Boeing fined $51M over export control violations

Boeing voluntarily disclosed the apparent violations of the International Traffic in Arms Regulations (ITAR), the majority of which occurred before 2020, the State Department said Thursday in a press release. The airline manufacturer cooperated with the agency’s investigation.

As part of the settlement, Boeing signed a three-year consent agreement, to be overseen by a special compliance officer. The agreement will also require two external audits of the company’s ITAR compliance program and the implementation of additional compliance measures.

Of the $51 million fine, $24 million will be suspended on the condition that the funds be used “for the department-approved consent agreement remedial compliance measures to strengthen Boeing’s compliance program,” the State Department said.

“The settlement demonstrates the department’s role in furthering the national security and foreign policy of the United States by controlling the export of defense articles,” the agency said. “The settlement also highlights the importance of exporting defense articles only pursuant to appropriate authorization from the department.”

The details: From 2017-22, Boeing appeared to violate the ITAR by allowing the transfer or retransfer of ITAR-controlled technical data to foreign-person employees or contractors, according to a charging letter. The company also disclosed apparent ITAR violations from 2013-18.

The alleged violations that occurred from 2017-22 fell into three broad categories:

1. Unauthorized exports and retransfers of technical data to foreign-person employees and contractors;
2. Unauthorized exports of defense articles, including technical data; and
3. Violations of license terms, conditions, and provisos of the Directorate of Defense Trade Controls (DDTC) authorizations.

On more than 100 occasions from 2013-18, foreign-person employees at multiple Boeing and partner facilities overseas downloaded, without authorization, files containing ITAR-controlled technical data from the company’s digital technical document repository, the charging letter continued.

Three of those employees were from China, which is a “proscribed destination” under the ITAR, the State Department said.

On 80 occasions, employees from 18 countries downloaded ITAR-controlled technical data, the charging letter said. Those countries included Australia, Canada, France, Germany, Hong Kong, India, Italy, Japan, Kenya, Morocco, Russia, Singapore, South Korea, Spain, Thailand, Taiwan, Ukraine, and the United Kingdom. At the time, Russia was subject to restrictive measures on defense exports.

Compliance considerations: Within nine months, Boeing must dedicate additional resources to its ITAR and Arms Export Control Act (AECA) compliance programs, according to the consent agreement.

The new policies and procedures of those enhanced compliance programs shall apply to any new businesses or acquisitions within six months, the order said. Boeing must notify the DDTC at least 60 days in advance if it intends to sell any divisions, subsidiaries, or business units under the consent agreement, and those units must continue to abide by the order unless granted an exemption by the director of the DDTC.

The special compliance officer will oversee the implementation of policies and procedures on:

• Preventing, detecting, and reporting AECA and ITAR violations;
• Maintenance and protection of access to ITAR-controlled technical data on Boeing networks;
• Screening and control of persons not authorized to access ITAR-controlled technical data;
• The transfer and retransfer of ITAR-controlled technical data;
• Maintaining appropriate records; and
• Maintaining appropriate compliance staffing levels at Boeing subsidiaries, divisions, and facilities.

Boeing did not respond to a request for comment.