UTC to pay $75m in compensation over illegal exports to China

2 July 2012 (Last Updated July 2nd, 2012 03:50)

United Technologies Corporation (UTC) has agreed to pay more than $75m in compensation to the US Department of Justice (DOJ) and the Department of State for the illegal export of software to China, which was used in the development of the country's WZ-10 military attack helicopter.

United Technologies Corporation (UTC) has agreed to pay more than $75m in compensation to the US Department of Justice (DOJ) and the Department of State for the illegal export of software to China, which was used in the development of the country's WZ-10 military attack helicopter.

The company's subsidiaries Pratt & Whitney Canada (P&WC) and Hamilton Sundstrand pleaded guilty to violating the State Department's international traffic in arms regulations (ITAR), as well as the false statements act.

According to the justice department, P&WC supplied ten development engines to China in 2001 and 2002 that were used to power each WZ-10 helicopter, during the development phases of the programme.

US Attorney David Fein was quoted by Reuters as saying that P&WC intentionally exported the military technology, with plans to become the exclusive supplier for the Chinese helicopter market with projected revenues of up to $2bn.

"We accept responsibility for these past violations and we deeply regret they occurred."

"PWC exported controlled US technology to China, knowing it would be used in the development of a military attack helicopter in violation of the US arms embargo with China," he said.

The company will now pay a $20.7m fine to the DOJ, and $55m in penalties to the State Department, in relation to separate export violations and those related with the WZ-10.

Of the $55m penalty, $35m is scheduled to be paid in cash over four years, while the remaining $20m will be suspended if UTC completes various compliance measures.

Commenting on the judgement, UTC chairman and chief executive officer Louis Chênevert said that the company was committed to conducting business in full compliance with all export laws and regulations, which forms an integral part of safeguarding US national security and foreign policy interests.

''We accept responsibility for these past violations and we deeply regret they occurred," Chênevert added.

The export of defence articles and associated technical data to China has been banned by the US Government after the Tiananmen Square massacre by the Chinese military in June 1989.