ITT Pleads Guilty to Giving Away Tech Secrets, to Implement Broad Reforms and Monitor All Shipments

April 23, 2007
ITT Corp. (White Plains, N.Y., reached a final settlement relating to an investigation that began in 2001 regarding ITT Night Vision's compliance

ITT Corp. (White Plains, N.Y., reached a final settlement relating to an investigation that began in 2001 regarding ITT Night Vision's compliance with International Traffic in Arms Regulations (ITAR). ITT plead guilty to one ITAR violation relating to the improper handling of sensitive documents, and one ITAR violation of making misleading statements. As part of the plea agreement, the company will pay a $2 million criminal fine, forfeit $28 million in illegal proceeds to the U.S. government and pay $20 million to the State Department. ITT is the U.S. military's 12th largest systems supplier, and is the first major defense contractor convicted of a criminal violation under the Arms Export Control Act that was passed in 1976.

"The superior quality of our night vision technology gives the United States Armed Forces an enormous advantage on the battlefield. Sending sensitive information on these advancements overseas without the necessary licenses puts that advantage in jeopardy," said U.S. Attorney John Brownlee. "We hope the agreement reached with ITT will send a clear message that any corporation who unlawfully sends classified or export-controlled material overseas will be prosecuted and punished. The remedial action plan that is part of this agreement is designed to bring ITT back into full compliance, which will benefit both the corporation and the United States."

The company has agreed to continue to invest in research and development for its night vision products in order to provide the most advanced night vision technology to the U.S. military. The value of these pledged investments is $50 million over the next five years. In addition, ITT has launched a comprehensive review of its policies, practices, training programs and procedures, including complete audits of all business units. New monitoring approaches, communications and training initiatives have already begun and more are expected.

"We have been cooperating with the government in this investigation and we have voluntarily disclosed all discrepancies that our internal reviews revealed," said Steven Loranger, company chairman, president and CEO, in a press release. "These violations have made it clear that we had gaps in our compliance programs. The steps we are taking now will address these issues in a comprehensive way," he added.

The company has begun implementing stricter control measures such as: Insuring that all personnel understand and follow applicable regulations governing the export of critical technology, naming a new compliance officer, instituting a required ethics and compliance training program for all employees worldwide, and developing a comprehensive computer tracking program to monitor all packages sent from ITT facilities.

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