ITT Guilty of Revealing Classified Military Data
The ITT Corporation, a major manufacturer of night-vision goggles used by the American military, pleaded guilty yesterday to illegally sending classified military information to other nations, including China, and agreed to pay a $100 million penalty.

This is the largest conviction of a big military contractor for violations of arms export controls, and ends a five-year federal investigation in which the government found ITT to have enlisted a front company to “set up an end run” around laws limiting the transfer of military technologies to other countries.

The government said ITT did so to take advantage of cheaper manufacturing overseas.

“ITT has put in jeopardy our military’s nighttime tactical advantage and America’s national security,” the United States attorney, John L. Brownlee, said in a statement. “The criminal actions of this corporation have threatened to turn on the lights on the modern battlefield for our enemies and expose American soldiers to great harm.”

Mr. Brownlee added that “I believe that our American soldiers are the principal victims of ITT’s crimes.”

As part of a plea agreement filed yesterday in United States District Court in Roanoke, Va., ITT pleaded guilty to two felony counts relating to the exportation, without a license, of night-vision technology to China, Singapore and Britain.

ITT, the nation’s 12th-largest military contractor, agreed to pay $50 million in fines, penalties and forfeitures to the government. In addition, as part of a government remedial program, the company agreed to invest $50 million in developing advanced night-vision technology, under the supervision of the Pentagon, that can be shared with other American military contractors.

Steven R. Loranger, chief executive of ITT, which is based in White Plains, said the company had cooperated with the investigation and that it “regrets very much that these serious violations occurred.”

Mr. Loranger added that the settlement “relates to the actions of a few individuals in one of our 15 business units” and that the most sensitive part of the company’s night-vision technology was not compromised by the employees’ actions.

Mr. Brownlee praised Mr. Loranger, a former Textron executive who succeeded Louis J. Giuliano as president and chief executive of ITT in 2004. Before Mr. Loranger’s arrival, Mr. Brownlee said, ITT management and outside counsel had “fought the government’s investigation” and had tried to “essentially run out the clock” on the statute of limitations.

“Mr. Loranger quickly changed course,” said Mr. Brownlee, who added that his “cooperation and strong leadership may have saved ITT from permanent ruin.”

Loren B. Thompson, a military analyst at the Lexington Institute in Arlington, Va., said that “this is a real black eye for ITT as a defense contractor, no question about it.”

“This is a stark reminder to contractors of how seriously the government regards the leakage of sensitive military technology,” Mr. Thompson added. “There’s not much point in outspending the rest of the world on military technology if countries like China can get it on the cheap.”

According to Mr. Brownlee, ITT, in an effort to “reduce its costs and enhance its financial bottom line” began to illegally outsource parts of the night-vision system. As it began to do business with overseas suppliers, it provided them with information that had been classified as “Secret-No Foreign,” which meant it was not to be shared with any foreign person or companies, including close allies.

For instance, the government found that two Chinese optical engineers worked on company designs in Singapore, and that engineers from Singapore worked side by side with ITT engineers at the company’s night-vision operation in Roanoke. In addition, sensitive technical data was sent to a Singapore company that then transferred the data to companies in England and China.

Rather than following United States export laws, the government said, ITT viewed those laws as “obstacles to getting business done.”

As a result, ITT said it has enacted a number of measures. Those include naming a new compliance officer, developing better tracking systems and setting up mandatory ethics classes for employees.

“ITT has a long track record as a trusted employer, supplier and partner,” Mr. Loranger said, “and we are firmly committed to ensuring that this will not happen again.”