ITT slapped with $100 million fine for illegally exporting military technology

This story brings Arthur Miller’s 1947 play “All My Sons” to mind: New York-based ITT Corp. (company’s motto: “Engineered for Life”) has agreed to a $100 million penalty for illegally sending to China and other countries classified night-vision technology used in military operations. The company is a leading manufacturer of night-vision equipment for the U.S. armed forces. Yesterday it agreed to plead guilty in U.S. District Court to two felony charges — one count is export of defense articles without a license and the other is omission of statements of material facts in arms exports reports. U.S. Attorney John Brownlee was blunt: “The criminal actions of this corporation had threatened to turn on the lights on the modern battlefield for our enemies and expose American soldiers to great harm.”

ITT defense-related technical data was given to China, Singapore, and the United Kingdom in order to cut costs, government investigators said. Homeland Security Assistant Secretary Julie Myers said: “Placing profits ahead of the security of our nation is simply not acceptable for any corporation.”

ITT, the U.S. military’s 12th largest systems supplier, is the first major defense contractor convicted of a criminal violation under the Arms Export Control Act which was passed in 1976. ITT agreed to pay a $2 million criminal fine, forfeit $28 million in illegal proceeds to the U.S. government, and pay $20 million to the State Department. “ITT will pay $50 million (A37.46 million) in restitution to the victims of their crimes — the American soldier,” Brownlee said.

The fine will be suspended for five years and the company can reduce it dollar-for-dollar by investing in the development and production of more advanced night-vision technology so the U.S. military maintains battlefield advantage. The government will maintain the rights to any technologies ITT develops and can share them with rival defense firms bidding on future contracts.

The company has also agreed to be subject to independent monitoring and an extensive remedial action program. In addition, the State Department had placed restrictions on certain exports of night vision equipment and technical data, and ITT Night Vision will face shipping restrictions for at least a year.

AP reports that the criminal investigation began in August 2001 when special agents from the Defense Department’s Criminal Investigative Service (DCIS) found that ITT had illegally sent a classified U.S. military document about night-vision technology to foreign nationals in the United Kingdom.

ITT and its corporate attorneys initially engaged in delaying tactics, fighting the government’s investigation for three years in an effort to run out the clock on the statute of limitations. The company changed tactics, however, after the government informed it that an indictment would be sought in the fall of 2005. In response, ITT’s new CEO, Steven Loranger, embarked on a new approach, hiring new attorneys and ordered full cooperation with the investigation.