WASHINGTION: United Technologies Corp on Thursday admitted selling China software that helped Beijing develop its first modern military attack helicopter, one of hundreds of export control violations over nearly two decades.
A law enforcement source said the companies did not even launch an internal inquiry until a non-governmental organization involved in examining “socially responsible” investments in February 2006 asked United Technologies whether Pratt & Whitney Canada’s involvement in the Z-10′s development might violate US export laws.
The group threatened to recommend that investors sell their holdings in UTC.
That investigation led to an initial disclosure, in July 2006, to US authorities about the Z-10 issue, but that filing was based on an incomplete investigation and contained false statements, according to company officials and the filings.
Analysts said the settlement was a setback for United Technologies, which is transforming itself into an aerospace giant. But the penalties are unlikely to affect its sales in China, which accounted for almost $10 billion of its 2011 sales.
“It’s certainly a black eye,” said analyst Jeff Sprague of Vertical Research Partners.
United Tech expects to close in coming weeks on its $16.5 billion acquisition of aircraft components maker Goodrich Corp.
It has put three units up for sale, including the industrial arm of the Hamilton Sundstrand division.
Jay DeFrank, a spokesman for Pratt & Whitney, said the company continued to do business in China, but it had now launched major efforts to educate all 70,000 employees in United Technologies’ aerospace units about export controls.
“China is and remains an important market for UTC and we will continue to do business there in full compliance with the law,” he said. Company officials said they were being particularly cautious about possible sales of Pratt engines for another Chinese helicopter, the commercial Z-15 aircraft.
The Obama administration has lent high-level backing to United Technologies’ work in China.
Then-Commerce Secretary Gary Locke, now the US ambassador to China, visited a Pratt & Whitney joint venture in Shanghai in May 2010, according to the company’s website.
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