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Selling chopper engines to China costs U.S. company

By Michael Hoffman Friday, June 29th, 2012 11:48 am
Posted in Air, International

The U.S. government fined a Connecticut-based defense contractor, United Technologies, $75 million for illegally selling engines to the Chinese to build the Z-10, an advanced military attack helicopter.

One of United Technologies subsidiaries, Pratt & Whitney Canada Corp., admitted on June 28 to violating a U.S. export control law and making false statements in the sale of 10 helicopter engines to the Chinese. Federal prosecutors said the company tried to evade export control laws by selling the engines as commercial items.

Company officials knew the engines, built using U.S.. technology, would be used in the development of a military helicopter, U.S. Attorney David Fein of Connecticut said. United Technologies wanted to establish itself in the growing commercial helicopter industry in China.

“P&WC took what it described internally as a ‘calculated risk,’ because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to $2 billion,” Fein said in a Reuters report.

A major supplier to the U.S. Department of Defense, United Technologies CEO Louis Chenevert said his company would take full responsibility for the charges.

“As a supplier of controlled products and technologies to the Department of Defense and other domestic and international customers, we are committed to conducting business in full compliance with all export laws and regulations,” Chenevert said in a statement.

The Z-10 made its first flight in 2003 with the bulk of the force reaching the Chinese Army in 2009 and 2010. It’s China’s first advanced attack helicopter which carries a 30-mm cannon, HJ-9 anti-tank guided missiles, HJ-10 anti-tank missiles and TY-90 air-to-air missiles.

What makes the engines that Pratt & Whitney Canada Corp. shipped to China different than a commercial engine is the software package designed for military applications. The feds have investigated this sale since 2006 when United Technologies officials told investigators they only knew about China’s intentions in 2003 and 2004. Company officials now admit they knew about the military development of the helicopter back in 2000.

Out of the $75 million fine, United Technologies can spend $20 million of it to improve their export control procedures and hire an independent monitor, according to a Reuters report.

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	Dan Reily June 29th, 2012 at 12:16 pm US government paid Pratt and Whitney / United Technologies to develop that engine. UTC then knowingly and illegally sold to China, violating export control law and making false statements. The $75 million fine is nothing. It will not affect their financial results. There should be criminal prosecution of those responsible. China has been trying to develop an attack helicopter since the 1980’s. Now they have one, thanks to US criminals who are getting off scot-free.
	Geoffry Woods June 29th, 2012 at 12:25 pm How about this? A $75 million fine, and the CEO and anyone who signed off on this gets arrested?
	Big-Rick June 29th, 2012 at 12:26 pm “P&WC took what it described internally as a ‘calculated risk,” translation: we’ll probably get caught at some point but we’ll only get our hands slap, then we can say “well, they already have the engine, so we should be able to continue to supply them” in the meanwhile, the US taxpayer get’s screwed, our boys in uniform will have to have that helicopter one day, and the executives get rich (and continue their Obama campaign contributions). Nothing ever changes-for the better.
	Guest June 29th, 2012 at 12:49 pm “Out of the $75 million fine, United Technologies can spend $20 million of it to improve their export control procedures and hire an independent monitor, according to a Reuters report.” Say what??????
	Michael June 29th, 2012 at 1:22 pm Yes, especially people from P&W Canada. Extradition is not just for terrorist.
	Michael June 29th, 2012 at 1:37 pm We really got a big problem of corruption in Canada, and now it’s clear that the problem is not limited to politics. For example, SNC Lavalin: linked to Gaddafi and they “just” loose the trace of 56M$… http://news.nationalpost.com/2012/06/28/lawsuit-a… http://news.nationalpost.com/2012/06/21/u-s-drug–… I won’t post more because it’s not really in link with the topics.
	majr0d June 29th, 2012 at 2:28 pm People should be going to jail!
	Black Owl June 29th, 2012 at 2:36 pm I we are our own worst enemy. If we let things like this slide, then we basically are giving other companies a free license to do it.
	WRG01 June 29th, 2012 at 3:07 pm “As a supplier of controlled products and technologies to the Department of Defense and other domestic and international customers, we are committed to conducting business in full compliance with all export laws and regulations,” Chenevert said in a statement.————Hey, Chenevert…f**k you!
	DC2 Jennings June 29th, 2012 at 3:12 pm don’t just pick on Obama. Mr. Duke Cunningham (Vietnam War Ace and former congressman) is in prison for taking kickbacks. The rich paying politicians off to get what they want is a bi-partisan affair.
	Michael June 29th, 2012 at 3:18 pm That engine –the PT6– have been all developed and manufactured in Canada, and the R&D expense were likely to come from Canadian government. But giving them military grade software is probably the only thing that could send them to jail. Do not misunderstand me, the fact that they sold one of the most successful prop engine of the history to the china in small batch, knowing it’s going to be reverse engineered, in the hope to maybe get contracts in the future is beyond stupidity; they all should be fired for that, and perhaps it’s criminal as it’s a division of United Technologies, I am not a lawyer. But selling them with the military software is totally criminal, and can have a lot more impact than what they thought. In many case, software is more important that what it is controlling. That’s unforgivable.
	Thunder350 June 29th, 2012 at 3:56 pm The CEO’s of these companies, among many others, should be strung up and hanged for treason! The military industrial complex only cares about $$$ not the country. Been like this for a long time. But this is what happens when we give up our free market republic and allowed a democratic corporate one to take its place.
	Michael June 29th, 2012 at 4:26 pm What? My post got deleted by the administrator. I can’t say that United technology should be crucified for their action?
	Michael June 29th, 2012 at 4:32 pm Can I put that part that was putting that sell in line with chinese espionage, which have been easier in Canada because the csis put all their effort againt terrorism, and forgot to protect our interest? (I removed the link in case it was the reason for my post being deleted) “According to a 2003–2004 CSIS report to Parliament, foreign spies are trying to uncover ”Canada’s scientific and technological developments, critical economic and information infrastructure, military and other classified information, putting at risk Canada’s national security. “ One thing sure is that the Canadian didn’t find it alone.
	Drake1 June 29th, 2012 at 4:55 pm No surprise. A certain country that did something similar is now flying our new aircraft at a bargain.
	Guest June 29th, 2012 at 6:17 pm Capitalists that are literally selling the Communists the rope by which they will be hung.
	mark June 29th, 2012 at 10:11 pm The CEO, CFO, President and all of the line managers should be required to give depositions, under oath, on what they knew, and who was involved. Their full statements will be used to determine if they get to bid on US contracts for at least three years. The CEO and President should be forced out.
	Steve Statkus June 29th, 2012 at 11:50 pm Did anybody read the article? They are Canadian citizens not US citizens. Now if you want to go after United Technologies as the parent company good luck there. They have so many senators and reps on the payroll you won’t get anywhere. 75M is a hand slap. They ought to be barred (United Technologies) from any gvt contracts for 10 years. Just another PO’d taxpayer.
	dingldorf June 30th, 2012 at 12:34 am Hopefully this will negativly affect their future consideration for US defence contracts
	Dog Face Liberal June 30th, 2012 at 4:11 am Just out of curiosity do any of you guys know who UTC is? Google it and then get back to us on the possibility of any long term negative consequences for the corporation from this. $10 billion a year in sales to the US government says that they most likely feel rather untouchable from the consequences of their actions. Also to be noted is that the engine in question, the PT6c-67c, was one of many different engines from around the world that were vying for selection. The final engine chosen was an under-performing home grown Chinese engine based off of an engine design other than the P&WC PT6. So not only did they knowingly give military grade engine control software to the Chinese but they didn’t even get the contract. Ouch, double fail.
	William C. June 30th, 2012 at 4:49 pm UTC is a huge group that owns many companies, the financial penalties won’t hurt, some senior people need to be fired for this, and without a nice pension.
	chockblock July 1st, 2012 at 12:01 pm No, the rocket scientists who put profits over national security need to go to jail. The company needs to be barred from new DoD contracts for years. Not months, years. No CLS, no sending their people downrange. Not one penny for Americans who sold out their country.
	Billy Bob July 1st, 2012 at 9:25 pm Who was head of Pratt when the Chinese deal went down? None other than Louis Chenevert, now CEO of UTC.
	William C. July 1st, 2012 at 9:49 pm And how is that going to work? UTC owns many companies, Pratt and Whitney, Sikorsky, Hamilton Sunstrand, all of which produce important stuff that we are constantly buying. P&W makes the engines for most of our fighter fleet for example. People ought to be fired and jailed. But changing suppliers of sub-components and entire helicopters long in production? The Army isn’t going to switch from the UH-60 Black Hawk to another design for example. It doesn’t make sense from a logistical and cost perspective.
	RSemproch July 2nd, 2012 at 12:07 am Somebody needs to go to jail for this. This is beyond a security violation…this pretty much threatens Homeland Security. These companies need to be dealt with by the full extent of the law.
	majr0d July 2nd, 2012 at 3:58 pm Good points but put some CEOs that knew what was going on in jail and you’ll address the problem, QUICK!
	CCDC July 2nd, 2012 at 5:17 pm if something like this happened in China, vice-versa, do you think the Chinese would slap these guys on the wrist? have we not learned yet? it’s bad enough the Chinese are getting away with putting spyware in Apple products and stealing OUR secrets. i wish we’d stop playing this “lets be nice” game, and go back to the attitude we had in WWII.
	JamesR July 3rd, 2012 at 5:43 am I believe its about time we as Americans TAKE OUR COUNTRY BACK from the CEO’s and their crony politicians. Send some to jail in GENERAL POPULATION and watch it stop. Then ONLY 100% AMERICAN companies can manufacture AMERICAN defense products with it parts coming only from AMERICAN manufacturers.. Then we will be secure…
	Ed Mac July 4th, 2012 at 3:42 pm If a Chinese company had done this the executives would be executed
	Forefronts July 4th, 2012 at 4:51 pm Only $75M. There must be a criminal offense in there somewhere.
	Rick B July 4th, 2012 at 4:57 pm This has nothing to do with Obama, this type of mentality and lack of consequence for treasonable actions, is intertwined in our federal contracting bureacticy and is bigger and more complicated then what a President can do. The system speaks the talk of patriotism but doesn’t walk the talk. How sad for our country, many of our self centered policy makers that do not know what is right anymore and our military that has to pay the price.
	Joe H. July 4th, 2012 at 7:49 pm I think its time for our spineless government to get off the politically correct band wagon and start prosecuting CEO’s and company officials who sell our military technology to foreign countries. Forget the fine, take the company and gut it, Take their money and make the company officials support, out of their pocket, the workers who will be displaced until they find another job. They are commiting treason, they are taking our technology and turning it against us.
	Lonnie J July 5th, 2012 at 9:27 am Maybe someone should be looking at a jail term for selling advanced tech. What really makes me sick about this sale is the fact that a year from now the Chinese will be making this very same engine from our technology, and selling them to the US putting how many employee’s out of work at United Tech? In my opinion this sale had to do with anything other than greed, as usual.
	Russell July 5th, 2012 at 10:12 am Isn’t this treason??
	Russell July 5th, 2012 at 10:16 am A Marine, who stepped on his dick with a chrome AK-47 from Iraq, is looking at 10 years for illegal possession of automatic weapons. UT can pull this stunt and only get fined?? Line ‘em up, I’ll pull the trigger!
	Infidel4LIFE July 5th, 2012 at 12:04 pm IDIOTS. No jail time? Wat a joke.
	Infidel4LIFE July 5th, 2012 at 12:05 pm most likely. its GREED, pure and simple.
	chris July 5th, 2012 at 2:04 pm This should be treason.…no if’s and’s or but’s.…..If any of us did this or give china the info we would be sent to prison for life for treason or killed.…..It is all about who you know.…They should never be allowed to ever be in bussiness again.….
	Schlappy July 5th, 2012 at 2:21 pm C’mon guys, what’s the problem…it’s not like we’re ever going to go to war against the nation who owns us, that would be suicide.
	Schlappy July 5th, 2012 at 2:23 pm then they should be fined $7.5 BILLION.…and we’ll take it in the form of credits for all the parts we’ll be ordering from them over the next 10 years.…solved!
	TheBaron July 5th, 2012 at 9:07 pm I wonder if this will come back to haunt us, like the steel sold to Japan just before Pearl Harbor.
	thankfully retired July 8th, 2012 at 12:53 am $10,075,000,000. would have been more appropriate.
	Mr. Smith July 9th, 2012 at 7:32 am Before Chenevert was promoted to CEO of UTC, he President of Pratt & Whiney Canada (1999 — 2006). He was the President of Pratt &Whitney Canada when the voilations occured. No one reported that. Question, was he personally involved in any of the wrong doing?
	JBSP July 9th, 2012 at 4:30 pm NOT ONLY SHOULD THEY BE PROSECUTED, BUT SHOULD LOSE ALL LICENSING TO BE A GOVERNMENT CONTRACTOR. THEY COMMITTED SABOTAGE OF OUR COUNTRY. THESE ENGINES WILL PROBABLY USED AGAINST OUR MILITARY IN THE FUTURE. — JBSP
	Chris August 12th, 2012 at 12:05 pm Yep…true story Dan but some congressman probably has his hands dipped in it as well…it’s all about the money now and it will be the downfall of this great nation.
	John October 2nd, 2012 at 2:34 pm Dear, Am interested in purchase your items there now, To know what items am looking for in your company please view this web site to see what items am looking for now.. Open this site and longing your username id and password to view what item there now…After you see the item give me the list price of the items now.. View this site now: and longing your username id and password http://www.motiontvonline.com/site2010/templates/…
	c barraca October 3rd, 2012 at 5:27 pm How do we define TREASON?
	Slovak Translator December 14th, 2012 at 8:06 am I definitely agree with Black Owl. http://www.slovak-translator.com

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