UK Company Fined $79 million in US Export Controls Case

The U.S. Department of State announced this morning that UK defense contractor BAE Systems plc has entered into a consent agreement to settle thousands of violations of the Arms Export Control Act (AECA) and the International Traffic in Arms Regulations (ITAR). The company has agreed to pay the largest civil penalty ever in a case such as this one, $79 million. 

According to the State Department, BAE employees had engaged in "the unauthorized brokering of U.S. defense articles and services" as well as failing to abide by numerous brokering provisions of the ITAR as well as record-keeping requirements. There were more than 2,500 alleged violations. 

As is typical in cases such as these, the U.S. Government has agreed to reduce the civil penalties, in this instance by $10 million, if the company implements compliance measures moving forward.

BAE Chairman Dick Olver issued the following statement:

"Last year the Company reached a settlement with the U.S. Department of Justice concerning historical violations of U.S. defence export control regulations and this settlement with the State Department arises in connection with its parallel civil jurisdiction over such matters. The Company is grateful to the State Department for the time and effort its staff have invested over the last year in reviewing the company's present compliance systems and processes, which enabled them to conclude that the Company has initiated appropriate steps to address the cause of the past civil violations and to mitigate any law enforcement concerns. The Company looks forward to working with the State Department to ensure that it continues to make progress towards achieving its goal as being as widely recognised for responsible conduct as it is for high quality products and advanced technologies."

The Consent Agreement documentation is available from the State Department, here.