Has United Technologies commited treason?

[Trieste]

http://www.mcclatchydc.com/2012/08/09/161328/sens-carl-levin-john-mccain-want.html

Two powerful U.S. senators want the Pentagon to consider suspending or blocking one of the nation’s largest defense contractors from government work because a subsidiary has admitted selling software to China that it knew would be used for military purposes.

[...]

The deal also could have meant access to a $2 billion civilian helicopter market in China, according to Justice Department documents.

[...]

United Technologies, based in Hartford, Conn., is a top 25 defense contractor. It earned $58 billion last year. Losing the opportunity to bid on federal contracts could cost it billions in lost revenue.

Wait, what? Not only does the money not make sense to me, but I'm having a hard time understanding why only two senators are writing a letter about this. I could be missing something, but I'm not entirely certain why this company would be allowed to continue working on defense contracts.

[AndyZ]

A lot of these things start out with a Democrat and a Republican co-sponsoring things.  At least as per my understanding, this shows that there's bipartisan interest and it's not a waste of time to pursue.

I imagine that this is just the beginning and that a bill will be written up on the matter.

However, I may very well be wrong.

[Callie Del Noire]

http://www.mcclatchydc.com/2012/08/09/161328/sens-carl-levin-john-mccain-want.html

Wait, what? Not only does the money not make sense to me, but I'm having a hard time understanding why only two senators are writing a letter about this. I could be missing something, but I'm not entirely certain why this company would be allowed to continue working on defense contracts.

M.O.N.E.Y.

Lots and lots of payola going around, folks don't want to hurt their nest egg and padding with something as trivial as a charge of treason from one of the many companies lining their campaign funds.

I personally think $75 million is a slap on the wrist..and a weak one for what is clearly criminal conspiracy to circumvent the export control laws. The software had to be a definite dual use technology and I'm sure that is why the CANADIAN division did the job rather than the US division directly. I would hit them with all their China Market profits +20% personally.

The people in congress aren't the ones that knew it was dual use.. it was the Execs and programmers at the firm.

[gaggedLouise]

M.O.N.E.Y.

Lots and lots of payola going around, folks don't want to hurt their nest egg and padding with something as trivial as a charge of treason from one of the many companies lining their campaign funds.

I personally think $75 million is a slap on the wrist..and a weak one for what is clearly criminal conspiracy to circumvent the export control laws. The software had to be a definite dual use technology and I'm sure that is why the CANADIAN division did the job rather than the US division directly. I would hit them with all their China Market profits +20% personally.

The people in congress aren't the ones that knew it was dual use.. it was the Execs and programmers at the firm.

The article is a bit vague worded, or under-researched, at some key points. For one, did Pratt & Whitney really *know* beforehand that the software they sold was going to be used for military projects? It's implied they did, but it could be just the pick-up contention line of these two senators. It looks as if the piece is contradicting itself on if the primary part of the contract was about civilian helicopters or about the military venture - and clearly those are crucial points.

And paying a big chunk of damages or enforced fines doesn't always mean guilt is admitted. Google paid a huge fine to Apple the other day on cookies planted in Safari, but it was pointed out in the news that this didn't imply any admission of being in breach; legally it was just a means of saying "okay, okay, we're paying top dollar and we're not gonna file appeals but shut up, it's under protest!". The court, too, had stated that they had found no breach of U.S. law, but said there was a breach of a previous contract between Google and the Federal Trade Commission. Google seem to want to see it as a "settlement out of court, but half made in court".


If the main lines of their letter are correct, then yes, it sounds like treason and/or grave criminal conversion with respect to software and licenses that U.S. defense have had a stake in developing and where they have been the main funder (or were the Canadian RAF involved too? anyway they won't like this either!). This kind of thing is going on here and there all the time, downright bootlegging and third-party selling of military tech between the big powers too, but I understand it's kept very much under wraps.

[Trieste]

M.O.N.E.Y.

Lots and lots of payola going around, folks don't want to hurt their nest egg and padding with something as trivial as a charge of treason from one of the many companies lining their campaign funds.

I personally think $75 million is a slap on the wrist..and a weak one for what is clearly criminal conspiracy to circumvent the export control laws. The software had to be a definite dual use technology and I'm sure that is why the CANADIAN division did the job rather than the US division directly. I would hit them with all their China Market profits +20% personally.

The people in congress aren't the ones that knew it was dual use.. it was the Execs and programmers at the firm.

The company stood to gain only $2 billion from a deal like this. For a company that pulled in something like $30 billion last year, that's small change. The M.O.N.E.Y. doesn't make sense.

[gaggedLouise]

The company stood to gain only $2 billion from a deal like this. For a company that pulled in something like $30 billion last year, that's small change. The M.O.N.E.Y. doesn't make sense.

The foot opening up the door. Likely they wanted to get in on a market that's sure to grow bigger in the near future, and get in first. And perhaps get a bunch of Chinese airlines recommending your chopper systems to countries like Thailand, Russia, the Central Asian states.

[OldSchoolGamer]

http://www.mcclatchydc.com/2012/08/09/161328/sens-carl-levin-john-mccain-want.html

Wait, what? Not only does the money not make sense to me, but I'm having a hard time understanding why only two senators are writing a letter about this. I could be missing something, but I'm not entirely certain why this company would be allowed to continue working on defense contracts.

The rich got a bit richer, so the GOP has no problem with it.

[Callie Del Noire]

The company stood to gain only $2 billion from a deal like this. For a company that pulled in something like $30 billion last year, that's small change. The M.O.N.E.Y. doesn't make sense.

In and off itself it's not a lot.. but its a way to circumventing the export laws. And I know enough of the avionics software I handled in the Navy, dual use applications were pretty fricking apparent.

Engineers, programmers, executives of all sorts would have known it was dual use tech. It's been long defined, explained and established in companies that have long standing military research divisions. P&W KNEW they were selling the Chinese restricted tech.

This is where companies and governments will inevitably clash. You spend two billion (or more) on R&D for a program that doesn't get picked up by the US military.. you're going to want to recoup those losses somehow.. BUT unlike some businesses, your tech isn't entirely yours to sell. That nasty Export Restrictions law.

What they did was illegal, they knew it.. and I'm willing to bet the execs who brokered the deal were doing it on the unwritten direction of the US mother company. Of course you'll never find any documentation to prove it..and evenutally the men who get the can for it will have nice parachutes for their departure from the company.

And let me tell you this much, Dual Use.. covers a goddamn lot of ground. NavAids, GPS software, Radio control systems, computer stabilization programming, trouble shooting software, data links, encryption software.

[js207]

http://www.mcclatchydc.com/2012/08/09/161328/sens-carl-levin-john-mccain-want.html

Wait, what? Not only does the money not make sense to me, but I'm having a hard time understanding why only two senators are writing a letter about this. I could be missing something, but I'm not entirely certain why this company would be allowed to continue working on defense contracts.

For one thing, it seems to revolve around a Canadian company, and involve export control laws that were at least partly ruled illegal back under the Clinton administration.

Moreover, it's not as if it involved exclusively American technology - even if the US government had managed to stop the Canadians selling their software to China, there's nothing to stop the Chinese buying something similar from Europe instead: companies there build helicopters too, including the one which had been selected as the next Marine One!

[gaggedLouise]

For one thing, it seems to revolve around a Canadian company, and involve export control laws that were at least partly ruled illegal back under the Clinton administration.

Moreover, it's not as if it involved exclusively American technology - even if the US government had managed to stop the Canadians selling their software to China, there's nothing to stop the Chinese buying something similar from Europe instead: companies there build helicopters too, including the one which had been selected as the next Marine One!

The Canadian company is a daughter of U.S. Pratt & Whitney, not sure where that puts it in terms of jurisdiction but it's very likely that they shared this technology, and some of the funding, with their U.S. parent company. I think Callie is right that many of those dealing with these products at P&W likely knew that it was restricted tech, but would have been careful not to leave a definite paper trail.

But it's a grey zone and this kind of thing really is going on a bit everywhere. In the 80s, Swedish tech giant ASEA (now ABB; they have long connections to military engineering and frontier machine-building) had licenses to build some sort of military radar and tracking equipment, for the home and European markets, setups which were partly their own constructions but included sensitive U.S. military tech. It was under a strict ban on sales to the Eastern bloc, but ASEA's stuff did get sold under wraps (smuggled) to East Germany (the story has become locally famous because of the connection to a journalist who mysteriously disappeared and was found, with her girlfriend, drowned in her car several months later; it has been alleged she was on the track of the story and was killed by GDR agents).

[Chelemar]

They shouldn't be permitted to have access to any further contracts or intelligence on US weaponry tech.  Attack helicopters are game changers in modern warfare.  They have multiple uses including killing tanks, intel gathering, intimidation, and destroying small ammo dumps, just to list a few. 


The part that they have to prove

civilian helicopters that the company knew “would be used by China to develop its first modern attack helicopter,”

Read more here: http://www.mcclatchydc.com/2012/08/09/161328/sens-carl-levin-john-mccain-want.html#storylink=cpy

the overt act to sell the knowledge to China knowing they would make attack helicopters is the part that has to be proven for treason to be considered. 

If they do prove it, then more than financial ramifications should be considered, criminal ones should be as well.  They will have aided in causing possible physical harm to the country and it's citizens.

[vtboy]

The wisdom of imposing penalties on publicly traded corporations for their transgressions has never appealed to me. Ultimately, the losers are the corporations' stockholders, the vast majority of whom would have little notion, much less control, of the nitty-gritty details of its business transactions. Moreover, if there are benefits to the nation from treating with a company like United Technology (perhaps better or cheaper products and services), it would seem counterproductive to bar the government from continuing to do so. 

Far better, I think, to impose criminal and/or civil penalties on those within a corporation who are personally up to their eyeballs in illegality. Taking away stock options, golden parachutes, retirement packages, etc. from those who knowingly engineer (or turn blind eyes to) a company's crimes, and locking up a bunch of them, strike me as far better deterrents of this sort of behavior, and a more just meting out of punishment. After all, notwithstanding the legal casuistry of Citizens United, corporations, unlike flesh and blood persons, can feel no sting.

[Callie Del Noire]

One BIG point on the selling/sharing of Dual Use tech is this: there is a resale clause. You agree by buying the tech to NOT sell it to counties the US has listed.  So, the Canadian company violated that clause at lest and like I said before, I'll bet P&W execs knew what it might be used for. 

[Shaitan]

I remember reading an article about this not too long ago, on arstechnica I believe, the execs knew and even saw the hardware they had supplied as test hardware to work with their software in place in an attach copter, and didn't see hide nor hair of the civilian copter, they were fully and completely aware that the whole civilian side of the job was looking like a pipe dream and kept going. They saw money and didn't want to believe that a foreign country would pull a fast one on them. Greed blinded them. At least that's my opinion anyways.

[Callie Del Noire]

I remember reading an article about this not too long ago, on arstechnica I believe, the execs knew and even saw the hardware they had supplied as test hardware to work with their software in place in an attach copter, and didn't see hide nor hair of the civilian copter, they were fully and completely aware that the whole civilian side of the job was looking like a pipe dream and kept going. They saw money and didn't want to believe that a foreign country would pull a fast one on them. Greed blinded them. At least that's my opinion anyways.

This one?

http://arstechnica.com/tech-policy/2012/07/how-us-software-ended-up-in-chinese-assault-helicopters/

My take: Yeah they knew they were being sold a bill of goods. The Chinese company was infamous for stealing tech, was a primary military builder and presented NO civilian version timeline. PW got greedy. And advance the Chinese program by five to ten years. 

[Shaitan]

that's the one :D

[Callie Del Noire]

My take? And to be cruely blunt in it

Nothing short of a HUGE billions of dollars fine, a chunk of their YEARLY gross profits will keep companies from trying to circumvent the law. as it is nw, these guys managed to get 20 MILLION in fines set aside in court.

Otherwise, it is just another cost of business expense to be weighed when considering breaking the law