Raytheon Technologies discloses 2nd criminal subpoena in probe of financial controls at missiles business

Stephen Singer, Hartford Courant
·2 min read

Raytheon Technologies Corp., the parent company of jet engine manufacturer Pratt & Whitney, on Tuesday disclosed a second criminal subpoena from the U.S. Department of Justice as part of an investigation of financial controls at its Raytheon Missiles and Defense business.

The Waltham, Massachusetts-based aviation and defense conglomerate said in a securities filing that it has determined it is exposed to “meaningful risk of civil liability for damages, interest and potential penalties.”

Raytheon disclosed last October it received a criminal subpoena from the Department of Justice seeking information and documents related to financial accounting, internal controls over financial reporting and cost reporting at its missiles and defense business since 2009.

The investigation includes potential civil defective pricing claims for three contracts between 2011 and 2013.

As part of the same investigation, Raytheon said it received the second criminal subpoena March 24 seeking documents related to a different contract in 2017.

Asked on a conference call Tuesday detailing first-quarter financial results if he was surprised by the subpoena, Chief Executive Officer Greg Hayes said the contracts date to between 2011 and 2013 and there are “always surprises like that out there when the DOJ suggested that we defectively priced some contracts.”

“We’ve been doing an investigation, we’ve been working with the DOJ and I think we appropriately provided for those exposures,” he said. “I wouldn’t call that a big surprise.”

In its securities filing, Raytheon said it is cooperating fully with the Department of Justice.

“Although we believe we have defenses to the potential claims, the company has determined that there is a meaningful risk of civil liability for damages, interest and potential penalties,” it said.

Based on information now available, Raytheon said it does not believe the results of the investigation or of any potential civil litigation will have a material adverse effect on its financial condition, results of operations or liquidity.

Stephen Singer can be reached at ssinger@courant.com.