Case File
Raytheon’s Dirty Business in Qatar (The Qatari Agent)
Contents
Introduction
Introduction
contentsIn the early 2000s, Qatar significantly expanded its military capabilities and defense spending. As a result of Raytheon’s pursuit of defense projects in the Emirate, US authorities have alleged several bribery and high-bribery-risk schemes Raytheon was involved in.
On 16 October 2024 the U.S. Security and Exchange Commission filed a cease-and-desist order against RTX Corporation, parent company to the Raytheon Company (collectively referred to as Raytheon). The commission found that as part of its effort to sell its Patriot Missile systems and other defense systems to the Qatari military, the company paid over USD 30 million to the Qatari agent, ignoring significant corruption risks and due diligence processes.
As part of its settlement of the cease-and-desist order and institution of proceedings, Raytheon entered into a Deferred Prosecution Agreement (DPA) with the US Department of Justice and the US Attorney’s Office for the Eastern District of New York. This DPA was for violations of the Foreign Corrupt Practices Act and Arms Export Control Act over bribery schemes in Qatar. A second DPA, entered into on the same day, was for defrauding the US government with regard to the pricing of PATRIOT missile systems and a radar system destined for an unnamed foreign customer.
Allegations concerning sham contracts set up by Raytheon to bribe Qatari military officials are documented on the Corruption Tracker under the case 'Raytheon’s Dirty Business in Qatar (Sham Contracts)'. This present case report specifically refers to the alleged improper payments to a Qatari agent detailed in the SEC’s cease-and-desist order. The order did not disclose the names of the Qatari individuals, companies, or Raytheon employees involved.
Case Details
Case details
contentsSeller country
United States
Seller company
Raytheon (now RTX)
Buyer country
Qatar
Goods category
Missile Systems, Radar Systems
Equipment sold
PATRIOT Missile System, Early Warning Radar (EWR), National Advanced Surface-to-Air Missile System (NASAM)
Deal value
At least USD 5.89 billion
Sum involved in corruption
USD 30 million
Start year
2007
End year
2019
Outcome status
Deferred Prosecution Agreement(s)
Actors
Actors
contentsRaytheon: An American arms company. We use the term Raytheon here as a collective term for the companies today under RTX Corporation, which was formed after a merger and name change involving Raytheon Company and Raytheon Technologies Corp., as well as for subsidiaries under their control.
Country Manager: Raytheon Country Manager for Qatar. Considered by the cease-and-desist order to be Qatari Agent’s handler and controlling all access to Qatari Agent by other Raytheon employees.
Qatari Agent Company: A limited liability company registered in Qatar.
Qatari Agent: Chairman and majority owner of the Qatari Agent Company. Qatari Agent is a cousin of the Emir of Qatar, at times advised the Emir on financial matters, and was a member of the Watari Council of the Ruling Family. Previously, the Qatari agent served as the chairman of a major bank in Qatar.
Allegations
Summary of Corruption Allegations
contentsThe October 2024 cease-and-desist order against Raytheon highlights numerous corruption red flags in Raytheon’s dealings with a Qatari agent, who is an influential member of the Qatari royal family. The order alleges that when Raytheon retained this agent as its representative in Qatar, his royal connections and lack of defense contracting experience were known. Raytheon’s due diligence process identified heightened corruption risks, yet the agent was engaged on a success-fee basis through his company. This arrangement involved vague service descriptions, with the agent’s primary responsibility being to exercise “best efforts” to help Raytheon establish relationships and goodwill with the Qatari military. The agent was not required to submit invoices to receive payment; instead, the award of a contract to Raytheon and receipt of payments from Qatar automatically triggered his commissions.
Until at least 2019, Raytheon did not require the agent to report on his activities. As a result, Raytheon was unaware of the actions the agent took on its behalf to secure billions in military contracts, nor how he utilized the millions he was paid. Although not explicitly stated in the order, this raises the possibility that the agent could have used the payments to distribute further bribes.
Raytheon’s country manager in Qatar actively supported the Qatari agent, providing him with internal documents to help him appear to be providing services and claim additional commissions. The country manager also ghost-wrote communications to Raytheon executives, including due diligence forms, and later, activity reports required for documentation. It is alleged that Raytheon managers and an attorney were aware that the country manager authored these reports without proper authorization.
The allegations against senior Raytheon executives suggest that they focused solely on the potential for substantial revenue from Qatari military sales, sidelining compliance and internal accounting controls. One senior manager reportedly stated that the Qatari agent “has access to both the Minister of Defense and the Emir. . . . I have witnessed it firsthand. It is what got the Patriot, [Ground-Based Integrated Air and Missile Defense], and EWR going.”
Timeline
Timeline
contents2007
- FebBetween February 2007 and April 2020, Raytheon paid over USD 30 million to the Qatari agent in its efforts to sell the Patriot Missile system to Qatar. Over the course of this relationship, Raytheon credited the agent with helping secure eight contracts valued at approximately USD 5.89 billion.
2014
- In 2014 and again in 2017, Raytheon paid the Qatari agent commissions for additions to a contract known as GGC HAT, despite the agent having played no role in the original contract. Raytheon later admitted to using sham contracts to distribute bribes related to this agreement (see our case report “[Raytheon’s Dirty Business in Qatar (Sham Contracts)]”(https://corruption-tracker.org/case/raytheons-dirty-business-in-qatar)). The payments were made because Raytheon managers believed they needed the Qatari agent’s assistance to secure the substantial Patriot contract.
2019
- Raytheon began requiring that representatives submit quarterly activity reports. As a consequence, the Country Manager ghost-wrote Qatari Agent’s reports.
2020
- MarIn March and April 2020, in an effort to exit the relationship quickly, Raytheon allegedly paid the agent a record USD 17 million. The cease-and-desist order states that, “Despite the staff’s investigation, Raytheon did not disclose to Commission staff the known corruption concerns and amounts paid to the Qatari Agent. They were not revealed until new management became aware following the merger that created RTX and they determined to cooperate fully with the staff’s investigation.”
Outcomes
Investigation Outcomes
contents2019
- In 2019, the Securities and Exchange Commission (SEC) handed Raytheon a subpoena seeking documents for an investigation regarding improper payments in dealings of Thales-Raytheon Systems in a “Middle Eastern country”.
2020
- OctIn October 2020, following these allegations, the U.S. Department of Justice started its own investigation and served Raytheon with two criminal subpoenas (in 2020 and 2021).
2021
- MarThe second criminal subpoena is filed, seeking information on a contract signed in 2017.
- Also in 2021, Raytheon puts aside 290 million USD for legal defense and liabilities relating to criminal investigations.
2024
- 16 OctRaytheon Company, as a subsidiary of RTX, enters into two Deferred Prosecution Agreements with the U.S. government and agrees to pay a total of USD 950 million and retain an independent compliance monitor for three years. One of the DPA’s concerned the specific allegations of breaches in the Foreign Corrupt Practices Act and the Arms Export Control Act. Raytheon entered into this DPA as part of its settlement of the institution of cease-and-desist proceedings by the Securities and Exchange Commission. The second DPA concerned two schemes to defraud the U.S. Department of Defense in connection with the provision of defense articles and services, including PATRIOT missile systems and a radar system.
References
References
contentsUnited States District Court District of Massachusetts. 16.10.2024. “United States of America v. Raytheon Company”. https://storage.courtlistener.com/recap/gov.uscourts.mad.276407/gov.uscourts.mad.276407.2.0_1.pdf
United States District Court For the Eastern District of New York. 16.10.2024. “United States of America v. Raytheon Company - Deferred Prosecution Agreement”. https://fcpa.stanford.edu/fcpac/documents/6000/004747.pdf
U.S. Department of Justice. 16.10.2024. “Raytheon Company to Pay Over USD 950M in Connection wtih Defective Pricing, Foreign Bribery, and Export Control Schemes.” https://fcpa.stanford.edu/fcpac/documents/6000/004746.pdf
U.S. Securities and Exchange Commission. 16.10.2024. “Order Instituting Cease-And-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, And Imposing a Cease-And-Desist Order”. . https://fcpa.stanford.edu/fcpac/documents/6000/004742.pdf
U.S. Securities and Exchange Commission. 16.10.2024. “SEC Charges Virginia-Based RTX Corp. with Violating Foreign Corrupt Practices Act in Connection with Efforts to Obtain Contracts with the Qatari Military.” https://fcpa.stanford.edu/fcpac/documents/6000/004743.pdf
Tarek A. Fouad v. The State of Qatar: Complaint. 2019-09-25. https://www.courtlistener.com/docket/16249039/tarek-a-fouad-v-the-state-of-qatar/
Tokar, Dylan. 07.10.2021. “WSJ News Exclusive | U.S. Probes Examine Raytheon’s Dealings with Qatari Defense Contractor.” WSJ. https://www.wsj.com/articles/u-s-probes-examine-raytheons-dealings-with-qatari-defense-contractor-11631007001.