ITT Corporation has been convicted of a criminal violation of the Arms Export Control Act for knowingly transferring classified and/or sensitive night vision technology to the UK, China and Singapore. According to a government spokesman the technology was illegally exported as a result of the company’s efforts to ‘reduce its costs and enhance its financial bottom line’. The technology was provided to the foreign subcontractors in order to manufacture night vision counter measures abroad. The company admitted that it had knowingly and willfully omitting material facts from its reports to the State Department. The company also admitted that it had provided false and misleading information in an effort to hide the fact that it had illegally exported night vision goggles and parts for years.
In its report the government found that ITT managers had created an atmosphere where U.S. export laws were viewed as obstacles to getting business done. It also found that the combination of grossly inadequate resources and a negative attitude toward export compliance had led to a regular pattern of export violations and misrepresentations to the government.
In addition to the $100 million penalty the investigation remains ongoing concerning some of the individuals involved in the matter. For more detailed information about the case, go to the U.S. Immigration and Customs Enforcement (ICE) website.
NOTE: As U.S. companies constantly seek ways to lower cost and outsource functions to foreign entities this case should act as beacon for the need to develop and maintain very robust compliance procedures to ensure that these types of violations do not occur. Companies must also guard against the attitude that compliance is a mere hindrance to its need to ‘get business done’. The combined issues of ‘deemed exports’ and today’s ease in sharing technology are particularly ‘slippery slopes’ for many companies.