A recent agreement has been reached by defense contractor RTX to pay more than $950 million to settle allegations of bribery involving a Qatari official and defrauding the Pentagon by overcharging for weapons sales, including Patriot missile systems. Previously known as Raytheon, RTX faced accusations of deceiving the U.S. Department of Defense, resulting in an overpayment of $111 million for the missile system and radar system operations between 2012 and 2018.
RTX has also entered into a deferred prosecution agreement with U.S. federal prosecutors. The agreement pertains to charges of conspiring to bribe a Qatari official and failing to disclose these bribes in export licensing agreements. Federal prosecutors indicated that the company paid $30 million to a member of Qatar’s ruling family and a relative of Qatari Emir Tamim bin Hamad al-Thani, aiming to secure a deal for its Patriot system with the Gulf state, which is a key U.S. ally in the Middle East.
No immediate comments were available from officials at the Qatari embassy in Washington. Breon Peace, the U.S. Attorney for the Eastern District of New York, stated, “Over the course of several years, Raytheon employees bribed a high-level Qatari military official to obtain lucrative defense contracts and concealed the bribe payments by falsifying documents to the government, in violation of laws including those designed to protect our national security.” He further stressed the commitment to pursuing justice against corruption to prevent similar misconduct in the future.
As part of the agreement, RTX is required to appoint an independent compliance monitor for three years. The company also settled a claim from the Securities and Exchange Commission (SEC), which accused it of violating anti-bribery and accounting laws. The SEC highlighted that despite repeated warnings from managers and employees about potential corruption involving the Qatari agent, the relationship continued without intervention.
Following the announcement of the settlement, RTX shares closed higher in New York, aligning with the provisions the company had set aside in its last quarterly earnings report in July. RTX acknowledged responsibility for its past misconduct, which mainly occurred at Raytheon Company before 2020.
As one of the Pentagon’s largest contractors, RTX is recognized for its missile systems, including the Patriot and Stinger, and in collaboration with Lockheed Martin, the Javelin missiles used by Ukraine against Russia. RTX also partners with Israeli defense firm Rafael Advanced Defense Systems on the Iron Dome interceptor.
The global demand for weapons has risen due to Russia’s invasion of Ukraine, contributing to increased revenues for RTX and other major contractors. RTX reported $19.7 billion in sales for the second quarter of 2024, marking an 8% increase from the previous year, with total revenue for 2023 reaching $68.9 billion. RTX is scheduled to report its third-quarter earnings next week.
