ITT Guilty of Revealing Classified Military Data
The ITT Corporation, a major manufacturer of night-vision goggles usedby the American military, pleaded guilty yesterday to illegally sendingclassified military information to other nations, including China, andagreed to pay a $100 million penalty.
This is the largest conviction of a big military contractor forviolations of arms export controls, and ends a five-year federalinvestigation in which the government found ITT to have enlisted afront company to “set up an end run” around laws limiting the transferof military technologies to other countries.
The government said ITT did so to take advantage of cheaper manufacturing overseas.
“ITT has put in jeopardy our military’s nighttime tactical advantageand America’s national security,” the United States attorney, John L.Brownlee, said in a statement. “The criminal actions of thiscorporation have threatened to turn on the lights on the modernbattlefield for our enemies and expose American soldiers to great harm.”
Mr. Brownlee added that “I believe that our American soldiers are the principal victims of ITT’s crimes.”
As part of a plea agreement filed yesterday in United States DistrictCourt in Roanoke, Va., ITT pleaded guilty to two felony counts relatingto the exportation, without a license, of night-vision technology toChina, Singapore and Britain.
ITT, the nation’s 12th-largestmilitary contractor, agreed to pay $50 million in fines, penalties andforfeitures to the government. In addition, as part of a governmentremedial program, the company agreed to invest $50 million indeveloping advanced night-vision technology, under the supervision ofthe Pentagon, that can be shared with other American militarycontractors.
Steven R. Loranger, chief executive of ITT, whichis based in White Plains, said the company had cooperated with theinvestigation and that it “regrets very much that these seriousviolations occurred.”
Mr. Loranger added that the settlement“relates to the actions of a few individuals in one of our 15 businessunits” and that the most sensitive part of the company’s night-visiontechnology was not compromised by the employees’ actions.
Mr. Brownlee praised Mr. Loranger, a former Textronexecutive who succeeded Louis J. Giuliano as president and chiefexecutive of ITT in 2004. Before Mr. Loranger’s arrival, Mr. Brownleesaid, ITT management and outside counsel had “fought the government’sinvestigation” and had tried to “essentially run out the clock” on thestatute of limitations.
“Mr. Loranger quickly changed course,”said Mr. Brownlee, who added that his “cooperation and strongleadership may have saved ITT from permanent ruin.”
Loren B.Thompson, a military analyst at the Lexington Institute in Arlington,Va., said that “this is a real black eye for ITT as a defensecontractor, no question about it.”
“This is a stark reminder tocontractors of how seriously the government regards the leakage ofsensitive military technology,” Mr. Thompson added. “There’s not muchpoint in outspending the rest of the world on military technology ifcountries like China can get it on the cheap.”
According to Mr.Brownlee, ITT, in an effort to “reduce its costs and enhance itsfinancial bottom line” began to illegally outsource parts of thenight-vision system. As it began to do business with overseassuppliers, it provided them with information that had been classifiedas “Secret-No Foreign,” which meant it was not to be shared with anyforeign person or companies, including close allies.
Forinstance, the government found that two Chinese optical engineersworked on company designs in Singapore, and that engineers fromSingapore worked side by side with ITT engineers at the company’snight-vision operation in Roanoke. In addition, sensitive technicaldata was sent to a Singapore company that then transferred the data tocompanies in England and China.
Rather than following UnitedStates export laws, the government said, ITT viewed those laws as“obstacles to getting business done.”
As a result, ITT said ithas enacted a number of measures. Those include naming a new complianceofficer, developing better tracking systems and setting up mandatoryethics classes for employees.
“ITT has a long track record asa trusted employer, supplier and partner,” Mr. Loranger said, “and weare firmly committed to ensuring that this will not happen again.”
In case you didn't read it their excuse: ITT did so to take advantage of cheaper manufacturing overseas. Yes, outsourcing the new way to spread your military secrets around. $50 million fine doesn't seem to feel right, as I'm SURE they've made more than that over the years and cost us more than that.