As first reported by NBC News, U.S. officials charge that in order to save money, ITT U.S. to Fine ITT For Allowing China to Obtain Night Vision Goggles outsourced some of the manufacturing to a company in Singapore. That company, in turn, subcontracted some of the work to companies in China.
"They have all our technology now," a law enforcement official told NBC News.
The fine is one of the largest ever for a violation of U.S. laws limiting the export of critical technology.
Among the secrets in the current design were methods for counteracting lasers, which can be used to blind older night-vision equipment. The technology also include sensitivity to temperatures, allowing the goggles to "see" through smoke and haze.
Law enforcement officials say when the U.S. first suspected a problem, ITT continued to mislead investigators, insisting no laws were violated.
As part of the fine, ITT will be required to spend $50 million to develop a new generation of night vision equipment.
"We have been cooperating with the government in this investigation and we have voluntarily disclosed all discrepancies that our internal reviews revealed," said Steven R. Loranger, chairman, president and chief executive officer of ITT, in a prepared statement released Tuesday. "While this settlement relates to the actions of a few individuals in one of our 15 business units, we regret very much that these serious violations occurred. I want to reinforce, however, that the heart of our night vision goggles -- the tube -- is secure. No technical information regarding the tube was ever compromised."
ITT first disclosed the investigation into its night vision goggle business last year, in a filing with the Securities and Exchange Commission.
At the time, the company said it was cooperating with the U.S. Attorney in Virginia, and that it had conducted its own investigation and turned the findings over to prosecutors.
In its latest annual report, ITT said, "The Company is in negotiations with the Government to resolve this matter and a settlement is expected in the Spring of 2007." That, apparently, is what the Justice Department will announce today.
Funds Set Aside
ITT has apparently set aside the funds to cover the night vision settlement expected to be announced today.
The company announced on December 15 a reserve of $25 million "in anticipation of resolution of a legal matter in its Roanoke-based Night Vision business."
The company said at the time that the $25 million, in addition to money previously set aside, should cover the settlement. The December press release quotes Chairman Steve Loranger as saying, "ITT is committed to having a world class compliance culture. We are working diligently with the government to resolve this matter by early next year.