BRIDGEPORT -- United Technologies and two of its subsidiaries, Pratt & Whitney Canada Corp. and Hamilton Sundstrand in Windsor Locks, pleaded guilty Thursday to several federal charges stemming from the sale of engine control software to China that enabled that country to build its first military attack helicopter.
As part of a plea-bargained agreement, UTC, one of the country's major defense contractors and based in Hartford, will pay more than $75 million in fines and penalties, of which $55 million is for 500 additional violations involving another 800 other exports.
The company will pay $35 million over four years but $20 million may be suspended if UTC completes various compliance measures. This includes hiring an independent export compliance monitor and training employees in that area at all of its facilities.
UTC and Hamilton Sundstrand pleaded guilty to making false statement to the State Department while Hamilton also admitted not reporting exports to an embargoed country in a timely manner.
Pratt & Whitney Canada was the main player in the violations, according to Assistant U.S. Attorneys Steven Reynolds and Michael Gustafson.
Officials there apparently pursued the military helicopter contract in the hopes of obtaining $2 billion in additional work helping China build a similar civilian copter. Hamilton allegedly believed that the software used to operate engines built by Pratt & Whitney Canada would be used in a civilian copter.
The software provides the necessary engine codes to operate the helicopter, Reynolds said. He added that without it China probably wouldn't be able to construct approximately a dozen helicopters. China never built the civilian version.
"... Pratt &Whitney Canada knowingly turned a blind eye to the attack helicopter application and went along with (China's claim) of a parallel civil program," court documents charge.
During the proceedings before Senior U.S. District Judge Warren W. Eginton, Pratt & Whitney Canada Corp. pleaded guilty to violating the Export Control Act by selling the software it obtained from Hamilton Sundstrand to China, making false statements to the State Department and failing to report exports to an embargoed country in a timely matter to the U.S.
Of the $75 million UTC is paying, $4.6 million represents a fine to Pratt & Whitney Canada and $2.3 million represents its profit from the sale and will be forfeited by Pratt.
Congress placed China on an export embargo list shortly after the 1989 Tiananmen Square massacre.
The illegalities were uncovered by a U.S. Department of Homeland Security Immigration and Customs Enforcement agent assigned to the attache office in Canada.
"This case is a clear example of how the illegal export of sensitive technology reduces the advantages our military currently possesses," said ICE Director John Morton. "I am hopeful that the conviction of Pratt & Whitney Canada and the substantial penalty levied against United Technologies and its subsidiaries will deter other companies from considering similarly ill-conceived business practices in the future. American military prowess depends on lawful, controlled exports of sensitive technology by U.S. industries and their subsidiaries, which is why ICE will continue its present campaign to aggressively investigate and prosecute criminal violations of U.S. export laws relating to national security."
Bruce Foucart, special agent in charge of the ICE New England office, said China is "one of the most aggressive and capable collectors of U.S. technology. The Chinese government is motivated in their desire to achieve military parity with the U.S."
An local aerospace analyst was shocked by the guilty pleas but conceded that entry into the Chinese helicopter market "is a huge prize."
"It does surprise me," said Will Alibrandi, who specializes in engine technology for Newtown-based Forecast International. "I would think there would be tighter control on where the engine technology is going."
But Alibrandi doubts these events will affect UTC and its subsidiaries' defense business.
"You're not going to see contracts being canceled because of it," he said.
The engine involved in the transaction is not used on many U.S. military helicopters. General Electric Co. supplies the engines for Sikorsky's Black Hawk and Boeing's Apache. The Pratt Canada engine is used on Air Force trainers, he noted.
UTC and its subsidary hired James T. Cowdery and Thomas Murphy, both former Connecticut assistant U.S. attorneys, to represent it.
"We accept responsibility for these past violations and we deeply regret they occurred," said Louis Chenevert, UTC's chairman and chief executive officer.
Since 2006, he said UTC assigned 175 executives, managers and professionals full-time to work export compliance and hundreds more on a part time basis. The company invested more than $30 million since 2006 to strengthen compliance, according to Chenevert.
"Safeguarding out military technology is vital to our nation's defense and the protection of our military men and women," said Ed Bradley, who heads the northeast division of the U.S. Defense Criminal Investigative Services, which partnered in the investigation. "We know that foreign governments are actively seeking U.S. defense technology for their own development. Thwarting these efforts is a top priority for DCIS."
mmayko 203-330-6286; mmayko@ctpost.com; http://twitter.com/mmayko2011
Source: http://www.newstimes.com/local/article/UTC-subsidiaries-guilty-for-aiding-China-s-3670550.php
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