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July 6, 2012 8:13 PM   Subscribe

"The Canadian arm of the aircraft engine manufacturer Pratt & Whitney closed a six-year U.S. government probe last week by admitting that it helped China produce its first modern attack helicopter ... The prosecution marked 'one of the largest resolutions of export violations with a major defense contractor in the Justice Department's history...'"
posted by griphus (60 comments total) 12 users marked this as a favorite

 
Nothing in the settlement agreement, in which Pratt & Whitney and two related companies, United Technologies and Hamilton Sundstrand agreed to pay a total of $75 million for multiple violations of export rules, directly threatens Pratt's existing or future government contracting.

Oh, well, thank God.
posted by Ghostride The Whip at 8:23 PM on July 6, 2012 [5 favorites]


How many years in prison would I spend if I did this as a private citizen?
posted by D_I at 8:33 PM on July 6, 2012 [7 favorites]


How many years in prison would I spend if I did this as a private citizen?

I assume you are speaking entirely hypothetically and are asking the question primarily for rhetorical effect. If you are considering doing this, please consult an attorney.

Anyway, up to 20 years, per 22 USC § 2778(c).
posted by jedicus at 8:46 PM on July 6, 2012 [3 favorites]


No possibility of treason charges and death penalty for persons giving up military secrets to other governments?
posted by jsturgill at 8:50 PM on July 6, 2012 [2 favorites]


Not only are corporations people, it turns out they're very lucky people.
posted by formless at 8:54 PM on July 6, 2012 [46 favorites]


$75 million on $12,940 million annual gross revenues.

That's 3.7%, or relative to the 2010 US median household gross income of $50,046, a fine of $1,885.93.
posted by TheNewWazoo at 8:59 PM on July 6, 2012 [2 favorites]


Whoops, damn, I screwed that up when I changed from net to gross. They were fined 0.58%, or equivalent to a fine of $290.03.

But really, what's a few orders of magnitude between conspirators, right?
posted by TheNewWazoo at 9:05 PM on July 6, 2012 [14 favorites]


And $1,885.93 would still hit anyone making $50,046 harder than $75M will hit P&W.
posted by adamdschneider at 9:05 PM on July 6, 2012 [1 favorite]


Honestly, if I stood to increase my median income of the $2 billion-equivalent (that's $2bn/$10.94bn * $50,040) $9,148 for a paltry $290 fine, you bet your sweet ass I would.
posted by TheNewWazoo at 9:08 PM on July 6, 2012 [1 favorite]


That's a 3,100% return on the fine amount. Not bad for a day's work.

I'll stop threadsitting now
posted by TheNewWazoo at 9:10 PM on July 6, 2012


War Is A Racket. TO HELL WITH WAR!

- Major General Smedley Butler
posted by Salvor Hardin at 9:11 PM on July 6, 2012 [1 favorite]


Hah, if a Chinese company sold the US or any other company technological secrets, you can be sure that some executives will most likely be executed or sent away for life somewhere remote for hard labor.
posted by astapasta24 at 9:18 PM on July 6, 2012 [3 favorites]


Something something, let the marketplace decide, something something.
posted by Capt. Renault at 9:23 PM on July 6, 2012


Oh, Canada :(
posted by unknowncommand at 9:24 PM on July 6, 2012 [2 favorites]


I first read that as helping Canada produce it's first attack helicopter. And I'm like: "Why were we trying to keep the Canadians from getting an attack helicopter? And why did they even want their own anyway?"
posted by delmoi at 9:29 PM on July 6, 2012 [1 favorite]


People do sometimes go to jail for arms export violations. I remember hearing about this one case where someone was basically framed as an export violator for undercutting a more established arms contractor for spare parts for helicopters. He was having the parts "pre cut" in china, so he would just finish the pieces. It was an obvious case of someone being prosecuted for competing against an established player rather then actual trade secret loss.
posted by delmoi at 9:34 PM on July 6, 2012 [1 favorite]


Something something, let the marketplace decide, something something.
I know that is a fun and easy snark, but a functioning legal system and the corresponding binding contracts are an important part of a free market. But then defense contracting - hardly a free market.
posted by b1tr0t at 9:34 PM on July 6, 2012


Pratt & Whitney executives are to be praised for their money-first, me-first instincts. If that's not the essence of American patriotism these days, I don't know what is.
posted by Camofrog at 9:34 PM on July 6, 2012 [1 favorite]


I first read that as helping Canada produce it's first attack helicopter. And I'm like: "Why were we trying to keep the Canadians from getting an attack helicopter? And why did they even want their own anyway?"

Canada will never need to produce an attack helicopter because we will give them as many as they could ever possibly want, and then some--- so that they will be able to protect our Arctic Sea oil from the Russians.
posted by jamjam at 9:40 PM on July 6, 2012


It's almost like a game of CivWhatever.

Trading/selling tech to your enemy's enemy. Usually in exchange for resources.

During the cold war there was the threat of Mutually Assured Destruction (MAD). Now we have one mega-state with absolute military supremacy (on a certain scale, and who have currently been given another shot in the junk).

Wouldn't be more sporting to get everyone to agree to fight one another on equal footing. Like, at the Olympics? Whoops, nevermind.
posted by porpoise at 9:46 PM on July 6, 2012


Not only are corporations people, it turns out they're very lucky people.

They're not just any people, they're they best kind of connected, protected, important, enlightened, elite and well intentioned people our society has ever produced, above and beyond any other person the Founders could have conceivably imagined existing.
posted by T.D. Strange at 9:47 PM on July 6, 2012


I call bullshit on this being solely an operation by the Canadian arm of Pratt and Whitney. More like a convenient patsy for their American masters. But since they've now admitted their guilt, there will be no further investigation, this will get swept under the carpet and things will proceed as normal. No culpability at all.
posted by Purposeful Grimace at 10:20 PM on July 6, 2012 [5 favorites]


This is a failure of the US Government. Failure to police Pratt, failure to take ownership of what US taxpayers paid for (it's all a pretty standard "work-for-hire"), failure to prevent export, failure to prosecute effectively, failure to punish effectively.

US taxpayers paid for it all and have gotten bit on the ass, again.

Back to business and government corruption as usual.
posted by caclwmr4 at 10:37 PM on July 6, 2012 [3 favorites]


So, did you ever hear about the city named CHI? That's right, they named it so they could mark stuff MADE IN CHI, N.A.
posted by dhartung at 10:55 PM on July 6, 2012


30 mm cannons, anti-tank guided missiles, air-to-air missiles and unguided rockets

I presume the post title refers to the armaments that can be fitted to the helicopter in question. P&W's contribution was software that manages the engine timing, much like the software that manages the timing in most cars. I disapprove, but it's a far cry from selling them a full-on weapons system; if there had in fact been a civilian helicopter project, then it would have been perfectly legal to export the exact same product. Our technology export laws are a bit retarded, to be honest; they hurt our economy and sometimes backfire. The penalty here is likely low because the laws are headed for change and the actual impact is likely negligible.

This is a failure of the US Government. Failure to police Pratt, failure to take ownership of what US taxpayers paid for (it's all a pretty standard "work-for-hire"), failure to prevent export, failure to prosecute effectively, failure to punish effectively.

Oh bollocks. How are they supposed to police such a large firm without doing regular top-to-bottom audits, in which case you'd complain about the amount of red tape imposed on them by the government and the knock-on costs for the taxpayer.
posted by anigbrowl at 12:02 AM on July 7, 2012 [5 favorites]


Not to detract too much from the points on how much of a joke the fine is, and how different a case this would be against an individual - but, er, this is already sort of warmongering, isn't it? I mean, the more severe an offense this is declared, the more the US is implicitly calling China an out-and-out enemy. The article already makes enough references to US forces 'reorienting' to counter a 'rising Chinese threat' - if Pratt & Whitney were strung up and executives tried for treason, that would be substantially stronger drum-beating. Do we really need that?

In a general sense I agree politics should play no role in the execution of justice, but to call anything touching the world of defense contractors "justice" or devoid of politics would be lunacy.
posted by pahalial at 12:02 AM on July 7, 2012 [1 favorite]


How are they supposed to police such a large firm without doing regular top-to-bottom audits blah blah

Knowing that the company is not trustworthy, we taxpayers should not use that company for anything - or if we taxpayers do use that company, it should be only with top to bottom audits.

We taxpayers need to get rid of the persons in government who direct taxpayer money to, and then allow, illegal activities which damage national security.
posted by caclwmr4 at 12:12 AM on July 7, 2012 [2 favorites]


No possibility of treason charges and death penalty for persons giving up military secrets to other governments?

Not for Canadians! The death penalty has been completely abolished in Canada - capital punishment for treason was one of the last instances to go, and was removed from the National Defense Act in December 1998. The worst one can get is life imprisonment, whether it's for helping the Chinese build an attack helicopter or for assassinating the Queen.
posted by ceribus peribus at 12:17 AM on July 7, 2012 [3 favorites]


When I mentioned treason I did so as a hypothetical punishment that a person (an American person, in this instance) could receive for committing this kind of offense. The point I was trying to make is that there is a huge discrepancy between a small fine for the company on the one hand, and actual death at the hands of the state for a real human being on the other. In case that wasn't clear.
posted by jsturgill at 12:59 AM on July 7, 2012


So, did you ever hear about the city named CHI? That's right, they named it so they could mark stuff MADE IN CHI, N.A.

Did it come with a China Export Mark?
posted by Dr Dracator at 2:08 AM on July 7, 2012


Sorry, jsturgill - I agree with your point; it's just a silly patriotic impulse to brag about our capital punishment stance whenever it has a chance of being relevant.

Canada does have a desperate need to replace it's aged Sea King fleet, by the way. In case you have any lying around that you don't know what to do with.

posted by ceribus peribus at 2:12 AM on July 7, 2012


Not only are corporations people, it turns out they're very lucky people.

Not lucky - privileged. Luck works some of the time. Privilege works all of the time.
posted by Kirth Gerson at 4:33 AM on July 7, 2012


I just finished training in ITAR exports for work. They scare the crap out of you over the various ways you can make honest mistakes trying to navigate the often confusing regulations.

They spent considerably less time on corporations who willingly disregard the rules to make a buck.
posted by tommasz at 5:47 AM on July 7, 2012


No possibility of treason charges and death penalty for persons giving up military secrets to other governments?

Treason in the US is radically limited. You can only be convicted of treason for making war against the US or helping others do so, so the absence of a war between China and the US makes treason convictions... difficult. And you can only be convicted of treason based on your confession in open court or with multiple witnesses to the same overt act.

Various acts of espionage carry the death penalty, though.
posted by ROU_Xenophobe at 6:41 AM on July 7, 2012


Canada would freakin' love to buy some helicopters. The ones we are attempting to purchase are years late with an order of magnitude cost overrun.
posted by five fresh fish at 6:57 AM on July 7, 2012 [2 favorites]


I'm not sure if Canadians can be charged for treason for illegally exporting US military classified technology ?
posted by Bwithh at 7:06 AM on July 7, 2012


I'm not sure if Canadians can be charged for treason for illegally exporting US military classified technology ?

They can't, as far as I know. I didn't mean to imply that they could be. My point was about possible worst-case scenarios for human beings doing what this corporation did.
posted by jsturgill at 7:11 AM on July 7, 2012


I first read that as helping Canada produce it's first attack helicopter. And I'm like: "Why were we trying to keep the Canadians from getting an attack helicopter? And why did they even want their own anyway?"
posted by delmoi at 9:29 PM on July 6 [1 favorite +] [!]


Because Canada has a military which is undersized with largely outdated equipment (currently - as I was told personally by an active duty Canadian army lieutenant-general last year - the entirety of the Canadian armed forces (including the Mounties, I assume?) would be very easily and quickly defeated by just the US Marine Corps (the smallest branch of the US armed forces apart from the Coast Guard) alone) but aspires to be ready to secure its Arctic resources once the global warming goldrush even further up North starts (don't mention the possibly substantially increased security threats from US instability and/or political pressure in the future !).
posted by Bwithh at 7:15 AM on July 7, 2012


And by "helping to produce China's first attack helicopter", they mean "supplied engines that would be freely and legally made available to a civilian helicopter being produced in China". An ITAR violation perhaps, but is this really a technological coup by the Chinese?
posted by cardboard at 7:18 AM on July 7, 2012 [1 favorite]


Ars Technica: How US software ended up powering Chinese assault helicopters: 'Why spy or steal when Western companies will sell you the tech you need?'
posted by the man of twists and turns at 7:23 AM on July 7, 2012


pahalial, when China starts acting like a friend and not a frenemy, then that's what we'll call them.
posted by 1adam12 at 8:53 AM on July 7, 2012


Canada will never need to produce an attack helicopter because we will give them as many as they could ever possibly want

Nah, because we keep investing in bullshit vaporware fighter jets because of our own territorial claims up there. You think your country is the only one who wants that area? Canadian identity is managing being a client of the US while not being perfectly happy about it, and we've turned down freebies from our neighbour before.
posted by Phalene at 10:30 AM on July 7, 2012


From an ethical standpoint, I really don't have a problem with what Pratt & Whitney did. If you're an arms manufacturer, why shouldn't you sell to whoever you want? Your products will ultimately be used in the same way regardless of who your client is (abstracting away human rights violators like Syria who are egregious enough to use attack helicopters on their own people), and why should the onus be on you to preserve some pre-existing balance of power?
posted by emergent at 11:55 AM on July 7, 2012


Because, in exchange for being permitted to sell to a market protected by certain militaries, you must agree not to upset that balance of power. Nothing is free, even permission to sell.
posted by TheNewWazoo at 12:11 PM on July 7, 2012


Oh bollocks. How are they supposed to police such a large firm without doing regular top-to-bottom audits, in which case you'd complain about the amount of red tape imposed on them by the government and the knock-on costs for the taxpayer.
posted by anigbrowl at 2:02 AM on July 7


I wouldn't. But I'm sort of a Keynesian's Keynesian.
posted by goethean at 12:11 PM on July 7, 2012


The linked article buries the details of the actual technology transferred, instead implying that it was some über-sophisticated weapon, or stealth technology, or targeting software.

It was engine management software. They article mentions that somewhere past the halfway mark.

I am curious (genuinely so) whether the engine management software in an attack helicopter is different than the engine management software in a civilian helicopter, given that the low level developers it seems (from the article) believed they were building something for a civilian model for sightseeing. I mean, is this like P&W made an air conditioner that happened to be used in a tank, or was it genuinely military tech?
posted by zippy at 12:50 PM on July 7, 2012


Engine management software is critical to ensure smooth airflow and temperature control in turbine engines. At the pressures and temperatures experienced in modern jet turbines, computer control is necessary. A civilian helicopter doesn't need the range, speed, response time or fuel economy of a military aircraft, and so would require much less sophisticated engine management software.

This is military tech, as much as a control package for ground-to-air missiles or communications encryption would be military tech.
posted by the man of twists and turns at 1:00 PM on July 7, 2012


article buries the details of the actual technology transferred, instead implying that it was some über-sophisticated weapon, or stealth technology, or targeting software.

From the article:
But the company told the Canadian government that because the engines were already approved for civilian export, it needed no special permission for use on a military aircraft. Canadian regulators disagreed, and demanded that company request a permit.

After Pratt conveyed this news to the Chinese, China's Aviation Industry Corporation suddenly told the company it had begun developing a civilian variant of the military helicopter - the "Z10C," which it said would be used for sightseeing, business VIPs, and search-and-rescue missions.
You are on the right track, but the deception in the article runs much much deeper. Who knows what The Atlantic is trying to prove by framing the story in such a propagandist way. I certainly see lots of things wrong in what happened, but exporting military secrets/technology has nothing whatsoever to do with it.
posted by Chuckles at 1:09 PM on July 7, 2012


"A civilian helicopter doesn't need the range, speed, response time or fuel economy of a military aircraft, and so would require much less sophisticated engine management software."

Is there anything in this case about capabilities beyond the ordinary? I don't know anything about helicopters but I assume civilian models are designed for range and fuel efficiency and engine responsiveness too.
posted by zippy at 1:27 PM on July 7, 2012


Turbine blade metallurgy would be different, fuel may be different (mil-spec), would need to produce power more quickly or eke out a higher top speed - depends on the capabilities of the helicopter. Obviously, a military attack helicopter has different needs than a civilian sightseeing helicopter. The sightseeing helicopter would fly predictable paths, and not need to function in the larger range of environmental conditions, airspaces, or speed/altitude regimes that a military one would.
posted by the man of twists and turns at 1:35 PM on July 7, 2012 [1 favorite]


But the company told the Canadian government that because the engines were already approved for civilian export, it needed no special permission for use on a military aircraft. Canadian regulators disagreed, and demanded that company request a permit.

While this at first seems to mean this would be legitimate if they'd structured the transaction differently, it's entirely reasonable to suppose that the engine can be used with any of several engine management software packages from P&W, and that the civilian version comes with a piece of software that is performance limited in some way. There's not enough data here to know.
posted by atbash at 1:37 PM on July 7, 2012


we taxpayers should not use that company for anything - or if we taxpayers do use that company

Don't worry your pretty little head about it, taxpayer -- your betters will decide how best to spend your money.
posted by ricochet biscuit at 1:42 PM on July 7, 2012


It sounds good; range, fuel efficiency, and engine responsiveness should be available for all - but the world doesn't actually work like that.

Those three don't come for cheap, and the civilian version is dramatically cheaper than the military version. The military version is simply unaffordable for private entities which means the military (with their gargantuan budget) are the only ones that can actually afford it, which puts a particular engine and software combination in the stratified air of military technology, which is highly regulated.
posted by fragmede at 2:01 PM on July 7, 2012


Ok, I understand better after reading the comments above and the Arstechnica article.

I have a little experience with automotive, naturally aspirated, engine management tech, and while I imagine that is far simpler than a turbine-powered helicopter, I can also see possiblE parallels.

In a custom helicopter design, the mapping from oxygen and temperature sensors (and perhaps blade pitch) would differ from standard to account for the weight of the helicopter (armored) and changes in the helicopter equivalent of a car's drivetrain. Plus the military helicopter might have to operate at a higher altitude, or need a different power to fuel efficiency trade off compared to the civilian model.

So, P&W may have saved the Chinese military time and money in their effort to develop a military helicopter, and may have also given these helicopters greater range or speed or reliability in the process.
posted by zippy at 4:38 PM on July 7, 2012


emergent: "Your products will ultimately be used in the same way regardless of who your client is (abstracting away human rights violators like Syria who are egregious enough to use attack helicopters on their own people), and why should the onus be on you to preserve some pre-existing balance of power?"

The onus is on you to not be a treasonous bastard. We don't exactly have the friendliest of relations with China, after all.

I think a quote may be apt here, as this seems to describe precisely the attitude you are advocating: "Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

I'm not much of a nationalist, in fact, I'm very unsympathetic to nationalism for nationalism's sake. However, I think that selling less-than-friendly people, especially those with worse human rights records than our own, the equipment necessary to make war is not really something that should be done. If I pulled that shit, I'd be very lucky to get a choice between Gitmo and leaving the US permanently after a long jail sentence.
posted by wierdo at 4:41 PM on July 7, 2012


People are vastly overstating the likely technical innovation in the software. From the Ars article:
And to get the engine controls to work properly with the avionics of an assault helicopter, changes were required, which would technically turn the software into a “defense article” covered by the US export ban.
It is most likely that the changes were simply a remapped interface to work with a computer not normally used in civilian applications. Very little chance that any technical capability was added to the military version.

This is an example of how companies ignore regulations, and it is propaganda, it is not espionage.
posted by Chuckles at 5:13 PM on July 7, 2012


The most interesting part of the Ars Technia article:
In February of 2006, an unnamed non-governmental organization, only identified by court documents as an organization that advises clients on socially responsible investing, sent an e-mail to UTC’s investor relations department as the company was preparing for its annual shareholders’ meeting. In essence, the message said that unless UTC came clean on what was going on with the Z-10, the organization would recommend that its clients dump their UTC stocks.
This explains a lot of the dynamic here. Some dirty f*cking hippies busted them.
posted by warbaby at 5:42 PM on July 7, 2012 [1 favorite]




From that link immediately before mine:
By contrast, the more recent case was not one of dual-use technologies, but clearly military ones. The Z-10 attack helicopter is patterned on the U.S. AH-64, Russian Mi-28, Eurocopter Tiger model, with a classic two-man fore-and-aft crew disposition. There is no mistaking it for a passenger helicopter. PWC was apparently willing to violate U.S. export control laws, so as to gain access to the large Chinese civilian helicopter market.
Which, as is detailed all over this thread, is an outright lie. Pathetic.


Meanwhile, very nice catch warbaby! I skimmed that Ars article looking for other info, and jumped right past the long hair hippy freak aspect :)
posted by Chuckles at 12:37 PM on July 14, 2012


From that link immediately before mine:

Immediately before my comment I mean..
posted by Chuckles at 11:55 PM on July 14, 2012


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