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Originally published March 7, 2014 at 5:53 PM | Page modified March 7, 2014 at 7:39 PM

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Esterline fined $20M for unauthorized defense-related exports

Esterline’s rapid acquisition of numerous defense contractors may have been a factor contributing to its lack of adequate oversight, investigators say.

Seattle Times business staff

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Bellevue-based aerospace supplier Esterline has agreed to a $20 million civil penalty after a federal investigation found its lax controls led to unauthorized exports of “defense articles and technical information.”

Investigations by several agencies found that Esterline “demonstrated inadequate corporate oversight and failed to establish an adequate arms export control compliance program,” the State Department said in a statement Friday.

The document outlining proposed charges against Esterline says “many of the violating transactions likely would have been approved” by export regulators had Esterline properly submitted licensing requests. It also notes “the absence of disclosure of sensitive technologies ... or harm to national security.”

It also says two criminal investigations involving some of the transactions, including some at Korry Electronics in Everett, were referred to the U.S. Attorney’s Office but did not result in prosecutions.

The Homeland Security Department’s investigations unit, which participated in the inquiry, said one of the violations at Korry involved transferring to a contractor in Lichtenstein sensitive technical data relating to manufacturing night-vision components used by the U.S. military.

The statement of proposed charges by the State Department’s Office of Defense Trade Controls Compliance cited Esterline’s rapid acquisition of numerous defense contractors as a factor contributing to its lack of adequate oversight.

The consent decree says Esterline will pay a $10 million penalty over several years, and the other $10 million will be suspended as long as the company applies that money toward improving its monitoring and compliance with arms-export controls.

Esterline President and CEO Curtis Reusser said in a statement that the company accepts responsibility for the actions leading to the penalties, and it has already spent more than $5 million to improve its procedures.

“We do not expect any disruption to our operations as a result of this agreement,” Reusser said.

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