In its financial filing, RTX Corp announced that it is setting aside $1.2 billion in order to satisfy expected deferred prosecution agreements with the Department of Justice and Securities Exchange commission. These anticipated agreements arise from allegations that the aerospace and defense company made numerous improper payments tied to contracts in the Middle East.
The company said that it expects an administrative order from the SEC to resolve previously disclosed criminal and civil investigations into “improper payments made by Raytheon Company and its joint venture, Thales-Raytheon Systems, in connection with certain Middle East contracts since 2012.”
The company also expects to enter into the deferred agreement and False Claims Act settlement with the DoJ to resolve investigations regarding defective pricing claims for “specific legacy Raytheon Company contracts from 2011 to 2013 and in 2017.”
“The charge also includes the impact of certain voluntarily disclosed export controls violations primarily identified in connection with the integration of Rockwell Collins and, to a lesser extent, Raytheon Company into RTX, including certain violations expected to be resolved pursuant to a consent agreement with the Department of State,” according to RTX’s financial disclosure.
It was reported in 2021 that the U.S. was investigating whether payments made by Raytheon to a consultant for the Qatar Armed Forces were actually bribes intended for a member of the ruling royal family.
“While the financial impact of these items is above what we had previously reserved, we believe the provisions we have taken put these issues behind us financially, and we will continue to cooperate with the government and external monitors as we move forward,” Neil Mitchill Jr., RTX’s chief financial officer, said on an earnings call. The company has described the bribery and contract pricing matters as legacy issues as it merged with United Technologies in 2020.
RTX said that prosecutors will seek to dismiss charges if the company adheres to the deferred prosecution agreements for a three-year period. These agreement mandates the company to enhance its compliance programs and implement other measures to prevent future violations. 
Jacob Horowitz is a contributing editor at Compliance Chief 360°