When Blood Money Isn’t Enough: Raytheon Admits to Defrauding Pentagon

RTX Corporation, the weapons giant formerly (and better) known as Raytheon, agreed on Wednesday to pay almost $1 billion to resolve allegations that it defrauded the U.S. government and paid bribes to secure business with Qatar.

Raytheon engaged in criminal schemes to defraud the U.S. government," said Deputy Assistant Attorney General Kevin Driscoll of the Justice Department's Criminal Division on Wednesday. Such corrupt and fraudulent conduct, especially by a publicly traded U.S. defense contractor, erodes public trust and harms the DOD, businesses that play by the rules, and American taxpayers."

RTX, as part of this agreement that spanned multiple investigations into its business, admitted to engaging in two separate schemes to defraud the Defense Department, which included deals for a radar system and Patriot missile systems. It also agreed to enter a separate deferred prosecution agreement, which requires increased government oversight and transparency for the next three years, in connection with the Qatari kickbacks.

Over the course of several years, Raytheon employees bribed a high-level Qatari military official to obtain lucrative defense contracts and concealed the bribe payments by falsifying documents to the government, in violation of laws including those designed to protect our national security," said Breon Peace, U.S. attorney for the Eastern District of New York. We will continue to pursue justice against corruption, and as this agreement establishes, enforce meaningful consequences, reforms and monitorship to ensure this misconduct is not repeated."

The $950 million payment includes criminal penalties, civil fines, restitution, and the return of profits that RTX made by bilking the Pentagon.

The announcement is a rare example of a major defense company being held accountable for its white-collar crimes. But while defrauding the government and breaking international corruption laws, Raytheon has also been party to potential war crimes in recent years.

One of the largest military contractors on Earth, Raytheon makes missiles, bombs, components for fighter jets and many other weapon systems used in war zones from Afghanistan and Iraq to Gaza and Yemen.Civilians have frequently paid the price.

Not only does Raytheon rip off the government on a regular basis, but its weapons have been used to kill civilians in Yemen, Gaza, and other war zones," William Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraftand longtime weapons industry watcher, told The Intercept.

RTX spokesperson Chris Johnson said the company was taking responsibility for its wrongdoing in the fraud and bribery scandal. We have worked diligently during the investigations to remediate that misconduct and continue to do so," he told The Intercept but declined to comment on civilian casualties caused by Raytheon's weapons.

Prior to 2023, the Israeli military used Raytheon's 5,000-pound GBU-28 bunker buster" and laser-guided Paveway bombs, as well as AGM-65 Maverick air-to-ground missiles, AIM-9X missiles, AIM-120 Sidewinder missiles, and TOW long-range missiles to attack targets in Gaza, according to a 2022 report by the American Friends Service Committee, a Quaker organization.

Such weapons are typically launched or dropped from F-15, F-16, and F-35 fighter jets for which Raytheon provides weapon systems, components, and maintenance services. The Israeli military has possibly used its bunker buster" bombs - weapons prohibited for usein areas with large civilian populations - in Gaza during the current war as well.

The Saudi-led coalition's war in Yemen was also waged using Raytheon munitions. In 2022, the coalition conducted an airstrike on a detention center that, according to Doctors Without Borders, killed at least 80 people and injured more than200. An investigation by Amnesty International found a Raytheon-made GBU-12, a 500-pound laser-guided bomb, was used in the attack. Amnesty also found that Raytheon bombs were used in a 2019 Saudi-led airstrike that killed six civilians - including three children.

An investigation by CNN and Yemen-based human rights group Mwatana found evidence that Raytheon weapons systems were used by the Saudi-led coalition in numerous instances of civilian harm, such as a 2018 attack on a wedding party that killed 21 civilians, including 11 children, and injured another 97 people, 48 of them children; a 2016 airstrike that killed 15 members of a single family including 12 children, the youngest a 1-year-old boy; the 2016 bombing of an apartment that killed six; and a 2015 strike on a residential neighborhood that killed one civilian and wounded six others, including two women and a young girl.

The Raytheon allegations are stunning, even by the lax standards of the arms industry," Hartung told The Intercept this week. Engaging in illegal conduct on this scale suggests that, far from being an aberration, this behavior may be business as usual for the company."

While Raytheon has been a key U.S. defense contractor since the 1940s, cashing in ontens of billions of dollars in government contracts, the company has, indeed, been embroiled in scandals and malfeasance for decades, though it has rarely been compelled to pay fines and penalties of this magnitude.

The company pleaded guilty toillegally trafficking in secret military budget reports" (1990); paid $4 million to settle charges that it overbilled the Pentagon (1994); paid $10 million to settle a class-action lawsuit contending that its Amana unit sold defective furnaces and water heaters (1997); paid $2.7 million tosettleallegations that it improperly charged the Pentagon for expenses incurred in marketing products to foreign governments (1998); paid $400,000 tosettleclaims that it overcharged the Defense Department (1999); paid the federal government more than $1 million to resolve quality-control issues on various electronic devices sold to the Pentagon (2000); paid $3.9 million to settle charges that it overbilled the Defense Department (2003); agreed to paya $25 million civil penalty to resolve State Department charges that the company violated export controls (2003); agreed to pay $12 million after the SEC found it made false and misleading disclosures and used improper accounting practices that operated as a fraud" (2006); agreed to pay an $8 million fine for export control violations (2013); agreed to pay $1 million to settle a claim involving procurement fraud (2019); agreed, along with a subsidiary, to pay $515,000 to settle False Claims Act allegations (2021); and agreed to pay $59.2 million to settle an Employee Retirement Income Security Act complaint after using an outdated mortality table to improperly calculate retirement benefits (2021).

Earlier this year, RTX agreed to pay $200 million to settle allegations that it violated U.S. export controls, including by transferring some technology behind Air Force One and U.S. military aircraft to China, among other wrongdoing, and was named in a class-action lawsuit for allegedly discriminating against job-seekers who are 40 years or older. This week's $950 million agreement includes a $428 million civil settlement for allegedly deceiving the government about its labor and material costs to justify pricier no-bid contracts and for double-billingon a weapons maintenance contract.

Raytheon Corporation engaged in a systematic and deliberate conspiracy that knowingly and willfully violated U.S. fraud and export laws," said Special Agent in Charge William S. Walker of Homeland Security Investigations, New York earlier this week. Raytheon's bribery of government officials, specifically those involved in the procurement of U.S. military technology, posed a national security threat to both the United States and its allies."

Johnson, the RTX spokesperson, would not comment on Raytheon's long history of alleged misconduct, noting only that RTX has entered into agreements with the U.S. Department of Justice (DoJ) and the U.S. Securities & Exchange Commission (SEC) related to previously disclosed investigations," characterizing them as legacy legal matters." He also failed to respond to questions about the company endangering U.S. national security and its obligation to the U.S. taxpayers.

While taxpayers have been harmed by Raytheon's corrupt business practices, the weapons giant's investors have cashed in during Israel's war on Gaza.Raytheon's total return for investors in the past year is 82.69 percent, outperforming the S&P 500 by about 46 percent," Eli Clifton, a senior adviser at the Quincy Institute, wrote recently.

At this point Raytheon appears to be a rogue company that is more interested in increasing revenues for its executives and shareholders than serving as a reliable supplier of defense equipment," Hartung told The Intercept. The scale of Raytheon's malfeasance suggests that the Justice Department should take a close look at the practices of other arms contractors to determine whether the kinds of things Raytheon has done are an industry-wide practice."

The post When Blood Money Isn't Enough: Raytheon Admits to Defrauding Pentagon appeared first on The Intercept.