Meggitt agrees to pay penalty after U.S. export-control review

WASHINGTON Fri Aug 23, 2013 6:25pm EDT

WASHINGTON (Reuters) - The U.S. unit of British aerospace and defense manufacturer Meggitt Plc (MGGT.L) has agreed to pay up to $25 million to resolve hundreds of possible export control violations the company uncovered in a review of operations dating back to the mid-1990s, the U.S. State Department said on Friday.

It said the settlement was part of a consent agreement. The State Department said it conducted a compliance review after Meggitt disclosed multiple potential violations of U.S. export control laws through shipments to India, China and other countries.

Under the 30-month consent agreement, Meggitt will pay $3 million of the total civil penalty of $25 million, with the remainder to be suspended, if the department approves company spending on remedial training and other compliance measures.

In a statement announcing the agreement, the State Department said it decided not to debar or suspend Meggitt from bidding for additional government contracts since the company disclosed nearly all of the alleged violations voluntarily, acknowledged their serious nature, and has implemented or planned extensive measures throughout its subsidiaries.

It said Meggitt discovered many of the violations during an extensive review the company launched after acquiring several subsidiaries. In many cases, the subsidiaries were not familiar with their responsibilities under U.S. law, it said.

Under the terms of the consent agreement, the company also agreed to hire an internal special compliance officer to oversee the agreement.

The State Department identified 67 specific charges of alleged violations in its charging letter, dated August 19.

The violations included unauthorized exports, re-exports and transfers to other countries of various components or equipment, as well as problems with the administration of licenses and agreements, it said.

The company's UK-based Meggitt Avionics unit, for instance, re-exported more than 800 quartz rate sensors, a sensitive type of gyroscope, which it had received from the company's U.S. unit, to a variety of countries, including Argentina, Brazil, Saudi Arabia, France and Israel, without proper authorization.

Other sensitive equipment was exported to a previously prohibited unit of Hindustan Aeronautics Ltd in India, a matter investigated by the Justice Department for possible criminal prosecution, but later resolved through an agreement in 2009.

Meggitt and its subsidiaries are key suppliers for many big weapons programs, including the Boeing Co (BA.N) Apache and Chinook helicopters.

Company officials were not available to comment.

(Reporting by Andrea Shalal-Esa; Editing by David Gregorio)

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