3 Companies Fined $75M For Selling China Military Tech

By: CBS (Posted by Kion Hudson)
By: CBS (Posted by Kion Hudson)

(CBS)-- United Technologies Corp. and two of its subsidiaries Thursday pleaded guilty to illegally shipping defense parts to China for use in building China's first military attack helicopter.

UTC, Pratt and Whitney Canada (PWC), and Hamilton Sundstrand agreed to pay $75 million to settle criminal charges, reports CBS News correspondent Bob Orr.

In a case brought by U.S. prosecutors in Connecticut, United Technologies was accused of shipping parts for the Z-10 helicopter in violation of a 1989 ban on defense exports put in place after Tiananmen Square.

The Justice Department also accused the defense contractors of essentially hiding the shipments by making false statements and belated disclosures to U.S. government officials.

The Z-10 which went into service in 2009 is a gunship armed with 30 mm cannons, anti-tank weapons and air-to-air missiles.

The government alleges that the U.S. contractors were attempting to curry favor with Chinese defense officials in hopes of gaining entree to China's much more profitable civilian helicopter market, potentially worth up to $2 billion.

From the $75 million fine, "roughly $20.7 million of this sum is to be paid to the Justice Department. The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10. Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures," the Justice Department said in a press release.

The Justice Department said that while China was developing the Z-10 helicopter, PWC sold them the engines for it, which operated on specialized software made in the U.S.

PWC had attempted to skirt the U.S. ban on military technology by claiming they already sold China the engines for use in commercial helicopters.

Assistant Secretary Shapiro, of the State Department's Bureau of Political and Military Affairs, said, "Today's $75 million settlement with United Technologies Corporation sends a clear message: willful violators of U.S. arms export control regulations will be pursued and punished. The successful resolution of this case is the byproduct of the tireless work of our compliance officers and highlights the relentless commitment of the State Department to protect sensitive American technologies from being illegally transferred."


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