On June 28, Pratt & Whitney Canada pleaded guilty to violating the Arms Export Control Act and to making false statements to the U.S. government about its export activities. Pratt & Whitney Canada sold commercial helicopter engines and modified software to the Chinese government. The software, originally developed for use in U.S. military helicopters, is controlled under the International Traffic in Arms Regulations.
The U.S. government does not allow the export of defense equipment and technology to China. Certain “dual-use” items that may have both a military and civilian use, such as the helicopter engines, may be exported under a license provided that they are not intended for military use. Pratt & Whitney Canada allegedly knew that the Chinese government would use the technology to develop a military attack helicopter, but proceeded with the sale despite the embargo with the hope that the company would be able to break into the civilian helicopter market in China.
Pratt & Whitney Canada, its parent company, United Technologies Corporation, and United Technologies’ U.S. subsidiary Hamilton Sundstrand Corporation, all agreed to pay more than $75 million in fines in order to settle with the State Department and the Justice Department. The companies will be eligible to have $20 million of the penalty suspended if the money is used to put remedial compliance measures in place. Additionally, the State Department has announced a partial debarment of Pratt & Whitney Canada for new export licenses. Pratt & Whitney Canada still will be able to request exemptions in order to receive export licenses on a case-by-case basis. The company will be eligible for reinstatement in a year.