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The US Department of State has issued a $51 million civil penalty against American multinational defence contractor Boeing for alleged unauthorised exports and data transfers to the People’s Republic of China.
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The department recently concluded an administrative settlement with Boeing to resolve 199 violations of the US Arms Export Control Act and the International Traffic in Arms Regulations (ITAR).
Under the terms of a 36-month consent agreement, Boeing will pay a civil penalty of $51 million, with the department suspending $24 million on the condition that funds will be used for the department-approved consent agreement remedial compliance measures to strengthen Boeing’s compliance program.
“The administrative settlement between the Department of State and Boeing, addresses Boeing’s unauthorised exports and retransfers of technical data to foreign-person employees and contractors; unauthorised exports of defence articles, including unauthorised exports of technical data to the People’s Republic of China … and violations of license terms, conditions, and provisos of Directorate of Defense Trade Controls authorisations,” the US Department of State said in a statement on 29 February.
“All of the alleged violations were voluntarily disclosed, and a considerable majority predate 2020.
“The Department of State and Boeing reached this settlement following an extensive compliance review by the Office of Defense Trade Controls Compliance in the department’s Bureau of Political-Military Affairs.
“Boeing cooperated with the department’s review of this matter and has incorporated numerous improvements to its compliance program since the conduct at issue.
“The settlement demonstrates the department’s role in furthering the national security and foreign policy of the United States by controlling the export of defence articles. The settlement also highlights the importance of exporting defence articles only pursuant to appropriate authorisation from the department.”
Outlined in the US Department of State, Boeing will engage an external special compliance officer to oversee the consent agreement, conduct two external audits of its ITAR compliance program and implement additional compliance measures.
The violations allegedly resulted from three Chinese employees of Boeing, who reportedly downloaded technical data involving AH-64 Apache, F-18, F-15 and F-22 aircraft, E-3 airborne warning and control system and AGM84E cruise missiles between 2013 and 2017.
The company also allegedly engaged in unauthorised exports of defence material and technical data to several countries such as Israel, and unauthorised downloads of technical data occurred in several international locations such as Australia, Canada, France, India, Japan, Taiwan, and Ukraine between 2013 and 2018.
