RTX Corp: Billion-Dollar Fund and Compliance Program Following Export Misstep

RTX Corp will pay a fine of $200 million to settle allegations that the aerospace and defense company violated export laws. This information comes from documents released by the U.S. Department of State. The issue arises from RTX Corp's non-compliance with the International Traffic in Arms Regulations. Defense articles, including classified items, were misclassified and exported improperly. Among other things, data and products were unlawfully exchanged with countries like China. In the earnings announcement on July 25, RTX mentioned that the company had set aside approximately $1 billion to settle three different legal issues. These were primarily identified during the integration of Rockwell Collins and Raytheon Co. into RTX. The announcement from the Department of State on Friday was the first of the three legal matters and involved the unauthorized transfer of intellectual property and technology to China. One example of these violations includes the transfer of information about an aluminum housing component of the F-22 Raptor fighter jet to Chinese nationals in Shanghai. The sensitivity of this information was initially underestimated by RTX employees. "As part of the resolution of these three matters, we will be required to oversee independent compliance monitors over the three-year term of the agreements," said the company during the earnings announcement. Half of the fine will be invested in the compliance program.