ITT to Pay U.S. Gov't $100 Million, Plead Guilty of Illegal Military Exports

ITT said late Tuesday it had reached a plea agreement to pay the U.S. Government $100 million for illegally sharing classified night vision technology with companies in Singapore, China and Britain. The company will also plead guilty for covering up its actions to the State Department. According to U.S. Attorney John Brownlee, "ITT has put in jeopardy our military nighttime tactical advantages and America's national security." Prosecuted under the Arms Export Control Act of 1976, the $100 million fine will be broken down as follows: $20 million to the State Department who it blatantly lied to, $2 million in fines and $28 million to the government to cover the cost of the investigation. The company must also spend an additional $50 million to develop a new generation of night-vision technology, as well as to cover the cost of government monitors who assure they don't again pass on sensitive technology. An ITT spokesman said the company "was anxious to put this behind us." The night-vision technology ITT passed on was classified as "Secret — No foreign" by the State Department, meaning it could not be shared even with friendly governments like Britain, and certainly not with the likes of strategic threats like China. ITT never sought permission to export the technology, in a pattern of blatant violations of export laws dating to 1980, according to investigators. No individuals have as of yet been charged, but Brownlee said the investigation was still in progress. Shares of ITT fell $0.37 to $60.82 in trading yesterday; they fell an additional $0.31 in after-hours action.

Sources: Press Release, Reuters, AP, USA Today
Commentary: ITT Corporation Is Making the Most of Its Market • Cramer's Take on ITT
Stocks/ETFs to watch: ITT Corporation (ITT). Competitors: Raytheon Company (RTN), Harris Corporation (HRS), Molex, Inc. (MOLX), Honeywell International Inc. (HON). ETFs: PowerShares Water Resources (PHO), PowerShares Aerospace & Defense (PPA), iShares Dow Jones US Aerospace & Defense (ITA)

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