14 DAY TRIAL // A Canadian subsidiary of the United States defense contractor United Technology Corporation (UTC) pleaded guilty to violating the Arms Export Control Act when it exported US military software to China.
The software, illegally exported by Pratt & Whitney Canada Corp. (PWC), was used by China to develop the Z-10, the country’s first modern military-grade attack helicopter.
PWC admitted that it made false statements regarding exports to China, and along with UTC and Hamilton Sundstrand Corporation (HSC) - UTC's US-based subsidiary -, agreed to pay more than $75 million (60 million EUR).
All three organizations have been charged with making false statements regarding their illegal exports. PWC has also been accused of illegally exporting defense articles to China for the Z-10.
Finally, count three charges have been brought against PWC and HSC for failing to timely notify the US government of the exports.
The exporting of defense product to China was banned by the US in 1989 and the prohibition specifically included items that could be utilized to build helicopters.
However, in 2001 and 2002, the Canadian firm delivered 10 development engines to China, but because they were identical with those supplied for commercial helicopters, PWC considered that the shipment didn’t require an export license.
The engines may have been similar to the ones used for commercial helicopters, but the Electronic Engine Control software they were running on was in fact modified for military applications, making them a defense article.
In 2004, UTC and HSC started questioning the legality of the operation, but PWC continued to export its own modified software until June 2005.
The US government learned about the exports only in 2006 when an investor group started raising questions about PWC’s involvement in the Chinese military project.
“Protecting national security is our top priority,” Assistant Secretary of Commerce for Export Enforcement, David W. Mills, said. “Today’s action sends a clear signal that federal law enforcement agencies will work together diligently to prevent U.S. technology from falling into the wrong hands.”