The encyclopedia · Legal & Compliance · Legal decision · 2015–2024
Raytheon recorded bribes as commissions and paid the SEC $124M
Improper payments to foreign officials were booked as legitimate vendor expenses — the controls over agent due diligence did not exist.
RTX Corporation
What happened
RTX Corporation, the parent of Raytheon and one of the world's largest defence contractors, made improper payments to foreign government officials through intermediaries. The payments were recorded in the company's books as legitimate commissions and business expenses, and the internal controls over vendor and agent due diligence were insufficient to detect or prevent them.
The SEC found violations of the Foreign Corrupt Practices Act's anti-bribery provision, its books-and-records provision, and its internal-accounting-controls provision. In October 2024 RTX agreed to pay $37.4 million in disgorgement, $11.8 million in interest, and a $75 million civil penalty — $124 million in total, offset by $22.5 million in payments already made to the Department of Justice.
RTX was also required to retain an independent compliance monitor for at least 36 months — a multi-year oversight commitment that costs far more than the penalty itself.
Why it happened
- Defence contracts in foreign markets often require local agents, and the line between a legitimate commission and an improper payment is the line the controls are supposed to draw.
- Recording bribes as commissions works until someone audits the agent's actual work product.
- A $75M penalty is a rounding error on a $70B revenue company; the 36-month compliance monitor is the real cost.
The lesson
The FCPA fails not because the payment is hidden but because it is recorded as something it is not — and the controls that should flag it were never built.
Sources
- SEC AAER-4534: In the Matter of RTX Corporation, Release No. 34-101353
- SEC Charges Virginia-Based RTX Corp. with Violating FCPA — Securities Docket
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