Raytheon to Pay Over $950 Million in DOJ Settlement for Defective Pricing, Foreign Bribery, & Export Control Violations

Raytheon Company, a defense giant and subsidiary of RTX, has agreed to pay over $950 million to settle criminal and civil investigations by the Department of Justice (DOJ). The hefty settlement addresses the company’s involvement in fraudulent pricing schemes, violations of the Foreign Corrupt Practices Act (FCPA), and breaches of export control regulations under the Arms Export Control Act (AECA).

The DOJ has outlined two significant schemes. The first relates to Raytheon’s fraudulent pricing practices on U.S. Department of Defense (DOD) contracts, while the second involves foreign bribery in Qatar and the company’s failure to properly disclose such conduct in export applications. These revelations mark a major chapter in the federal government’s efforts to combat corporate misconduct in defense contracting, which not only endangers taxpayer dollars but also national security.

Raytheon admitted to engaging in deceptive practices from 2012 to 2013 and again between 2017 and 2018, providing false pricing data to secure inflated government contracts. These contracts, worth hundreds of millions of dollars, were tied to critical defense systems, including the PATRIOT missile and a radar system. According to court documents, the company’s fraudulent actions resulted in the DOD overpaying by approximately $111 million.

As part of the resolution, Raytheon has entered into a deferred prosecution agreement (DPA) in Massachusetts and will pay $146.8 million in criminal penalties. The company will also refund the $111 million in overcharges as part of the settlement. The settlement also requires Raytheon to enhance its compliance program, implement corrective actions, and retain an independent compliance monitor for three years.

Foreign Bribery & Export Control Violations

In parallel, Raytheon faced charges of foreign bribery tied to defense contracts with Qatar. From 2012 to 2016, Raytheon employees bribed a high-level official in the Qatar Emiri Air Force (QEAF) to secure lucrative defense contracts. These illicit payments were concealed through sham subcontracts and other deceptive documentation.

Raytheon also failed to disclose these bribes in export license applications, a violation of the AECA and the International Traffic in Arms Regulations (ITAR). As part of the resolution in the Eastern District of New York, Raytheon will pay an additional $230.4 million in criminal penalties, along with $36.7 million in forfeiture. The Securities and Exchange Commission (SEC) also imposed a $49.1 million disgorgement and a $75 million civil penalty.

In addition to the criminal penalties, Raytheon has also settled a civil False Claims Act case, agreeing to pay $428 million. This settlement resolves allegations that the company misrepresented cost data in negotiations for numerous DOD contracts, in violation of the Truth in Negotiations Act (TINA). The civil recovery, the second-largest of its kind, was bolstered by a whistleblower lawsuit filed by Karen Atesoglu, a former Raytheon employee, who will receive $4.2 million as part of the settlement.

Beyond the financial penalties, Raytheon is required to implement a sweeping overhaul of its compliance framework. For the next three years, the company will be subject to an independent monitor overseeing its adherence to new compliance measures. The DOJ’s resolution will also trigger a review by the Interagency Suspension and Debarment Committee (ISDC) to determine whether Raytheon should be suspended or debarred as a federal contractor.

This decision is pivotal as Raytheon’s parent company, RTX, remains a major supplier of military equipment to the U.S. government. A potential debarment could have far-reaching implications, given the company’s role in supplying critical defense technology globally.

Government Response: A Warning to Contractors

Deputy Assistant Attorney General Kevin Driscoll underscored the significance of the settlement, stating, “Raytheon’s actions erode public trust, harm American taxpayers, and undermine the integrity of the DOD. Today’s resolution reflects the Justice Department’s commitment to holding major defense contractors accountable.”

Other DOJ officials echoed this sentiment, with Principal Deputy Assistant Attorney General Brian M. Boynton highlighting that government contractors have a duty of full transparency when negotiating sole-source contracts. "This settlement restores faith in the procurement process, safeguarding taxpayer dollars,” Boynton added.

The case also highlights international anti-corruption priorities, as Assistant Attorney General Matthew G. Olsen noted, “Raytheon’s bribery of a Qatari military official poses a threat to our national security and violates our anti-bribery laws.”

Raytheon’s settlement marks one of the largest resolutions involving a defense contractor and emphasizes the DOJ’s increasing focus on fraud and corruption in government contracts. The three-year DPAs, massive financial penalties, and ongoing federal review serve as a stark warning to corporations that misconduct — whether domestic or international — will be met with serious consequences.

Raytheon’s compliance commitments and corrective actions aim to prevent such violations from occurring in the future, but the magnitude of the case and the financial recovery signify the high stakes involved in defense contracting fraud. As the dust settles, the company’s ongoing relationship with the federal government will be scrutinized closely.

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