Raytheon to pay $950M+ to resolve fraud, bribery charges

The U.S. Department of Justice announced Wednesday that Arlington County’s Raytheon, a subsidiary of aerospace and defense contractor RTX, has agreed to pay more than $950 million to resolve multiple allegations that include fraud and bribing a Qatari official.

Under Wednesday’s settlement, Raytheon must pay the following penalties:

• For two counts of major fraud in allegedly overcharging the U.S. Department of Defense by $111 million, Raytheon will pay a criminal monetary penalty of $146.78 million and $111.2 million in victim compensation.
• Under a civil False Claims Act settlement related to the DOD allegations, Raytheon was penalized $428 million, but the $111.2 million in victim compensation will be credited toward that amount.
• In the bribery case, filed in the Eastern District of New York, Raytheon will pay a criminal penalty of $230.4 million and pay forfeiture of $36.69 million. In addition, to resolve the Securities and Exchange Commission’s parallel investigation, Raytheon will pay $49.1 million in disgorgement and a civil penalty of $75 million, $22.5 million of which will go toward the criminal penalty.
• For allegedly failing to disclose to the U.S. Department of State and the Directorate of Defense Trade Controls the bribes reportedly paid to a Qatari official, Raytheon will pay a financial penalty of $21.9 million.

Raytheon entered into a three-year deferred prosecution agreement Wednesday in the fraud case, which was filed in federal court in Massachusetts, and stems from charges that Raytheon employees allegedly provided false information to the U.S. Department of Defense that inflated costs for purchasing missile systems and operating and maintaining a radar system from 2012 through 2013, and 2017 through 2018. In addition to the financial penalties, Raytheon will have an independent compliance monitor for the next three years.

The bribery charges stem from a reported scheme among Raytheon employees between 2012 and 2016 to bribe a high-level official with the Qatar Emiri Air Force, a branch of the Middle Eastern country’s armed forces, to assist the contractor in obtaining and retaining their business. According to the DOJ, Raytheon made payments to the official by creating “sham subcontracts” for air defense studies, with funds going to the official.

In addition to the financial penalties, Raytheon and RTX have agreed to an independent compliance monitor for the next three years, as well as improvements and enhancements to the company’s compliance programs.

“The department is committed to holding accountable those contractors that knowingly misrepresent their cost and pricing data or otherwise violate their legal obligations when negotiating or performing contracts with the United States,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in a statement.

In 2020, Raytheon merged with United Technologies to form Raytheon Technologies. In 2022, the company relocated its global headquarters from Massachusetts to Arlington. The company rebranded as RTX in 2023. 

“These legacy legal matters relate to conduct that occurred at Raytheon Company largely prior to 2020,” noted RTX spokesperson Chris Johnson in a written statement. “RTX is taking responsibility for the misconduct that occurred,” he added in the statement. “We have worked diligently during the investigations to remediate that misconduct and continue to do so.”

RTX noted it had set aside more than $1.2 billion to resolve pending legal matters in a July SEC filing. 

In August, the State Department announced RTX had agreed to pay $200 million to resolve allegations of violating the Arms Export Control Act and the International Traffic in Arms Regulations. 

With more than 185,000 employees globally, RTX reported $68.9 billion in sales in 2023.