The Raytheon Company’s latest quarterly filing with the Securities and Exchange Commission reveals the company is “currently conducting a self-initiated internal review” of its operations abroad, “focusing on compliance with the Foreign Corrupt Practices Act.” During the review, the company “identified several possible areas of concern relating to payments made in connection with certain international operations related to a jurisdiction where we do business.”
For the last several years, the Justice Department has ramped up its enforcement of the Foreign Corrupt Practices Act, a law that seeks to stop bribery of foreign officials by U.S. companies and individuals and foreign companies that issue securities in the U.S.
Raytheon’s biggest customer is the United States federal government, mostly the Defense Department, with $18.4 billion in sales in 2008 (excluding $1.8 billion in foreign military sales through the U.S. government), according to its annual report to the SEC. About 20 percent, or $4.6 billion (including U.S. government-arranged foreign military sales), of the company’s business in 2008 were with foreign entities. The Boston-based company sells weapons such as the Patriot air defense system and the SM-3 missile component of the sea-based Aegis missile defense system.
The defense giant has “voluntarily contacted the Securities and Exchange Commission and the Department of Justice to advise both agencies that an internal review is underway.” Typically, voluntary disclosure to the SEC and Justice Department can mitigate penalties for a company if the U.S. government seeks action.
The July 23, 2009, Raytheon filing states “because the internal review is ongoing, we cannot predict the ultimate consequences of the review,” but “based on the information available to date, we do not believe that the results of this review will have a material adverse effect on our financial condition, results of operations or liquidity.”
Raytheon had not responded to the Center’s request for further details at the time of publication.