US aviation giant Boeing Co is facing possible US charges for selling commercial aircraft to China and other countries containing a gyroscopic chip with potential military applications, officials said on Wednesday.
"The [State] Department is currently in negotiations with the Boeing company regarding potential violation of the Arms Exports Control Act and International Trafficking in Arms Regulations," State Department spokeswoman Nancy Beck said.
She declined to provide specifics concerning the negotiations but said "documents relating to the charges" or a settlement would eventually be made public.
A Boeing spokeswoman, Amanda Landers, said the company has "been in discussions with the State Department for many months concerning past deliveries of aircraft and spare parts with the QRS-11 censor."
"As we continue to work with the State Department towards possible resolution of this matter, it would not be appropriate for us to comment on any possible charges or response," she said in a statement.
Boeing made the statement in response to a report in the Seattle Times newspaper that the State Department was poised to sue it for selling aircraft equipped with the QRS-11 chip.
The aviation giant, whose production base is in Seattle, could be hit with up to US$47 million in fines if found guilty of 94 violations of the Arms Control Act, according to the Seattle Times.
Aside from the fines, Boeing faces a "potential but unlikely three-year suspension from government contracts," the newspaper said.
Boeing failed to get export licenses for some microchips used in 96 jets it sold to China and other countries between 2000 and 2003, government officials maintained in civil charges cited by the paper.
The charges relate to the export of jets that contain the QRS-11 chip, used as a backup system in determining a plane's orientation in the air.
The Times cited a Boeing document that refers to the chip as "relatively unsophisticated" technology, but notes that the gyrochip also has been used to help stabilize and steer guided missiles.
The State Department's Directorate of Defense Trade Controls claims the company sold the technology to China "deliberately and repeatedly" even after it had been warned to stop, the Seattle Times said.
Boeing "was aware that a Department export license was required but chose to export without authorization by using false statements on documents," it quoted the charges as saying.
Boeing eventually acknowledged to the State Department it had exported 96 aircraft and 27 spare gyrochip-equipped flight boxes without export licenses, according to the report.
The QRS-11 chip, made by a unit of BEI Technologies in Concord, California, sells for between US$1,000 and US$2,000 and reportedly works in tandem with one made by the French firm Thales.
The newspaper reported that the State Department's charging letter contends that Thales told Boeing in 2000 that an export license was needed for the gyroscope system.
Such systems require a license every time they are moved to another country.
The new charges come in the wake of a series of scandals involving the aircraft maker.
The US Air Force in March lifted a ban on business with three Boeing units, clearing the way for them to compete for satellite launches worth billions of dollars.
The ban was slapped on the Boeing units in July 2003 after they were discovered with proprietary information belonging to Lockheed Martin that helped them win a 1998 rocket contract.
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