Boeing Faces $51M Penalty For Arms Exports Violations To China, Russia

Boeing Co. BA has agreed to pay a $51 million penalty to settle a U.S. administrative charge related to unauthorized exports of technical data to countries including China and Russia.

What Happened: The settlement, announced by the U.S. State Department on Thursday, resolves nearly 200 violations of the Arms Export Control Act and the International Traffic in Arms Regulations laws, reported the Financial Times.

The violations, which occurred between 2013 and 2017, were found to have “caused harm to U.S. national security” by the State Department. The exports to Russia, during a period of restrictive measures on defense exports, “created the potential for harm to U.S. national security.”

Boeing disclosed these violations between 2017 and 2022, leading to an “extensive compliance review.” The company’s international employees and contractors were found to have been violating the law.

The majority of violations occurred before President Joe Biden implemented export controls aimed at preventing Chinese access to U.S. technology. Additionally, they occurred before Boeing revised its trade controls compliance program in 2020.

The settlement covers a range of incidents, including unauthorized exports and retransfers of technical data to foreign employees and contractors, unauthorized exports of defense articles, and violating license terms.

See Also: Jay-Z, Beyoncé Personalize Their Cybertruck: Elon Musk Reacts

"We are committed to our trade controls obligations, and we look forward to working with the state department under the agreement announced today," Boeing said.

The settlement also includes a two-year oversight by a special compliance officer. The government will suspend $24 million of the civil penalty if Boeing uses the funds to strengthen its compliance program.

Why It Matters: This settlement is the latest in a series of setbacks for Boeing. The company has been facing regulatory scrutiny following a midair door blowout incident in January. The FAA ordered the grounding of some Boeing 737 Max 9 jets after a door plug dislodged from the side of an Alaska Air Group, Inc. aircraft.

Prior to that, in September, Boeing agreed to pay $8.1 million to settle allegations that it violated the False Claims Act by submitting false claims and making false statements in connection with contracts with the U.S. Navy to manufacture the V-22 Osprey.

In February, the FAA issued a stern ultimatum to Boeing to rectify its "systemic quality-control issues" within 90 days or face serious repercussions after a door panel detached during a flight of a new Alaska Airlines 737 MAX 9, forcing an emergency landing.

Additionally, in February, Boeing announced that it had identified new quality defects in its 737 MAX airplanes, potentially leading to delays in the delivery of the aircraft.

Read Next: Warren Buffett-Backed BYD Says Chinese Auto Makers’ Success Not Because Of State Subsidies: ‘It’s Because Of State Subsidies: ‘It’s Because…’

Image Via Shutterstock