ITT is fined on military exports

Diversified industrial manufacturer ITT Corp. has agreed to pay a $100-million penalty for illegally sending classified night-vision technology used by the U.S. military to China, Singapore and Britain, the Justice Department said Tuesday.

According to a written plea agreement to be filed today in U.S. District Court in Roanoke, Va., ITT will plead guilty to two felony counts: export of defense articles without a license and omission of statements of material facts in arms export reports.

“The criminal actions of this corporation have threatened to turn on the lights on the modern battlefield for our enemies and expose American soldiers to great harm,” U.S. Atty. John Brownlee said in a statement.

ITT, which Brownlee cited as the 12th-largest systems supplier to the U.S. military, is the first major defense contractor convicted of violating the Arms Export Control Act.

The $100-million penalty includes a $2-million criminal fine, the forfeiture of $28 million in illegal proceeds to the United States and $20 million to the State Department.

The remaining $50-million penalty will be suspended for five years and the White Plains, N.Y.-based company can reduce it on a dollar-for-dollar basis by investing in the development and production of more advanced night-vision technology so the U.S. military maintains a battlefield advantage.

The Army must approve any reduction in the suspended fine, and the government will maintain the rights to any technologies ITT develops and can share them with rival defense firms on future contracts, according to the agreement.

“The size of the penalty shows how severely the government regards any sale of sensitive military technology to a potential adversary,” said Loren Thompson, a defense analyst at the Lexington Institute in Arlington, Va.

“Night-vision goggles greatly enhance the capability of military forces to operate around the clock, which differentiates our force from that of most adversaries.”

An ITT spokesman declined to comment beyond a Feb. 2 news release that said the company’s fourth-quarter operating income for defense was “negatively affected by a charge relating to the resolution of a legal matter involving the night-vision business.”

A five-year criminal investigation began in August 2001 when special agents from the Defense Department’s Criminal Investigative Service found that ITT had illegally sent a classified U.S. military document about night-vision technology to foreign nationals in Britain.