Night vision goggles are displayed at an ITT exhibit in 2002 during the Association of the U.S. Army annual meeting. ITT Corp. of Harrison mishandled classified technical data related to its own night vision goggle system and attempted to mislead the government about it for years.
Now the company is the first major defense contractor to plead guilty to criminal conduct in violating federal export laws, the U.S. Justice Department said yesterday. ITT will pay $100 million in penalties, one of the largest amounts ever for a criminal case, the government said.
The technical data found its way to China, Singapore and Britain as the company sought cheaper ways to manufacture certain parts by making them overseas.
Managers at the ITT Night Vision division headquartered in Roanoke, Va., went out of their way to avoid following licensing rules, and they sought to conceal their efforts to do so, the government said.
The Justice Department accused ITT of fighting its investigation for three years, attempting "to essentially run out the clock on the statute of limitations," U.S. Attorney John Brownlee said in a statement released yesterday.
The company changed course in the fall of 2005 after the Justice Department said it would seek an indictment, Brownlee said. He added that Steven R. Loranger, who took over as chief executive officer from the retiring Louis J. Giuliano in 2004, ordered the company to work more closely with the government.
"Mr. Loranger's cooperation and strong leadership may have saved ITT from permanent ruin," Brownlee's statement said.
It was unclear to what extent, if any, the mishandled technical data compromised the night vision goggle program. Brownlee couldn't say if the breach meant that troops using the equipment were in new danger.
"We won't know, quite frankly, until potentially you're on the battlefield," he said.
ITT spokesman Tom Glover said the technical data at the heart of the case could not be used to reverse engineer night vision technology. No technical information about a sophisticated light-gathering tube at the center of the product was compromised, he said.
"There's no question that serious violations occurred," Glover said. "We have dedicated a lot of time and resources to find out exactly what happened and to determine ways to prevent it from happening ... and we've shared all this information with the government.
"Our leadership is committed to making sure this doesn't happen again," he said. Among other changes, the head of ITT Night Vision was transferred a year ago, he said.
A diversified global manufacturer, ITT had sales last year of $7.81 billion. ITT has corporate offices in Harrison but does not manufacture or do research in the area.
ITT is the 12th largest supplier of sophisticated defense systems in the United States, and it has produced night vision technology for 40 years. ITT Night Vision contributed about $400 million in revenue in 2005, Glover said.
The company's 2007 financial forecast will not be affected by the case, ITT said. In the fourth quarter of 2006 it took a $25 million charge, or 13 cents a share, as part of the case. Its stock closed yesterday at $60.82, down 37 cents.
Government investigators began their probe of ITT in August 2001 after they learned that ITT Night Vision had sent a classified military document to foreign nationals in Britain.
Managers at Night Vision "created an atmosphere where U.S. export laws were viewed as obstacles to getting business done," Brownlee's statement said. Such laws require companies to obtain licenses or other approvals from the State Department before shipping circumscribed equipment or data overseas.
In April 2001 a Night Vision employee transferred technical data related to a goggle part to a Singapore company. The part, a light interference filter, is used to offset the effect of laser light that adversaries can use in combat to reduce the ability of the goggles to see in the dark.
The Singapore company later sent the data to other companies in Britain and China, the Justice Department said. Between 2001 and 2005, ITT Night Vision illegally allowed a Singapore engineer to work alongside ITT engineers at the Roanoke manufacturing plant. Two Chinese optical engineers also were allowed to work on an advanced night vision goggle system in Singapore.
ITT will plead guilty to one count of exporting technical data to the three countries. It also will plead guilty to another count of omitting material information from arms exports reports it filed with the government, omissions that made the reports misleading.
The Justice Department will defer prosecution on a third count involving the trafficking of arms without a license as ITT carries out a remediation program to prevent the breach from happening again.
"By establishing these precedents, we will send a clear message that illegally exporting our nation's most important secrets will be prosecuted and punished," Brownlee said.