Night vision goggles are displayed at an ITT
exhibit in 2002 during the Association of the U.S. Army annual
meeting.
ITT Corp. of Harrison mishandled classified technical data related
to its own night vision goggle system and attempted to mislead the
government about it for years.
Now the company is the first major defense contractor to plead
guilty to criminal conduct in violating federal export laws, the
U.S. Justice Department said yesterday. ITT will pay $100 million
in penalties, one of the largest amounts ever for a criminal case,
the government said.
The technical data found its way to China, Singapore and Britain as
the company sought cheaper ways to manufacture certain parts by
making them overseas.
Managers at the ITT Night Vision division headquartered in Roanoke,
Va., went out of their way to avoid following licensing rules, and
they sought to conceal their efforts to do so, the government
said.
The Justice Department accused ITT of fighting its investigation
for three years, attempting "to essentially run out the clock on
the statute of limitations," U.S. Attorney John Brownlee said in a
statement released yesterday.
The company changed course in the fall of 2005 after the Justice
Department said it would seek an indictment, Brownlee said. He
added that Steven R. Loranger, who took over as chief executive
officer from the retiring Louis J. Giuliano in 2004, ordered the
company to work more closely with the government.
"Mr. Loranger's cooperation and strong leadership may have saved
ITT from permanent ruin," Brownlee's statement said.
It was unclear to what extent, if any, the mishandled technical
data compromised the night vision goggle program. Brownlee couldn't
say if the breach meant that troops using the equipment were in new
danger.
"We won't know, quite frankly, until potentially you're on the
battlefield," he said.
ITT spokesman Tom Glover said the technical data at the heart of
the case could not be used to reverse engineer night vision
technology. No technical information about a sophisticated
light-gathering tube at the center of the product was compromised,
he said.
"There's no question that serious violations occurred," Glover
said. "We have dedicated a lot of time and resources to find out
exactly what happened and to determine ways to prevent it from
happening ... and we've shared all this information with the
government.
"Our leadership is committed to making sure this doesn't happen
again," he said. Among other changes, the head of ITT Night Vision
was transferred a year ago, he said.
A diversified global manufacturer, ITT had sales last year of $7.81
billion. ITT has corporate offices in Harrison but does not
manufacture or do research in the area.
ITT is the 12th largest supplier of sophisticated defense systems
in the United States, and it has produced night vision technology
for 40 years. ITT Night Vision contributed about $400 million in
revenue in 2005, Glover said.
The company's 2007 financial forecast will not be affected by the
case, ITT said. In the fourth quarter of 2006 it took a $25 million
charge, or 13 cents a share, as part of the case. Its stock closed
yesterday at $60.82, down 37 cents.
Government investigators began their probe of ITT in August 2001
after they learned that ITT Night Vision had sent a classified
military document to foreign nationals in Britain.
Managers at Night Vision "created an atmosphere where U.S. export
laws were viewed as obstacles to getting business done," Brownlee's
statement said. Such laws require companies to obtain licenses or
other approvals from the State Department before shipping
circumscribed equipment or data overseas.
In April 2001 a Night Vision employee transferred technical data
related to a goggle part to a Singapore company. The part, a light
interference filter, is used to offset the effect of laser light
that adversaries can use in combat to reduce the ability of the
goggles to see in the dark.
The Singapore company later sent the data to other companies in
Britain and China, the Justice Department said. Between 2001 and
2005, ITT Night Vision illegally allowed a Singapore engineer to
work alongside ITT engineers at the Roanoke manufacturing plant.
Two Chinese optical engineers also were allowed to work on an
advanced night vision goggle system in Singapore.
ITT will plead guilty to one count of exporting technical data to
the three countries. It also will plead guilty to another count of
omitting material information from arms exports reports it filed
with the government, omissions that made the reports
misleading.
The Justice Department will defer prosecution on a third count
involving the trafficking of arms without a license as ITT carries
out a remediation program to prevent the breach from happening
again.
"By establishing these precedents, we will send a clear message
that illegally exporting our nation's most important secrets will
be prosecuted and punished," Brownlee said.