Title: Boeing Faces $51 Million Penalty for Exporting Controlled Military Technology and Unauthorized Data Downloads
Boeing, a leading American multinational corporation specializing in aerospace and defense, has agreed to pay a penalty of $51 million for violating export controls related to military technology. This violation included instances of sensitive data being downloaded by employees in China from numerous defense aircraft and missile models between 2013 and 2017.
Accusations and Downloads: Unauthorized Access of Defense Data
The complaint filed against Boeing alleges that three employees in China downloaded data on three different models of fighter jets, an airborne warning and control system, an attack helicopter, and two types of air-to-ground missiles a total of 25 times. Additionally, there were approximately 80 unauthorized downloads of defense data and information from Boeing employees and contractors in 18 countries. These countries included Australia, Canada, France, Germany, Hong Kong, India, Italy, Japan, Kenya, Morocco, Russia, Singapore, South Korea, Spain, Thailand, Taiwan, Ukraine, and the United Kingdom.
State Department Findings and Mitigating Factors
The State Department identified a total of 199 violations of the Arms Export Control Act by Boeing. It is important to note that all the alleged violations were voluntarily disclosed by Boeing, and a significant majority of them occurred before 2020. The mitigating factors considered by the department include these voluntary disclosures and improvements implemented in Boeing’s compliance program since then.
Penalties and Oversight
$24 million of the fine imposed on Boeing will be suspended, provided that the company uses this money to further strengthen its compliance program. Boeing will also be subjected to the oversight of a special compliance officer for at least the next two years. The company’s statement regarding the settlement reads: “We are committed to our trade controls obligations, and we look forward to working with the State Department under the agreement announced today. We are committed to continuous improvement of that program, and the compliance undertakings reflected in this agreement will help us advance that objective.”
Boeing: A Major Defense Contractor
Apart from its commercial aircraft business, Boeing is a significant defense contractor. In 2021, the company recorded revenue of $24.9 billion from its defense division, which falls short of the $33.9 billion revenue generated from its commercial jet sales.
Boeing’s Reputation and Ongoing Investigations
This settlement is just one of several recent blows to Boeing’s reputation, which was once synonymous with safety and engineering. The company currently faces multiple investigations, including one by the National Transportation Safety Board (NTSB) concerning a door plug blowing out on a 737 Max flight operated by Alaska Airlines. This incident left a large hole in the plane’s side and resulted in the loss of several fasteners that were supposed to secure the door plug.
Boeing is also under scrutiny from the Federal Aviation Administration (FAA), which has demanded that the company create a plan to improve its quality controls in aircraft manufacturing. Additionally, the Justice Department is probing whether the incident amounts to a violation of a 2021 deferred prosecution agreement related to defrauding the FAA during the initial certification of the 737 Max, which led to two fatal crashes causing the deaths of all 346 passengers onboard.
The NTSB has yet to determine fault or blame for the door plug incident, and any conclusions regarding responsibility are expected much later in their investigation. Boeing CEO Dave Calhoun acknowledged the company’s accountability for the problem during a January investors’ meeting, stating: “We caused the problem, and we understand that. Whatever conclusions are reached, Boeing is accountable for what happened.”
