United States Department of State (DOS) - Settlement Summary (As of: 112512)

UNITED TECHNOLOGIES CORPORATION (UTC) Includes subsidiaries: Pratt & Whitney (PW) Canada; Hamilton Sundstrand Corporation;
Sikorsky Aircraft Corporation; Deco Aerospace, Inc.; Kidde Technologies, Inc.; and PW Rocketdyne [Consent Agreement (CA) Date: 062812]
Trade compliance professionals are encouraged to read all the available related documents at www.pmddtc.state.gov/compliance/consent_agreements/UTC.html.

Charges
General

Description
Five-hundred and seventy-six (576) alleged violations of the Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR) for unauthorized export and transfer of defense articles, to include technical data (TD), and unauthorized provision of defense services to various countries, including proscribed destinations. - Unauthorized exports to Canada of Electronic Engine Control (EEC) software - Unauthorized re-transfer of modified EEC software to the Peoples Republic of China (PRC) - Failure to file export information - Failure to immediately notify (the DOS) of sale/transfer to a proscribed country - Unauthorized exports of defense articles due to incorrect jurisdiction self-determination - Unauthorized export to Venezuela of test stand - Unauthorized exports of TD and automation tools - Unauthorized export of TD to the PRC - Failure to comply with the terms and administrative requirements of agreements - Unauthorized exports of defense articles to Singapore

- Appoint qualified individual from outside UTC as Special Compliance Officer (SCO) with approval of the Director, Defense Trade Controls Compliance (DDTC) - Promote and publicize existing reporting mechanisms for CA will remain reporting allegations of AECA and ITAR violations in effect for 4 years. - Within 12 months of the CA date institute strengthened and * $5 million of the $55 million uniform corporate export compliance procedures penalty is suspended for self- Continue to implement a comprehensive and reasonably initiated pre-CA Remedial uniform automated export compliance system throughout 1-13 compliance measures. operating divisions, subsidiaries and business units * $15 million of the $55 million - Develop and implement policies, procedures and training to 14-24 is suspended for Remedial ensure accurate identification & tracking of ITAR controlled TD compliance measures over - Conduct a study to identify feasible improvements to maximize the 4 years of the CA. 25 automation of the identification and tracking of ITAR-controlled 26 Total fine of $55 million TD throughout the information technology infrastructure equates to $95,486.11 - Review and verify the export control jurisdiction of all ITARper alleged violation. 27-84 regulated hardware exported in the past five years from The worse case criminal fine operation divisions, subsidiaries and business units 85 could have been - Conduct two audits by an outside consultant with AECA/ITAR st $576 million. 86-136 expertise and approved by the Director, DDTC (The 1 by 12 nd 137 Actual civil penalty months and the 2 within 36 months of the term of the CA) 138-574 of $55 million is about 9.5% - While CA is in effect, arrange and facilitate with minimum of maximum that could advance notice onsite reviews by the DDTC have been imposed. 575-576 - 3 months prior to CA conclusion, submit a written certification for criminal violations. that all CA mandated compliance measures are implemented SCO RESPONSIBILITIES in three principal areas: Policy and Procedure includes: jurisdiction and TD determinations, access controls, re-exports/re-transfers, agreement management, preventing, detecting and reporting violations. [See CA, (n)(1) i-xii, pages 8-10]; Specific Duties include: oversight of CA mandated compliance measures, allocation of resources, expenditures, incorporating ITAR compliance into business plans, implementing policies & procedures, reporting violations and potential violations. [See CA, (n)(2) i-vii, pages 10-11]; Reporting includes: tracking, evaluating and reporting of ITAR violations and compliance resources to UTCs Board of Directors, UTCs Senior Vice President and General Counsel and the Director, DTCC. [See CA, (n)(3) i-iv, pages 11-12] NOTABLE CA QUOTES: Respondents subsidiaries repeatedly discovered and disclosed violations to the (State) Department, in some cases finding that reported remedial measures failed to prevent or detect additional similar violations. [See Proposed Charging Letter (PCL), page 2, first paragraph (para)] The violations demonstrate a systemic, corporate-wide failure to maintain effective ITAR controls and require immediate, comprehensive, effective remedial action across Respondents many operating units and subsidiaries. (See PCL, VIOLATIONS, page 5, second para) DEPARTMENT OF JUSTICE (DOJ) CRIMINAL CASE: In a separate related DOJ global settlement, UTC and affiliates Pratt & Whitney Canada and Hamilton Sundstrand Corporations also pleaded guilty to violating the AECA and making false statements in connection with illegal exports to the PRC and agreed to pay the DOJ an additional $20.7 million fine. [For complete details, see DOJ Press Release (PR), 062812, at www.justice.gov/opa/pr/2012/June/12-nsd-824.html]. RELATED US GOVERNMENT REMARKS: any corporation that willfully sends export controlled material to an embargoed nation will be prosecuted and punished, as will those who know about it and fail to make a timely and truthful disclosure. (David B. Fein, US Attorney, District of Connecticut, DOJ PR, 062812); This case is a clear example of how the illegal export of sensitive technology reduces the advantages our military currently possesses. (John Morton, Director, US Immigration and Customs Enforcement, Department of Homeland Security, DOJ PR, 062812) OTHER FACTS/ITEMS OF INTEREST: According to hoovers.com, UTC is a public company and #48 of the FORTUNE 500. UTC and its subsidiaries develop technologies, systems and services for the aerospace, construction and security industries. UTC operates in more than 70 countries. Over half of UTCs sales are outside the US. UTC 2011 facts (Source: http://finance.yahoo.com/q/ks?s=UTX+Key+Statistics): Revenue: $58.08 billion; Employees: 199,900.

Monetary Fines Actual Remedial * Including $55,000,000 (Civil Penalty) $20,000,000

Mandated Action Plan Highlights

Trade Compliance Solutions

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