By Luc Cohen and Nate Raymond
NEW YORK/BOSTON (Reuters) -RTX agreed on Wednesday to pay about $950 million to resolve federal charges it defrauded the U.S. Department of Defense into overpaying for defense systems and bribed an official in Qatar to secure business from the Middle East country's air force.
The aerospace and defense company's Raytheon (NYSE:RTN) unit entered into two deferred prosecution agreements to resolve criminal charges filed by the U.S. Department of Justice in federal courts in Boston and Brooklyn.
The Arlington, Virginia-based company also settled civil claims by the department arising out of a whistleblower lawsuit by a former employee and agreed to resolve a related foreign bribery case by the U.S. Securities and Exchange Commission.
Under the accords, prosecutors have agreed to dismiss criminal charges against the company after three years if it complies with the terms of the deferred prosecution agreements, which call for hiring an independent compliance monitor.
In court papers, its Raytheon unit admitted the allegations were true. RTX, which previously set aside $959 million to cover expected settlements in the cases, said in a statement that it "is taking responsibility for the misconduct that occurred."
The investigations had hung over RTX, formerly known as Raytheon Technologies (NYSE:RTX), since 2019. The company merged with United Technologies in 2020 and changed its name last year.
Prosecutors in Boston alleged that Raytheon from 2012 to 2018 defrauded the Defense Department into paying over $111 million more than it should have in two contracts to purchase Patriot missile systems and operate a radar system.
Raytheon will pay a $146.8 million criminal penalty to resolve that criminal fraud case and another $428 million to resolve related civil claims brought under the False Claims Act that arose from a whistleblower lawsuit by former Raytheon employee Karen Atesoglu.
As a reward for pursuing the case, Atesoglu will receive a $4.2 million cut of the settlement, the Justice Department said. Her attorney, Pat Almonrode, in a statement called her a "courageous and determined whistleblower."
In Brooklyn, prosecutors alleged that Raytheon from 2012 to 2016 conspired to pay bribes to a high-level official with Qatar's air force in exchange for assistance obtaining and retaining business from the Gulf country's military branch.
Raytheon was charged with conspiring to violate the Foreign Corrupt Practices Act and conspiring to violate the Arms Export Control Act.
It has agreed to pay a criminal penalty of $252.3 million and forfeit $36.7 million, though it would get a $7.4 million credit against the expected related settlement with the SEC.
Under that settlement, the company would pay a $75 million penalty, for which it would receive a $22.5 million credit based on the criminal penalty, and disgorge another $37.4 million, according to Raytheon's agreement with the Justice Department.