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Selling chopper engines to China costs U.S. company

The U.S. government fined a Connecticut-based defense contractor, United Technologies, $75 million for illegally selling engines to the Chinese to build the Z-10, an advanced military attack helicopter.

One of United Technologies subsidiaries, Pratt & Whitney Canada Corp., admitted on June 28 to violating a U.S. export control law and making false statements in the sale of 10 helicopter engines to the Chinese. Federal prosecutors said the company tried to evade export control laws by selling the engines as commercial items.

Company officials knew the engines, built using U.S.. technology, would be used in the development of a military helicopter, U.S. Attorney David Fein of Connecticut said. United Technologies wanted to establish itself in the growing commercial helicopter industry in China.

"P&WC took what it described internally as a ‘calculated risk,' because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to $2 billion," Fein said in a Reuters report.

A major supplier to the U.S. Department of Defense, United Technologies CEO Louis Chenevert said his company would take full responsibility for the charges.

“As a supplier of controlled products and technologies to the Department of Defense and other domestic and international customers, we are committed to conducting business in full compliance with all export laws and regulations," Chenevert said in a statement.

The Z-10 made its first flight in 2003 with the bulk of the force reaching the Chinese Army in 2009 and 2010. It's China's first advanced attack helicopter which carries a 30-mm cannon, HJ-9 anti-tank guided missiles, HJ-10 anti-tank missiles and TY-90 air-to-air missiles.

What makes the engines that Pratt & Whitney Canada Corp. shipped to China different than a commercial engine is the software package designed for military applications. The feds have investigated this sale since 2006 when United Technologies officials told investigators they only knew about China's intentions in 2003 and 2004. Company officials now admit they knew about the military development of the helicopter back in 2000.

Out of the $75 million fine, United Technologies can spend $20 million of it to improve their export control procedures and hire an independent monitor, according to a Reuters report.

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