BAE Systems, the UK defence company, has agreed to pay a $36m (£26.7m) civil penalty after breaching US arms export regulations more than 100 times. The US Department of State announced on Thursday that it had reached an administrative settlement with BAE's US arm to resolve 104 violations of the Arms Export Control Act and the International Traffic in Arms Regulations.
Details of the violations
The breaches included unauthorised exports of technical data to multiple countries, including China, and violations of directorate of defense trade controls authorisations involving various countries. BAE voluntarily disclosed all but one of the alleged violations, which helped it avoid a higher penalty. It also persuaded the state department to suspend half of the penalty, on the condition that the $18m was used to strengthen BAE's compliance programme.
BAE Systems said it remained committed to ensuring full compliance with all applicable export control laws, and had “thoroughly cooperated” with the state department's review. “We have been working diligently to implement improvements to our BAE Systems Inc compliance programme over the last several years, and we will continue to do so. We take seriously our responsibility to protect critical information and support all our customers' security,” the company added.
Specific incidents and impact
The state department said the settlement highlighted “the importance of exporting defence articles pursuant only to appropriate authorisation from the department”. BAE was accused of sending technical data related to printed wiring boards for use in global positioning system (GPS) to a manufacturer in China in December 2023. According to the state department, the company “recognised its supply chain team did not fully understand the export control and compliance regulations” and that its secure file transfer networks did not highlight export control warnings before the data was sent.
The company also sent data related to printed wiring boards for use with military GPS to Canada in September 2021, after a licence agreement had expired, and the technical specification of an “explosive mixture” to the UK. In another breach, technical data related to a US navy guided-missile destroyer were sent to Germany. A BAE subcontractor also “furnished defence services without authorisation” on more than 17 separate occasions in Italy and France, and also in Indonesia, according to the state department.
Compliance and future steps
The company also accidentally exported without authorization a control system for a military gas-turbine engine to Switzerland. BAE's voluntary disclosure and cooperation were key factors in the settlement, with the state department agreeing to suspend $18m of the penalty, contingent on BAE using that amount to bolster its compliance programme. The company has stated it will continue to implement improvements to its compliance procedures, underscoring its commitment to safeguarding critical information and supporting customer security.
