It’s not very often that business news finds its way into a network evening newscast. Tonight was an exception--on all three broadcast networks!
The story is this as told by the AP: ITT Fined $100M for Illegal Tech Exports
ROANOKE, Va. (AP) -- ITT Corp. has agreed to pay a $100 million penalty for illegally sending classified night-vision technology used in military operations to China and other countries, U.S. Attorney John Brownlee announced Tuesday.
US armed forces possess a virtual monopoly when it comes to high quality night vision capability. Night vision technology is such an important focus of our military capability that it warrants its own Pentagon acronym – OTN (for own-the-night).
Own the night with me below the fold.
It’s extremely important that our secret OTN technology not be exported to countries whose security interests are not closely aligned with our own, or to countries that may resell OTN technology to our competitors or adversaries, or perhaps even to terrorist groups.
An earlier diary by newfie53523 has already called our attention to the story rolled out by the MSM, but I have a rather different take on what it all means.
Still from the AP (with my emphasis):
ITT, the leading manufacturer of night-vision equipment for U.S. armed forces, will plead guilty in U.S. District Court on Wednesday to two felony charges, Brownlee said at a news conference. One count is export of defense articles without a license and the other is omission of statements of material facts in arms exports reports.
"The criminal actions of this corporation had threatened to turn on the lights on the modern battlefield for our enemies and expose American soldiers to great harm," Brownlee said.
What could possibly motivate ITT to sell out the security interest of the United States? If you’ve been paying attention to what’s been happening for the last 30 years, you might guess that it’s about money. And you’d be right.
ITT defense-related technical data was given to contractors in China, Singapore and the United Kingdom in order to cut costs, government investigators said.
<snip>
Government agents said managers viewed U.S. export laws "as obstacles to getting business done," Brownlee said.
Of course, cutting costs by outsourcing work to China is just another way of saying “We could pay Americans a living wage to do high-tech work in an environmentally acceptable manner, or we could send the work to China, which places little value on human labor, and even less on the environment.” Even loyal Bushies appear to be somewhat outraged.
"Placing profits ahead of the security of our nation is simply not acceptable for any corporation," Homeland Security Assistant Secretary Julie Myers said in a statement.
So, there’s going to be hell to pay, right? Even if ITT is the U.S. military's 12th largest systems supplier—because it is, after all, the first major defense contractor convicted of a criminal violation under the Arms Export Control Act of 1976.
At least the company was apologetic and helped government investigators get to the bottom of the matter. After all, out national security is at stake. Well, no. That would be a lie, I suppose.
ITT and its corporate attorneys fought the government's investigation for three years, attempting to "run out the clock on the statute of limitations" after law enforcement officials executed a search warrant in October 2002 at the Roanoke operation, Brownlee said.
ITT hired new attorneys and began to cooperate with the investigation only when it became clear that an indictment was imminent.
For me, the most notable quote in the AP story is this:
"The size of the penalty shows how severely the government regards any sale of sensitive military technology to a potential adversary," said Loren Thompson, a defense analyst at the Lexington Institute in Arlington, Va.
The size of the penalty
Remember, we are talking about felony violations of the law. Violations that threaten to erode the military superiority of the United States (during a time of war, some might contend). To date, no individuals have been charged. I am reminded that many countries use the abbreviation S.A. instead of our Inc. S.A. stands for “anonymous society” – just another way to say that when the cops come calling, there’s never anyone home.
Ah, but the money. That must really hurt.
Well, let's see. ITT is currently worth over $11B. So, the $100M fine is less than 1% of the company’s worth. To put this on a scale that we kossacks can more readily understand, suppose that the culprit is an individual worth $1M. DOJ would have the perp pay a fine of only $10,000. (And, if you’ll recall, no one spends any time in prison).
Here's another measure of ITT’s fine – a penalty that shows how severely the Bush administration regards any sale of sensitive military technology to a potential adversary. ITT reports net income available for common equity (i.e., shareholder profit) of $500M per year. The $100M fine will cost ITT the profit that it accumulates in about 73 days.
We ought to be outraged by DOJ’s sweetheart deal with ITT! The “record fine” is a pittance. The story line that DOJ is really cracking the whip is a lie. The people who perpetrated this crime are not charged (and probably will recieve bonuses for cutting costs)!
Would DOJ cut a sweetheart deal with a corporate perp, you wonder? Well, I do recall a recent post by EZ Writer, “USAgate bombshell! Sweet tobacco deal cost us BILLIONS!” In a nutshell, EZ’s diary reports that DOJ reduced a proposed penalty against the tobacco industry from $130 billion to $10 billion!
The ITT story is just another case of a pig wearing lipstick. It’s 2007, and we really shouldn’t be falling for this crap any more! I know Congress has a lot to do, but this should not pass silently by. And if we aren't willing to nail ITT to the wall over this one, I just have to wonder what it would take?