The Justice Department announced on Wednesday that defense contractor RTX, formerly known as Raytheon, will pay more than $950 million to resolve charges involving inflated federal contracts and foreign bribery.
RTX admitted that Raytheon employees had provided fraudulent information to the Army that resulted in $111 million in inflated contracts for Patriot air-defense systems in 2013 and a radar system in 2018, according to the Justice Department.
Employees of the company had also engaged in a scheme to bribe a high-level Qatari air force official between 2012 and 2016, in violation of the Foreign Corrupt Practices Act, federal prosecutors said.
“Such corrupt and fraudulent conduct, especially by a publicly traded U.S. defense contractor, erodes public trust,” Kevin Driscoll, deputy assistant attorney general in the Justice Department’s criminal division, said in a statement.
RTX did not dispute the allegations and said it would work closely with an independent monitor for three years under a deferred prosecution agreement.
“RTX is taking responsibility for the misconduct that occurred,” RTX spokesperson Chris Johnson said in an emailed statement. “We have worked diligently during the investigations to remediate that misconduct and continue to do so.”
RTX, which was formed in 2020 through a merger of Raytheon and United Technologies Corporation, is one of the Big Five defense contractors, along with Lockheed Martin, Boeing, General Dynamics and Northrop Grumman.
The bulk of the fraud case involved Raytheon’s sale of its Patriot missile systems to the Army in 2013. The Army could not conduct competitive bidding, as Raytheon is the only company that makes the sophisticated defense system, which involves surface-to-air guided missiles that can shoot down incoming missiles and aircraft, providing blanket protection to troops and civilians. Instead, the Army had relied on Raytheon’s own declarations of its costs for making the system.
Prosecutors told a district court in Massachusetts that Raytheon employees knowingly inflated their cost declarations, resulting in the Army awarding it a Patriot missile systems contract for $619 million, with a fraudulent inflation of $100 million.
For another contract in 2017, Raytheon employees falsely inflated the salary projections of employees maintaining a surveillance radar system for the U.S. Air Force, resulting in a contract price $11 million higher than it should have been, the Justice Department said.
The foreign bribery charges, meanwhile, had been filed separately in a New York district court. Prosecutors said that Raytheon employees had paid nearly $2 million through sham contracts to benefit a Qatari official in the hopes of securing government defense contracts. These payments were supposedly made for three air-defense studies, but Raytheon employees knew “that the Qatari Entities did not perform any work on or incur any cost for the studies,” prosecutors told the court in a filing.
The Justice Department’s announcement follows a separate State Department settlement with RTX in August, in which the company agreed to pay $200 million to resolve export control violations.
RTX, which is listed on the New York Stock Exchange, disclosed in a filing in July that it had reserved $1.24 billion to resolve legal issues with federal regulators. Investors were apparently relieved that the fines were not higher: RTX’s stock closed up 1 percent on Wednesday.
Aaron Schaffer contributed to this report.