General Electric Agrees To $9.4M Settlement Over Military Part Inspections: Report

General Electric Co GE has reportedly settled with the federal government, agreeing to a $9.4 million payment over claims that a Massachusetts plant sold parts to the U.S. Army and Navy that were not properly inspected or did not meet specifications.

The agreement with the U.S. Department of Justice addresses accusations that GE Aerospace's Lynn facility neglected crucial inspections and sold engine parts containing inappropriate metallic fragments to the U.S. Army and Navy, reported Reuters. 

The investigation reportedly unearthed that the absence of proper inspections and the distribution of noncompliant parts might put military equipment and national security at risk, posing a potential threat to the safety of service members.

The claims settled indicate that GE Aerospace, situated in Evendale, Ohio, breached the federal False Claims Act—a key legal instrument the government utilizes to combat fraud—over a period extending from July 2014 to December 2019.

Acknowledged for its cooperation and remediation measures initiated over half a decade prior, GE Aerospace stressed that while the lapses in quality control had no bearing on aircraft safety, comprehensive corrective steps have been enforced to prevent future occurrences. Of the settlement amount, approximately $5.4 million represents restitution, the report noted.

The Boston-headquartered conglomerate made public in 2021 its intentions to segregate into three distinct entities, each concentrating on aviation, energy, and healthcare.

Having already executed the healthcare division's spinoff, GE anticipates the energy segment's separation in the second quarter of 2024, transforming GE into a standalone aviation-focused entity, GE Aerospace.

Price Action: GE shares closed higher by 2.63% at $111.78 on Monday.

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