NEWSLETTER BLOG POST
The Boeing Fine and the Importance of Trade Controls
The recent $51 million fine imposed on The Boeing Company by the U.S. Department of State for serious violations of export control laws is a stark reminder of the importance of compliance in today's globalized world. These events highglight the need for companies and individuals alike to be diligent in complying with all applicable regulations and laws, particularly with respect to the export of sensitive technical data. Such violations can have not only financial consequences, but also significant damage to the reputation and integrity of the parties involved. It is important that we all take our compliance responsibilities seriously and ensure that similar incidents are avoided in our organizations.
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The U.S. Department of State has fined The Boeing Company $51 million U.S. for multiple violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). Violations of Export Control Laws and Regulations
The aircraft manufacturing giant has been found to have committed 199 violations of federal laws. They relate to unauthorized exports and retransfers of technical data to foreign-person employees and contractors; unauthorized exports of defense articles, including exports of technical data to China; and violations of license terms, conditions, and provisos of Directorate of Defense Trade Controls (DDTC) authorizations. |
Unauthorized Downloads of Technical Data
Between 2013 through 2017 three Chinese employees at Boeing facilities in China downloaded technical data involving programs including the F-18, F-15 and F-22 fighter jets, the E-3 airborne warning and control system, the AH-64 Apache attack helicopter and the AGM84E cruise missile.
Further, Boeing discovered additional unauthorized downloads of technical data with other Boeing and partner facilities in 18 countries, including Australia, Canada, France, Germany, Hong Kong, India, Italy, Japan, Kenya, Morocco, Russia, Singapore, South Korea, Spain, Thailand, Taiwan, Ukraine, and the United Kingdom between 2013 to 2018.
Unauthorized Exports
In addition, Boeing also engaged in some unauthorized exports of defense material and technical data related to defense programs to a number of countries including Israel, Turkey and Lebanon.
In addition, Boeing also engaged in some unauthorized exports of defense material and technical data related to defense programs to a number of countries including Israel, Turkey and Lebanon.
Voluntary Disclosure and Civil Penalty
Boeing voluntarily disclosed all the alleged violations, most of which occurred before 2020, according to the State Department. Under the terms of the 36-month Consent Agreement, Boeing will pay a civil penalty of $51 million. The Department has agreed to suspend $24 million of this amount on the condition that the funds will be used for the Department-approved Consent Agreement remedial compliance measures to strengthen Boeing's compliance program.
In addition, for an initial period of at least 24 months, Boeing will engage an external Special Compliance Officer to oversee the Consent Agreement, the State Department said.
Boeing voluntarily disclosed all the alleged violations, most of which occurred before 2020, according to the State Department. Under the terms of the 36-month Consent Agreement, Boeing will pay a civil penalty of $51 million. The Department has agreed to suspend $24 million of this amount on the condition that the funds will be used for the Department-approved Consent Agreement remedial compliance measures to strengthen Boeing's compliance program.
In addition, for an initial period of at least 24 months, Boeing will engage an external Special Compliance Officer to oversee the Consent Agreement, the State Department said.
Settlement and Compliance Review
The State Department said the settlement "highlights the importance of exporting defense articles only pursuant to appropriate authorization" and followed "an extensive compliance review" by the government.
The Charging Letter, Consent Agreement and the Order can be found on the DDTC Penalties site: https://www.pmddtc.state.gov/ddtc_public/ddtc_public?id=ddtc_kb_article_page&sys_id=384b968adb3cd30044f9ff621f961941.
The State Department said the settlement "highlights the importance of exporting defense articles only pursuant to appropriate authorization" and followed "an extensive compliance review" by the government.
The Charging Letter, Consent Agreement and the Order can be found on the DDTC Penalties site: https://www.pmddtc.state.gov/ddtc_public/ddtc_public?id=ddtc_kb_article_page&sys_id=384b968adb3cd30044f9ff621f961941.
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