Honeywell Fined $13 Million for Illegally Exporting Technical Data, Drawings
The State Department fined a U.S. aerospace and technology company $13 million for illegally exporting technical data to several countries, including China, according to a May 3 order. Honeywell International sent drawings of parts for military-related items, including for engines of military jets and bombers, the agency said, all of which were controlled under the International Traffic in Arms Regulations. After discovering the violations, issuing a self-disclosure to the State Department and bolstering its compliance program, the company again illegally exported technical drawings, failing to abide by its improved compliance requirements, the order said.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Between 2011 and 2018, Honeywell illegally exported and retransfered technical data to China, Taiwan, Canada, Ireland and Mexico, the Directorate of Defense Trade Controls said. In total, the company committed 34 violations of the ITAR and the Arms Export Control Act, some of which DDTC said “harmed” U.S. national security,
DDTC will waive $5 million of the $13 million penalty on the condition that Honeywell instead applies that money to “remedial compliance costs” and continues to improve its compliance program. As part of a settlement agreement, Honeywell agreed to install a “comprehensive automated” export compliance system, conduct an internal review and audit of its AECA and ITAR compliance, and appoint a DDTC-approved “special compliance officer” who will monitor Honeywell’s compliance and report to DDTC.
DDTC said it didn’t impose a debarment against Honeywell -- which would have restricted it from exporting certain defense items and services -- because the company cooperated with the agency’s review, “expressed regret” for the violations and took steps to improve its compliance. The settlement “demonstrates the Department’s role in strengthening U.S. industry by protecting U.S.-origin defense articles, including technical data, from unauthorized exports,” the State Department said. It also “highlights the importance of obtaining appropriate authorization from the Department for exporting controlled articles.”
Honeywell submitted its first disclosure for violations that took place between 2011 and 2015, when the company sent drawings of parts to foreign suppliers through its file exchange platform. The company eventually discovered that it had illegally sent 71 ITAR-controlled drawings of items on the U.S. Munitions List, including “engineering prints showing layouts, dimensions, and geometries for manufacturing castings and finished parts for multiple aircraft, military electronics, and gas turbine engines.”
Some of the drawings contained technical data “for which special export controls are warranted” because of their “capacity for substantial military utility or capability,” DDTC said. Fifty-one of the 71 drawings were exported to suppliers in China, DDTC said, and the remaining 20 were exported to Honeywell’s subsidiaries in China, who then retransferred 16 of those 20 drawings to “unaffiliated suppliers” in China.
In the 2016 self-disclosure, Honeywell said it took “multiple corrective actions” to address the violations, including more training, a “mandatory second-level review” for all international document sharing and an improvement to its document sharing system that limited an employee's ability to “select an export authorization that does not match a drawing’s export classification.”
But two years later, the company submitted another disclosure with similar violations committed by employees in the same Honeywell department. DDTC said those Honeywell employees “invented” an “alternative process” to sharing the drawings that they “believed complied with export compliance requirements.” Under that process employees “failed to review the export control classifications for multiple technical documents or used a classification analysis method that did not properly categorize the documents” under the USML or Commerce Control List. Honeywell told DDTC that the employees were “not permitted to deviate from the standard process” but did so to “increase the efficiency and speed of a procurement project.”
That process led to illegal exports of two drawings to Canada, two drawings to China, and 23 drawings to Mexico, DDTC said. The drawings included engineering prints and finished parts for various aircraft and gas turbine engines.
In a statement, Honeywell said it’s “fully committed” to complying with U.S. export control laws. “The issues Honeywell reported involved technology that was assessed as having an impact on national security, though is commercially available throughout the world. No detailed manufacturing or engineering expertise was shared,” a company spokesperson said May 4. The company has “taken several actions to ensure there are no repeat incidents.”