United Technologies and two of its subsidiaries agreed to pay more than $75 million to the U.S. Justice Department and State Department for selling sensitive military software to China, which was used by Beijing to develop a modern attack helicopter.
The U.S. Justice Department said it levied the fine against the Hartford, Connecticut-based contractor because China’s possession of modern attack helicopters threatened the safety of overseas American troops and its allies. It said that while the company was attempting to break into China’s civilian helicopter market, a United Technologies subsidiary circumvented export laws, including the 1976 Arms Export Control Act.
In June 1989, the U.S. imposed an arms prohibition on China after its military cracked down on and killed, according to some estimates, thousands demonstrators in Tiananmen Square. Specifically, when Congress voted on the Chinese arms ban legislature in 1990, it prohibited helicopters and the technology from being sold.
Federal prosecutors said United Technologies knew that by selling the software to China, it would allow Beijing to develop a military helicopter, the Z-10.
United’s subsidiary, Pratt & Whitney Canada “took what it described internally as a ‘calculated risk,’ because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to two billion dollars,” stated U.S. Attorney for the District of Connecticut David Fein, who added that “several years of violations were known” before anything was done about it.
United Technologies, a company with more than $58 billion in net sales last year and which is the maker of the U.S. military’s Black Hawk helicopters, pleaded guilty to two charges for violating the Arms Export Control Act and making false statements to cover up their misdeeds.
Court documents show that PW&C knew that the Z-10 project would be used by Chinese officials to produce a modern attack helicopter and that supplying it with U.S.-made components would breach export laws.
The documents show Chinese officials said the commercial version of the helicopter would be developed in tandem, leading PW&C’s marketing personnel to internally express skepticism over the “sudden appearance” of the civilian helicopter. They also wondered if it is “real or imagined,” later saying that China would “no longer make reference to the military program,” according to the documents.
The Justice Department said the subsidiary failed to notify United Technologies until years later and turned a blind eye to helicopter’s military potential. In all, PW&C sought to corner the civilian helicopter market in China, which was potentially worth around $2 billion to the company.
The charges come over the United States’ concern over the modernization of China’s military and its increasingly aggressive moves in the Asia-Pacific region—including Beijing’s ongoing dispute with the Philippines over the Scarborough Shoal in the South China Sea and wrangling with Vietnam over the Spratly and Paracel islands, which are said both to be rich in oil and minerals.
At the same time, the U.S. has accused China of spying on and hacking into American defense contractors and businesses to steal intellectual property. In a report from Congress in March, China’s military has made significant advances in its cyber warfare capabilities and could be used against the U.S. to wreak havoc on its computer networks. email@example.com