ITT Fined $100 Million For Illegal Exports

Manufacturer Will Plead Guilty To Illegally Exporting Night-Vision Technology

(AP)  ITT Corp. has agreed to pay a $100 million penalty for illegally sending classified night-vision technology used in military operations to China and other countries, U.S. Attorney John Brownlee announced Tuesday.

ITT, the leading manufacturer of night-vision equipment for U.S. armed forces, will plead guilty in U.S. District Court on Wednesday to two felony charges, Brownlee said at a news conference. One count is export of defense articles without a license and the other is omission of statements of material facts in arms exports reports.

"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," Brownlee said.

ITT defense-related technical data was given to China, Singapore and the United Kingdom in order to cut costs, government investigators said.

"Placing profits ahead of the security of our nation is simply not acceptable for any corporation," Julie Myers, of U.S. Immigration and Customs Enforcement, said in a statement.

ITT, which Brownlee said is 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.

According to the prosecutor, 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 in restitution to the victims of their crimes — the American soldier," Brownlee said.

The fine will be suspended for five years and the White Plains, N.Y.-based 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, Brownlee said.

No individuals have been charged, but Brownlee said the investigation was continuing.

"Stay tuned for the rest," he said.

"The size of the penalty shows how severely the government regards any sale of sensitive military technology to a potential adversary," said Loren Thompson, a defense analyst at the Lexington Institute in Arlington, Va. "Night-vision goggles greatly enhance the capability of military forces to operate around the clock, which differentiates our force from that of most adversaries."

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

Officials from DCIS, the Bureau of Immigration and Customs Enforcement and DOJ later uncovered numerous export law violations, such as ITT allowing a Singapore engineer to work with its engineers at the company's manufacturing operation in Roanoke County, and two Chinese optical engineers illegally working on the design of the enhanced night-vision goggle system in Singapore.

Government agents discovered that ITT managers viewed U.S. export laws "as obstacles to getting business done," Brownlee said.

Prosecutors also said that between April 2000 and October 2004, ITT omitted material facts in required arms exports reports that made them misleading.

As part of the agreement, the company is subject to independent monitoring and an extensive remedial action program, Brownlee said.

An ITT spokesman declined comment beyond a Feb. 2 press release that said the company's fourth-quarter operating income for defense was "negatively affected by a charge relating to the resolution of a legal matter involving the night-vision business."

ITT and its corporate attorneys fought the government's investigation for three years, attempting to "run out the clock on the statute of limitations" after law enforcement officials executed a search warrant in October 2002 at the Roanoke operation, Brownlee said.

But when the government informed ITT it would seek an indictment in the fall of 2005, the company's new chief executive, Steven Loranger, hired new attorneys and fully cooperated with the investigation.

Shares of ITT, which makes products ranging from wastewater handling systems to electronic warfare technologies for military aircraft, ended Tuesday down 31 cents to $60.89 on the New York Stock Exchange.

[down-ndirty]

"Is ITT an independent company? If so can't they sell their technology to whomever they want?" Posted by killtheliars

It doesn't matter if they are a public or private company. Information and material pertaining to defense and military related technologies fall under ITAR (International Traffic in Arms Regulations) and may not be given to or even shared with non-U.S. persons without government approval.

U.S. persons include U.S. citizens and people here legally (resident aliens) who do not work for a foreign company/government/etc. There is also a 'need to know' requirement.

This case proves we are not a "classless" society. The officers of ITT should be in jail and any lessor person would be in jail.

The president of a company I worked for went to jail for bribery in connection with government contracts. Violating the ITAR regulations is far more serious than bribing goverment officials. Lives are at stake when our enemies have military technologies equal to or better than ours.

[tbweb]

America's enemies alway brag about Americans selling each other out for a dollar and this nightmare is just another modern day example! Those responsible should be tied to the tips of the first set of missiles fire at Iran! Pathetic losers!

[tucano2]

Just as with the tons of munitions USA companies shipped to the middle east which today killed more Americans ITT has shipped military-use night-vision technology overseas. American servicemen will be killed by enemies using this American technology. Whether a single dollar or several Billions of dollars of fines makes no difference at at to these Daddywarbucks traitors. The Corporate officers ought to be strung up by the neck till dead and that would be too good for them and their Republican buddies that facilitated the ongoing shipments.

[cj7jeepstir]

Just another pathetic corporate example of how nothing can be allowed to get in the way of the quest for the almighty dollar. Not the safety and health of American citizens, National Security, or the rule of law and the United States Constitution. And in too many cases they're doing it with the help of this disgusting government. Yes, ITT got caught, but how many others haven't?

[iiffv]

Arms dealers and war profiteers don't care! Profit is what counts and there is no profit unless you can sell war technologis and arms. And you can't keep making and selling either without war.

[toolmangler-2009]

If they wish to develop new technology then let it be technology that can "detect" the same technology being used against us. Maybe then we can shoot 'their' lights out.

[pakaal]

"Not to worry sports fans; the Chinese will have outdated technology and we end up with superior optics. It is no different than some of our computer technology...."

Gee Musty2U, I'm sure glad this is such a non-story for you. Just relax, everything's OK. To take a page from the Republican playbook, I have to ask, how exactly do you justify supporting terrorists by saying this is no big deal?

If the NYT printed an article on night-vision technology, Conservatives would say we should try them for treason. But when a company actually sells the tech to foreign agents, we get a "no big deal" out of them. Guess the Almighty dollar is more important than the truth.

[sshard]

ITT fined a $50 million and has to invest $50 million in new night vision technology. In 2006 the company generated $7.8 billion. What a deal ITT got from the government. Not only is the fine low by any standard, they get to invest in the technology they so easily sell to anyone on the market.

[musty2u]

Not to worry sports fans; the Chinese will have outdated technology and we end up with superior optics. It is no different than some of our computer technology or manner in which we freeze dry carrots. From the sounds of things some people don't want any bonuses paid to the executives this year.

[dan9111]

This case is ridiculous. The problem claimed by the prosectution is not even that the technology is being given to murderers. Even so, it is apparently less lethal technology than your everyday semi-automatic. Their issue with this is only that the manufacturers are not adhering to imaginary lines, yet we hand almost all of our manufacturing markets to China without hesitation. It's rather paradoxical behavior, considering they're a "favored" trading partner.

[sero5]

Selling high-tech military to technology to a rogue nation like China is treason. All the executives at ITT should be thrown in jail for this. China has rounds up political dissidents and throws them into slave labor camps. They also impose abortions on women who have multiple births. Factories in China are sweatshops for goods exported to the US. The execs at ITT want do business with such a despotic regime?

[sero5]

In 50 years, the US might find ourselves in a military showdown with China. We can thank US defense contractors like ITT for giving military technology to human rights abusers like China.

[musty2u]

Publically traded on the NYSE. This incident hasn't even really caused a bump.

[killtheliars]

Is ITT an independent company? If so can't they sell their technology to whomever they want? Don't get me wrong, I am not happy potential enemies have acquired this technology, but isn't the principal of free trade that you can sell to whomever is willing to pay the price?
Maybe we ought to re-think having contractors outside the military making military technology.

[musty2u]

Steven Loranger's full cooperation with the investigation should be considered laudable. Of course, some might say his $2.26 million pay was in jeopardy if he hadn't been. I believe the fine and penalty will be utilized to correct and improve the next generation of night vision technology. Fifty million of it is on a dollar for dollar reduction. Our soldiers and law enforcement personnel will be the beneficiaries. No one will lose their pants. Just business as usual.

[toolmangler-2009]

If I were the parent of a soldier killed as a direct result of this technology being given to the enemy, I would sue the pants off ITT.

[Syndicate]

This fine should be set aside for veterans. Our military will be the ones who pay the price for this corporations greed and Incompetance.

[mnelsonix]

Whoa! Wait a sec...someone should go to jail for this, or worse. Many corporate smart guys (and gals) should be prosecuted for this. Fine the company, i agree. But also put someone's fat, greedy A$$ in prison. National security compromised for a buck...damned shame.