Senators suggest new penalties in Chinese helicopter probe

Introduction

Two senior members of the Senate Armed Services Committee called on Monday for the Defense Department to consider suspending or blocking its ties to a major weapons contractor that admitted illegally helping China develop a new attack helicopter.

Sen. Carl Levin (D-Mich.), the committee chairman, and Sen. John McCain (Ariz.), its senior Republican member, asserted in an Aug. 6 letter to Defense Secretary Leon Panetta and Secretary of State Hillary Clinton that a series of export violations by the Canadian branch of helicopter engine manufacturer Pratt and Whitney and its parent company United Technologies “may have caused significant harm to our national security.”

Although Pratt, United Technologies and another firm agreed to pay a total of $75 million in fines when they publicly admitting wrongdoing in June, Levin and McCain complained that “no individual manager or employee has been held personally accountable.” The senators said that although the State Department has restricted some licensing privileges for Pratt’s Canadian branch, “we believe that the Defense Department should itself evaluate this case for the appropriateness of contract suspension or debarment.”

In its settlement with the Justice Department and the State Department, Pratt and United Technologies acknowledged that Pratt knowingly sent critical software to China for use with a military attack helicopter, the Z10, because it hoped to win a lucrative contract for a civilian version. “We find the crime to which P&WC [Pratt & Whitney Canada] pleaded guilty enormously troubling,” the two senators said.

United Technologies, headquartered in Hartford, Connecticut, was the ninth largest U.S. defense contractor in 2010. Since July 2006, when the company filed statements about the software exports to China that it admitted this year were incorrect, the Pentagon has awarded it more than $1.67 billion in contracts, according to an article the Center published about the case in July. One of Pratt’s major contracts with the department now is to supply jet engines for the troubled F-35 Joint Strike Fighter jets, the most expensive military program in history.

U.S. Attorney for Connecticut David Fein, who directed the government’s effort, said at the time of the settlement that it marked “one of the largest resolutions of export violations with a major defense contractor in the Justice Department’s history.” Assistant Attorney General Lisa Monaco, who spoke with Fein, said Pratt had compromised “U.S. national security for the sake of profits and then lie[d] about it to the government.”

After closely examining company procedures and internal records, the government found United Technologies responsible for 576 violations of the State Department’s export rules. U.S. military exports to China have been embargoed by the department since 1989.

The senators said in their letter that “the widespread nature of these violations by just this one major defense contractor raises the possibility of systemic deficiencies with the oversight and enforcement of federal export controls.” They asked both secretaries to explain what their departments are doing to ensure better compliance.

Pentagon spokeswoman Cheryl Irwin said the department had not seen the letter as of Monday afternoon and had no immediate comment. A United Technologies spokesman did not immediately respond to a phone call and e-mail requesting comment. The company has previously said it is taking steps to improve oversight, including assigning more specially-trained personnel to review its export-related actions.