Sujet ouvert pour parlé des differente nouvelle sur l'espionage industriel a caractere militaire.


les chinois on deja des S300 peu etre qu'il voulai des information sur le S400 et S500

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Espionnage: lourdes peines de prison pour deux professeurs russes Deux scientifiques ont été condamnés mercredi à douze et douze ans et demi de prison pour avoir livré à la Chine des informations secrètes sur des missiles de dernière génération. par e-mail «Evgueni Afanassiev a été condamné à 12 ans et demi de prison à régime sévère pour haute trahison et Sviatoslav Bobychev à 12 ans de prison pour complicité», a précisé une responsable du tribunal. L'enquête a établi que les scientifiques avaient transmis à la Chine des informations sur le missile stratégique russe de dernière génération Boulava. MM. Afanassiev et Bobychev, professeurs de l'Université technique Baltiïski Voïenmekh de Saint-Pétersbourg, un institut lié au domaine militaire, avaient été arrêtés le 16 mars 2010. Les deux scientifiques revenaient d'une mission en Chine, où ils s'étaient rendus plusieurs fois en 2009 dans le cadre d'un partenariat avec l'Université polytechnique de Harbin. Selon les services spéciaux russes (FSB), lors de leurs missions en Chine, les scientifiques ont transmis aux services de renseignement chinois des informations secrètes contre rémunération. Le procès s'est déroulé à huis clos, les professeurs avaient plaidé non coupable. En octobre 2011, le FSB avait annoncé l'arrestation d'un espion chinois qui tentait d'obtenir des informations sur les batteries russes sol-air S-300..

http://www.lessentiel.lu/fr/news/story/14234618

Une jolie histoire impliquant Pratt&Whitney Canada et le Z-10 chinois

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How US software ended up powering Chinese assault helicopters Why spy or steal when Western companies will sell you the tech you need? In 2002, United Technologies Corporation was coming off its most profitable year ever. The various units of UTC, which owns businesses ranging from helicopter manufacturer Sikorsky to Otis (“the world’s leading manufacturer, installer, and maintainer of elevators”), had a net income of $1.9 billion off $27.8 billion in sales in 2001. Pratt & Whitney, the aircraft engine unit of UTC, was poised to bring in billions more from defense contracts, supplying the engines for Lockheed-Martin’s F-22 Raptor, the F-35 Joint Strike Fighter program, and the Boeing C-17 Globemaster III cargo plane. But there were still opportunities to make even more money. One of the most promising came from Pratt & Whitney’s Canadian subsidiary, which had a plan to open up an entirely new market—China. Large risks were involved, however: the program was shrouded in secrecy, for one. It also involved working with partners who had a reputation for ripping off technology. And it just happened to be illegal. Pratt & Whitney Canada wanted to help China's state-owned Aviation Industry Corporation (AVIC) develop the Z-10—China’s first modern attack helicopter, comparable to the US Army’s AH-64 Apache. While operating under the cover story that this was a “dual use” helicopter—built both for civilian and military purposes—at least some people in Pratt & Whitney Canada’s marketing and export team knew exactly what they were getting into. In an August 2000 e-mail, a Pratt & Whitney Canada marketing employee described the negotiations with AVIC and the China National Aero-Technology Import and Export Corporation (CATIC) this way, according to documents released last week by the US Department of Justice: "Discussions on the P&WC engine for Chinese Z-10 attack helicopter are progressing smoothly. From the attendance at the meetings, it is clear that this is a serious effort and they have a tight timetable.” “I believe it is important that P&WC management take a clear position on this project," he added. "Aside from legal considerations on export control issues, how will P&WC/UTC respond if US government put some pressure on UTC? P&WC will lose all credibility in China, if P&WC/UTC, as a corporation, backs out of the program at a later date when put under pressure even if a legal basis for export restriction may not exist." AVIC told P&WC’s representatives that it had been developing its own engine but had run into delays; it was seeking an engine supplier to move on quickly with the development of the Z-10. The long-term goal, the Chinese said, was to equip a civilian version of the helicopter with a “western” engine—creating a huge sales opportunity for P&WC—while eventually putting the AVIC-developed engine into the military version. If P&WC wanted in on the civilian helicopter, it was told, it had to help build the military one. With a potential payoff in the billions and a long-term chunk of China’s growing helicopter market, Pratt & Whitney Canada executives saw this as a calculated risk. But in the end, the company got the shaft. There never was a civilian variant of the helicopter—the Chinese opted for a larger design and re-opened competition, breaking an exclusive deal with the company. During the project, P&WC also transferred sensitive technology—electronic engine control software—that had a potential impact far beyond the development of China’s first “world class” assault helicopter. As a result of Pratt & Whitney Canada’s involvement with the Z-10, China gained technology that potentially accelerated the development of the country’s own advanced jet propulsion systems. The software Pratt & Whitney Canada put into the hands of the Chinese Aviation Industry Corporation “can be modified for use in other jet engines," said Mark Bobbi, senior analyst for military aircraft at IHS Janes, in an interview with Ars. “Theoretically, they could use that software and develop new fuel control for the J-10 stealth fighter to improve engine efficiency, for instance.” This sort of gamble is taken all too often by executives lured by the promise of huge profits. Every year, major multinational technology and aerospace companies—by oversight, by subterfuge of a third party, or by deliberate action—sell technology restricted by US law to countries that are banned from receiving it. While some companies try hard to comply with US International Traffic in Arms Regulations (ITAR), others seem to accept the occasional fines and slaps on the wrist as part of the cost of doing business—and a very profitable business, at that. Out of (export) control Much of the US military’s might depends on technology—technology developed at the cost of billions and billions of dollars in taxpayer money. Guarding that technology from potential adversaries can be difficult, especially when the technology gets shot out of the sky or crash lands and ends up in hostile hands. Take, for instance, the stealth unmanned aircraft captured by Iran last December, or the special operations helicopter recovered by Pakistan after the mission to take out Osama Bin Laden last May. China has made the most out of these sorts of opportunities. In the wake of the Tiananmen Square protests and crackdowns in 1989, Congress explicitly banned the export of any technology with military applications to China. So China's military and its state-owned industries have used whatever means necessary to obtain what they want. The prototype J-20 Chinese stealth fighter unveiled last year, for example, appears to be based on technology recovered from a US F-117 stealth fighter shot down over Serbia in 1999. Chinese intelligence got to examine the stealth helicopter that SEALs flew in to take out Bin Laden. And China has been accused of widespread industrial espionage and cyber attacks on US defense contractors in a quest to unearth technology secrets. But it doesn't always need such drastic measures—sometimes, US companies will just sell China off-the-shelf technology. (As Vladimir Lenin once put it, “The capitalists will sell us the rope with which we will hang them.” Except the Chinese are now capitalists, too.) The Chinese technology industry has learned to get major tech companies to sell it components which can then be reverse-engineered, copied, or just plain stolen; ask Cisco or American Superconductor. Governments have a long history of trying to prevent technology companies from trading with countries that have been labeled off-limits. There's also an equally long history of companies working around it. ITT, for example, owned 25 percent of Focke-Wulfe, the German aircraft manufacturer that supplied fighter aircraft to the World War II-era Luftwaffe; ITT also owned another company that built radios for the Wermacht. In 1983 and 1984, Toshiba sold $17 million worth of computer-driven milling machines to the Soviet Union, allowing the Soviet Navy to create noiseless propellers for its submarine fleet and counter the US’s SOSUS undersea sonar tracking network. Experts put the damages to US military capability at $30 billion. While ITT actually received compensation for Focke-Wulfe factories that were damaged by Allied bombers, Cold War politics weren't as kind to Toshiba. Two executives were arrested and the company was banned from doing business with Soviet bloc countries for one year—the harshest sanction ever imposed by Japan for a trade violation (at the time, trade with Soviet countries accounted for 12 percent of Toshiba’s high-tech machining business). And the US military banned Toshiba from competing for government business for years. Even so, many companies remained willing to risk selling technology to the Soviets, and later to the Chinese government. As Hitori Kumagai, the chief Moscow representative of Wako Koeki Trading Company, explained when he informed regulators of Toshiba’s trade violations, “Russian business is [a] delicious, especially dangerous business. Illegal machines contain profits.” And those profits are even bigger when dealing with China, thanks to its economic strength. In the case of the Z-10, Pratt & Whitney Canada's export managers were drawn down the rabbit hole by the promise of a big no-compete deal for legitimate business in exchange for a seemingly small bending of the rules. Sure, it’s civilian! That journey to the dark side began when P&WC was brought to the table with Chinese aircraft manufacturers by the Italian helicopter manufacturer Agusta S.p.A. (now AugustaWestland) back in 2000. Agusta had started a joint venture in the late 1990s with European Aeronautic Defense and Space Company (EADS, the conglomerate that builds, among other things, the Airbus airliner) to develop a new helicopter for AVIC, called the Chinese Medium Helicopter (CMH). Agusta already had a relationship with P&WC—the company used P&WC’s PT6C-67C turboshaft engines as the power plant for its own AB139 civilian helicopter. So Agusta offered to bring P&WC into the deal. The Chinese told P&WC that CMH was going to be a “common platform” for multiple helicopters—a gunship and a “dual use” transport helicopter that would be used for both civilian and military purposes. There was no timeline offered for the civilian version; AVIC was looking for a way to accelerate the development of the Z-10 attack helicopter without having to wait for Chinese engine manufacturers to catch up. So, given that much of the technology for the Z-10 itself was coming from Agusta, and Agusta already was familiar with the characteristics of the PT6C-67C engine, AVIC was hoping to get P&WC to provide development engines as a stopgap until their Chinese supplier was ready. P&WC’s PT6C-67C turbine engine is sold worldwide for use in civilian helicopters; being Canadian, it didn’t fall under US export regulations. So the company thought it was in the clear to use the engine for the Z-10 project for development—so long as everyone thought the sale was for a “dual use” application, and not for a gunship. The main problem that P&WC had to get past was the software that controlled the engine. Like most modern turbine engines, the PT6C can’t function without electronic engine control (EEC) software, which controls the flow of fuel to the engines, power output, and other parameters based on factors like air density, pressures within the engine, and the input from the pilot via a digital throttle control. The engines P&WC had sold previously to Agusta used both controller hardware and software from UTC’s avionic software subsidiary Hamilton Sundstrand—a US company based in Connecticut. While exporting the software as part of engines for an Italian manufacturer wasn’t an issue, exporting the software to China was. And to get the engine controls to work properly with the avionics of an assault helicopter, changes were required, which would technically turn the software into a “defense article” covered by the US export ban. The Canadian Department of Foreign Affairs and International Trade (DFAIT) initially was suspicious about the whole deal. P&WC disclosed the nature of the project in a request for a permit in September of 2000, saying that that a military helicopter would get the engine for development purposes first—leaving out the small detail that it was in fact an attack helicopter. DFAIT officials expressed concerns about the level of technology in the engines, and said that it would require an export license for the engines unless the initial version of the helicopter was “civil certified.” And according to internal documents, Canadian officials were “particularly interested to know whether the aircraft was a gun ship.” That put a major crimp in the project’s timetable. When informed of the licensing issue by P&WC, the general director of AVIC offered a solution: “If P&WC needs, the Chinese party will provide related information of the civil version of the helicopter.” Within a month, representatives from CATIC delivered a briefing paper on a new helicopter—the Z10C, a 6-ton helicopter to be used for tourism, cargo transport, search and rescue, and other civilian purposes. At the time, even P&WC’s marketing people were suspicious of the timing of the document. Doubts arose within the company that it was real—could it just be a ploy to help them win a Canadian export license for “dual use” engines? In a November 13, 2000 e-mail, P&WC GM for Asia Marketing said that the “sudden appearance” of this civilian version of the helicopter “indicate[s] that it may have been put together to aid approval of export license.” However, he said this gave P&WC the cover it needed—“By putting forward the civil helicopter program now…real or imagined…an opening is created for P&WC to insist on exclusivity in civil version of this helicopter.” The next day, P&WC sent another request letter to DFAIT, outlining the alleged civilian program. This time, a permit was granted. But as the project moved forward, the company remained concerned about the US government’s reaction to the program. In September of 2001, nine months after AVIC and CATIC signed a contract for 10 of the PTC6C engines for development, one P&WC manager warned in an e-mail: Please note the attached notice (in bold) regarding the imposition of US sanctions on the Chinese Government for military aircraft. We must be very careful that the helicopter programs we are doing with the Chinese are not presented or viewed as military programs. As a result of these sanctions, we need to be very careful with the Z10C program. If the first flight will be with a gun ship then we could have problems with the US government. In addition, we could run into problems with the Canadian Government as we have told them that the program is civil and the military versions (gun ship) would have the Chinese WZ-9 engine. And so when P&WC sent a purchase order to Hamilton Sundstrand in January of 2002 requesting software development for the “CMH,” they told Hamilton Sundstrand representatives that the software was for a Chinese commercial helicopter. The company never mentioned the potential military use. In 2002 and 2003, the ten “development” engines were shipped to China. Two were used in a ground test unit, and six were installed in three flight-test versions of the Z-10 (two were kept onhand as spares). Hamilton Sundstrand employees—not knowing they were producing software for a Chinese attack helicopter—shipped 12 different versions of the software to P&WC over that two-year period. After local testing, six of those versions were sent to China to be installed on the engines, sent as an e-mail attachment to be downloaded to the controller hardware. It was clear that P&WC knew the software was export-controlled. In April of 2002, in a string of e-mails under the subject “EEC S/W Downloads for CMH (Z10) Program,” P&WC’s general manager for Asia marketing asked if there was any reason why P&WC couldn’t train Chinese developers to make changes in the code during helicopter development. The company’s export manager replied that the software “is controlled technology and is also US technology I think. If it is US, then we will require a US license.” Hard problems to solve Stopping advanced technology developed in the US from falling into potential adversaries’ hands is hard for a number of reasons. One of them is simply a matter of the reach of American authority—once technology leaves the US for a customer in an “approved” country, there’s no way to make sure it stays there. While the US and its allies may have somewhat consistent export laws, the enforcement of them is anything but consistent. Identifying whether something actually falls under the definition of “arms” is an additional problem. So many products rely on technologies that can be classified as “dual use” that “it’s to the point where it’s impossible to tell how much falls under ITAR,” said Bobbi. “It requires a lot of oversight.” With big aerospace companies, that oversight is sometimes lacking. Perhaps the most dramatic case came in 1996, when Loral Space and Communications “mistakenly sent to the Chinese” restricted information on missile technology. This came during the course of an investigation into the crash of a Long March rocket carrying a Loral-built communications satellite. The technology was instrumental in China improving its missile systems, including its ICBMs, and may have helped accelerate China’s own space program. Loral was fined $14 million and spent $6 million to improve its ITAR compliance program... but it also received authorization to keep working with the Chinese government. In 2006, Boeing got caught up in the “dual use” mess when it was charged by the State Department with violating ITAR. The company was caught selling commercial jets to China and other countries between 2000 and 2003—jets equipped with flight boxes that contained a gyroscopic microchip. The company was fined $15 million, and the State Department imposed additional regulatory oversight on Boeing—because it was the company’s fourth strike since 1998. You don’t have to be a big aerospace player to get caught up in sending technology to countries that shouldn’t have it. Take, for example, the case of Blue Coat, the network security vendor whose hardware made its way to Syria—and was used in efforts to censor the Web and track down dissidents within the country. Blue Coat’s Senior Vice President Steve Daheb told the Wall Street Journal that 13 of its security appliances being used in Syria were originally shipped to a distributor in Dubai, who identified the customer as Iraq’s Ministry of Communications. The State Department is still investigating that case. “Where are the other ten seats?” In March 2003, as development of the Chinese helicopter moved forward, P&WC engineers from Montreal flew to China to assist with ground testing for the first flight. On March 15, they got their first look at the helicopter prototype, which they had been told by management was for a 12-seat transport helicopter. They walked into the hangar and saw a helicopter with two PWC engines and two seats, one above and behind the other—for a gunner and a pilot. It also had mocked-up weapons systems. Surprised, one of the Canadian engineers asked, “Where are the other ten seats?” The P&WC program chief laughed in response. Another engineer asked the Chinese about the design, and they politely explained that they had been budgeted to develop an attack helicopter. When they got back to Montreal, the engineers met with the company’s Asia general manager and export manager, among others, for a debriefing. According to an engineer present at the meeting, the managers still felt the project could go forward as long as the engine had a “predominantly civil application.” The managers expressed surprise about the design but made no move to stop the program. The company proceeded as before, and engineers made several more trips to China to work on the Z-10. It was apparently clear to the project team that it was time to cover themselves. The P&WC export manager sent a letter to the Canadian DFAIT, saying, “In the initial permit application we informed you… that there would be two aircraft development programs for both civil and military helicopters and that development of these helicopters would be done very much in parallel.” But, the export manager wrote, the delays in the development of a Chinese engine for the military helicopter had “prompted the Chinese to consider using the PT6C-67C engine for the initial military aircraft,” and that the military helicopter’s development had rocketed ahead of the civilian one, with ground tests already using the P&WC engine. “First flight of the aircraft is expected to be before the end of April and will be the two seat military version of the aircraft and not the civil version.” Not to worry, though, the export manager wrote: P&WC was “assured by the Chinese that the civil aircraft is continuing under development and that the [P&WC] engine would only be used on the military version for a limited transition production batch.” And, by the way, “because of the sensitivity of military programs in China,” the export manager asked DFAIT to contact the company if the officials thought they might need a permit now to export 100 more engines to China. The P&WC export manager e-mailed a copy of the letter to UTC’s government business development staff in Washington, DC. But the information was never sent to Hamilton Sundstrand. A week later, Hamilton Sundstrand software engineers sent the final version of the EEC software to P&WC—which was promptly forwarded to China, despite the fact that it now seemed clear they were breaking US law. Someone at Hamilton Sundstrand must have become suspicious of just what kind of helicopter he was writing code for, however. In the minutes of a Hamilton Sundstrand software control board meeting, notes included a discussion of clues that “PWC is having problems with export control.” About the same time, P&WC was looking for an alternate Canadian source for the software. On January 28, 2004, Hamilton Sundstrand’s export compliance team requested an “end-use” statement from P&WC. This asked the company to spell out what the software was being used for. P&WC’s export manager sent an e-mail to the Asia general manager and other executives: “We are now being asked by Hamilton Sundstrand to provide the end use for the Z10 program. They require this to determine if there are any US re-export issues. Would you please provide me with a statement of the end use for the Z10 program that I can provide to HS... I expect that this will not be the last request of this nature as the US suppliers are becoming more aware of export and re-export issues.” A week later, P&WC sent back a response, indicating that the Z-10 military helicopter would be the first to get the engine and software: Based on current activity, the military version of the helicopter appears to lead the development program. The civil program is active but certification date has not been announced... As the military version of the helicopter appears to be the first application, any US sourced components that are not common to other civil certified engine applications will be subject to the US ITAR controls and will require an export license from State in order for HS to ship the components to P&WC and for P&WC to ship these components either as spare parts or as part of the engine for this application to China. It is our understanding that the US will not issue an export license for any military component to China. We are therefore required to resource this component from HS to a non US supplier as we cannot risk the supply of components should the first application be military and we are refused a US export license for China. With that statement in hand, Hamilton Sundstrand could no longer legally do work on the project (and the company did cease work on the project). But that notification didn’t make its way back up through the parent company’s ranks, and the project continued without Hamilton Sundstrand’s involvement. P&WC could not quickly find a Canadian source for EEC software, since that would mean replacing EEC hardware as well and starting over from scratch. From that point on, P&WC took over work on the code itself, altering what Hamilton Sundstrand had already provided—shipping four of its own “patches” of Hamilton Sundstrand’s software to China between November 2004 and June 2005. All the while, P&WC executives were telling the folks at the front office at UTC that everything was peachy. “A Major Breakthrough” In May of 2004, in a briefing for what Justice Department documents refer to as a “senior executive” of United Technologies on the ongoing project in China, P&WC executives called the program a “major breakthrough” for the company. Instead of referring to the Z-10 as an attack helicopter, the report described it as a “two-seat military version” of a common helicopter platform that had been the first model to reach flight testing. “Because of the military applications, risks do exist on export control issues,” the report admitted, but P&WC executives asserted those risks had been dealt with by “obtaining the necessary export permits and through appropriate selection of suppliers for engine components." But there were clearly doubts about how well the risk had been managed. A few days later, according to court documents, the briefing paper from P&WC ended up in front of Pratt & Whitney’s vice president for government business development in UTC’s Washington, DC office. According to the company’s records, that was David Manke. After reviewing it, he fired off e-mail messages to two top-level lawyers in Pratt & Whitney’s legal department who handled export control issues for the company: Attached is a briefing paper for [UTC senior management’s] upcoming trip to China (June 22-26). Please note the description of the PT6 activity with the helicopters, especially the Z-10c. I would say that the “2 seat version” is code for an attack helicopter. I believe that Canada has all the appropriate approvals from the Canadian government and a paper trail to support this, however, this has the possibility to be very controversial and I’m sure [the UTC senior management] will want to be sure this has all the appropriate government approvals. Are you aware of this program? Any concerns? That e-mail triggered a flurry of e-mails between UTC’s legal department and P&WC about the origin of technology in the engines being shipped to China. In a June 3, 2004 e-mail, P&WC’s export manager assured UTC’s lawyers that there would be no US-origin EEC software on the production engines shipped to China. He didn’t mention the software that was already there on the development engines, however. After a series of meetings between Manke and the P&WC managers involved in the project, concerns seemed to be set aside. It would be another year before the questions would come up again. In May 2005, as UTC senior managers were preparing to meet with the Chinese, they received a briefing paper on the Z-10 program. But this time, there was less credulity, and a UTC export specialist in DC fired off an e-mail to Hamilton Sundstrand. Senior management “needs to understand how it is that Pratt Canada can supply engines for the Z-10 Chinese military attack helicopters. I know we’ve discussed this before, but here’s what we need from Hamilton: What goods and technology does Hamilton supply to PWC that is used on these helicopters/engines?... Under what export authorization are they exported to Canada?" Once again, P&WC’s export manager got pulled into the conversation. He claimed that the engine used in the project was “developed using Canadian technology” and the electronic engine controls were Canadian-sourced. But after more inquiries, a P&WC export project manager admitted that some engines had been shipped with Hamilton EECs and software for development (this admission came in a footnote within a reply). Neither P&WC nor Hamilton reported the breach to the US government at this point—and development of the Z-10 once again went forward. Getting the shaft In 2006, the deal with the Chinese started to come apart. With development of the Z-10 nearly complete, the Chinese changed the game with the civil helicopter and renegotiated their deal to make P&WC the exclusive provider. The design of the “CMH” civilian helicopter was changed—now called the Z-15, it was nearly a full ton heavier than the Z-10. None of the development work done on the Z-10 would apply. P&WC would now have to re-compete with their engine against the French engine manufacturer Turbomeca. On June 7, 2006, P&WC sent a letter to the Canadian government. The company reported, “Recent developments in the civil variant program” had called into question whether P&WC’s engines would ever be used in a civilian version of the Z-10. “The concept of the ‘common platform’ has been eroded.” Since this meant P&WC was being essentially cut out of its potential fortunes with a civilian Z-10, “we wish to be forthright and make you aware of these developments.” The company asked for permission to now pursue the Z-15 with the same engine. Still, the breach of US export laws went unreported. But as the Z-10 deal went sour for P&WC, an investigation from outside the company was raising questions about the project—not from the government, but from an institutional investor. In February of 2006, an unnamed non-governmental organization, only identified by court documents as an organization that advises clients on socially responsible investing, sent an e-mail to UTC’s investor relations department as the company was preparing for its annual shareholders’ meeting. In essence, the message said that unless UTC came clean on what was going on with the Z-10, the organization would recommend that its clients dump their UTC stocks. The inquiry from the NGO led to a meeting of UTC, Hamilton, Pratt & Whitney, and P&WC lawyers, and a team from UTC’s Export, Licensing, and Economic Sanctions office in April of 2006. That meeting led to more meetings, and more internal investigations. Finally, after a May 8 conference call, consensus was reached: it was time to inform the US State Department’s Directorate of Defense Trade Controls that the company had screwed up. But when UTC sent its disclosure letter to the State Department, the company’s representatives said the company had no idea that the Chinese were developing an attack helicopter until 2004, and that the company had taken “swift remedial action.” It would be another four years until the company would admit that Hamilton had neglected to follow through on those actions, as the State Department continued to follow up on the disclosure. Finally, in a July 2010 response to yet another State Department inquiry, UTC admitted that Hamilton had exaggerated the degree to which they had corrected their actions and had lied to the State Department to help make the problem look less severe. The wages of sin That confession led to things hitting the fan for UTC—the State Department launched a full investigation and brought in the Justice Department. On June 28, UTC's lawyers admitted the company's violation of the law after negotiating a deferred prosecution agreement with the Justice Department. In the plea, the company’s lawyers confessed the organization’s guilt in violating the defense embargo on China and other international trade regulations. UTC agreed to pay a fine of $20.7 million dollars—$4.6 million (twice the value of the 10 engines sold to the Chinese, plus spare parts and support work) plus a $14 million “deferred prosecution monetary penalty.” UTC also agreed to pay the State Department a $55 million civil penalty—$20 million of which was suspended. To keep that $20 million, UTC has to satisfy the State Department that it has cleaned up its compliance act. In comparison to other fines that companies have been hit with for these sorts of export violations, the $75 million (or $55 million) that UTC will have to cough up is substantial. But it’s just a speed bump when compared to the value of the company’s continuing business in China. The company’s wrongdoing didn’t even faze stockholders. After news of the agreement broke, the company’s stock price... was up.

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