RTX Corp has agreed to a $200 million fine to settle allegations of violating U.S. export laws by improperly handling and sharing sensitive data and products with prohibited countries, including China. The penalty, announced by the U.S. State Department on Thursday, addresses breaches related to the International Traffic in Arms Regulations (ITAR).
The fine is a result of RTX’s failure to adequately classify and control the export of defense articles, some of which were classified. The company disclosed these issues voluntarily and informed investors during its July 25 earnings call that it had set aside approximately $1 billion to address three significant legal matters identified during the integration of Rockwell Collins and Raytheon Co. into RTX.
The State Department’s notification on Friday marks the resolution of the first of these three legal matters. Among the violations cited was the improper provision of intellectual property and technology to China. One specific instance involved the inadvertent disclosure of information about an aluminum display housing component used in the F-22 Raptor Fighter Aircraft to Chinese citizens in Shanghai. This information was deemed more sensitive than initially assessed by RTX employees.
As part of the settlement, RTX will be required to implement a comprehensive compliance program, with half of the $200 million fine allocated to funding this initiative. Additionally, the company will be subject to independent compliance monitoring over a three-year period to ensure adherence to export regulations and prevent future violations.
The settlement underscores the importance of stringent controls over defense-related exports and highlights the consequences of failing to meet regulatory requirements. RTX’s proactive disclosure and commitment to resolving these issues reflect its efforts to address and rectify past compliance lapses.
The remaining two legal matters related to RTX’s integration and export practices are expected to be resolved in the near future, with continued emphasis on improving compliance and safeguarding sensitive information.
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