said the company has implemented remedial measures and continues to do so. The spokesperson said the company is "committed to maintaining a world-class compliance program, adhering to global laws, regulations, and internal policies, while serving customers ethically and with integrity."