RTX (ex-Raytheon) busted for ‘extraordinary’ corruption

How bad do you have to be to get slapped with nearly $1 billion in fines?

Indictments of arms contractors for corruption and malfeasance are not uncommon, but recently revealed cases of illegal conduct by RTX (formerly Raytheon) are extraordinary even by the relatively lax standards of the defense industry.

The company has agreed to pay nearly $1 billion in fines, which is one of the highest figures ever for corruption in the arms sector. To incur these fines, RTX participated in price gouging on Pentagon contracts, bribing officials in Qatar, and sharing sensitive information with China.

Engaging in illegal conduct on this scale suggests that, far from being an aberration, this behavior may be business as usual for the company. Given the scale of RTX’s malfeasance, the Justice Department should take a close look at the practices of other arms contractors to determine whether these infractions are industry standard.

The company’s approach is reminiscent of the way arms companies did business in the 1960s, when, for example, massive cost overruns on Lockheed Martin’s C-5 transport plane drew fire from internal critics like Ernest Fitzgerald and congressional gadflies, like the-Democratic Sen. William Proxmire of Wisconsin.

Resorting to bribery has been less prevalent since Sen. Proxmire pushed through the Foreign Corrupt Practices Act of 1977, which was a response to a massive scandal involving the bribery of officials in Japan, Germany, the Netherlands, Indonesia, and Saudi Arabia. The exposure brought about by the scandal -- which covered events going back to the 1950s that were not known to the general public until a set of 1975 Senate hearings on the activities of multinational corporations showed the world how bribery was used to sway the decisions of foreign policy makers. This resulted in major consequences, including the conviction of former Japanese Premier Kakuei Tanaka, along with 10 other business people and government officials.

These days, with the exception of egregious cases like the recent conviction of Sen. Robert Menendez (D-N.J.) for taking bribes from the Egyptian government, most arms companies are more subtle in their efforts to influence foreign government officials, as far as can be determined. Bribery as blatant as passing along bags of cash, as happened in a number of cases in the 1960s and 1970s, is no longer prevalent. Now bribes are hidden amongst business deals. For example, a precondition of most major U.S. arms sales is the creation of an “offset” or kickback agreement. Basically, if a country spends billions of dollars on a U.S.-supplied weapon system, the company making the sale is expected to give something back to the purchasing country.

These offsets can include things like letting the host country build components of the system they are buying, to subsidizing military-related activities like the UAE’s cybersecurity industry, or even investing in unrelated items like hotels and entertainment venues. These deals are complex, and the U.S. government generally gives the companies involved free range to make whatever deals they need to make to secure an arms sale.

https://responsiblestatecraft.org/raytheon-corruption/ Indictments of arms contractors for corruption and malfeasance are not uncommon, but recently revealed cases of illegal conduct by RTX (formerly Raytheon) are extraordinary even by the relatively lax standards of the defense industry.

The company has agreed to pay nearly $1 billion in fines, which is one of the highest figures ever for corruption in the arms sector. To incur these fines, RTX participated in price gouging on Pentagon contracts, bribing officials in Qatar, and sharing sensitive information with China.

Engaging in illegal conduct on this scale suggests that, far from being an aberration, this behavior may be business as usual for the company. Given the scale of RTX’s malfeasance, the Justice Department should take a close look at the practices of other arms contractors to determine whether these infractions are industry standard.

The company’s approach is reminiscent of the way arms companies did business in the 1960s, when, for example, massive cost overruns on Lockheed Martin’s C-5 transport plane drew fire from internal critics like Ernest Fitzgerald and congressional gadflies, like the-Democratic Sen. William Proxmire of Wisconsin.

Resorting to bribery has been less prevalent since Sen. Proxmire pushed through the Foreign Corrupt Practices Act of 1977, which was a response to a massive scandal involving the bribery of officials in Japan, Germany, the Netherlands, Indonesia, and Saudi Arabia. The exposure brought about by the scandal -- which covered events going back to the 1950s that were not known to the general public until a set of 1975 Senate hearings on the activities of multinational corporations showed the world how bribery was used to sway the decisions of foreign policy makers. This resulted in major consequences, including the conviction of former Japanese Premier Kakuei Tanaka, along with 10 other business people and government officials.

These days, with the exception of egregious cases like the recent conviction of Sen. Robert Menendez (D-N.J.) for taking bribes from the Egyptian government, most arms companies are more subtle in their efforts to influence foreign government officials, as far as can be determined. Bribery as blatant as passing along bags of cash, as happened in a number of cases in the 1960s and 1970s, is no longer prevalent. Now bribes are hidden amongst business deals. For example, a precondition of most major U.S. arms sales is the creation of an “offset” or kickback agreement. Basically, if a country spends billions of dollars on a U.S.-supplied weapon system, the company making the sale is expected to give something back to the purchasing country.

These offsets can include things like letting the host country build components of the system they are buying, to subsidizing military-related activities like the UAE’s cybersecurity industry, or even investing in unrelated items like hotels and entertainment venues. These deals are complex, and the U.S. government generally gives the companies involved free range to make whatever deals they need to make to secure an arms sale.

https://responsiblestatecraft.org/raytheon-corruption/