Defense Contractor to Pay Nearly $1 Billion for Defrauding DOD, Bribery

One of America’s major defense companies is fined nearly $1 billion for defrauding DOD on contracts and bribing Qatar officials. Learn more on why RTX is paying up.

Defense and aerospace contractor RTX, formerly known as Raytheon, agreed to pay nearly $1 billion in fines to settle bribery and fraud charges.

The fines stem from two cases: defrauding the U.S. Department of Defense (DOD) into overpaying for defense systems and bribing an official in Qatar to win business in that country.

Bribery Case

For the bribery case, RTX entered into a deferred prosecution agreement in Brooklyn, New York federal court.

Court documents say that between 2012 and 2016, Raytheon employees and agents bribed a high-level official in Qatar to gain an advantage in winning Qatari defense contracts. Prosecutors say Raytheon was successful in securing additions to an existing Gulf Cooperation Council contract, by bribing the official with at least $2 million in sham contracts. The company also allegedly bribed another official with ties to Qatar’s Emir.

Raytheon was hit with nearly $400 million in fines related to this case.  

“Raytheon willfully failed to disclose bribes made in connection with contracts that required export licenses. Today’s resolution should serve as a stark warning to companies that violate the law when selling sensitive military technology overseas,” said Assistant Attorney General Matthew G. Olsen of the Department of Justice (DOJ) National Security Division. 

DOD Fraud Case

In the fraud case, RTX again entered into a deferred prosecution agreement, this time in federal court in Massachusetts.

Prosecutors say Raytheon employees provided false and fraudulent information to DOD during two contract negotiations, with the intention of winning the contract at inflated prices. DOJ says the fraud caused DOD to pay Raytheon over $111 million more than the proper price.

The alleged incidents happened in 2012-2013 and in 2017-2018. RTX will pay $111 million to resolve the allegations.

RTX also agreed to resolve a civil lawsuit brought forth by a former employee who exposed the fraud as well as double billing and other inflated pricing practices.  

As part of that settlement, RTX will pay $428 million, with whistleblower Karen Atesoglu received a $4.2 million cut of the settlement.

“Investigating procurement fraud impacting DOD contracts is a top priority for the Defense Criminal Investigative Service (DCIS), the law enforcement arm of the DOD Office of Inspector General,” said Inspector General Robert Storch of DOD. “When DOD contractors fail to provide truthful pricing data and overcharge the government, they undermine the integrity of the DOD procurement process and harm critical DOD programs.”

Under the deferred prosecution agreements, RTX must hire an independent compliance monitor. If it remains in compliance for three years, charges will be dismissed.

In a statement, RTX said that the settlements pertain to “legacy legal matters” and that company is “is committed to maintaining a world-class compliance program, following global laws, regulations and internal policies, while upholding integrity and serving our customers in an ethical matter.”