Raytheon Allegedly Overcharges Taiwan for Radar and Weapon systems
A report by Bloomberg and subsequent investigations by the US Federal Government revealed that the RTX Corporation (formerly Raytheon Technologies Corporation) wilfully overcharged multiple U.S. allies, including Taiwan, on various weapon sales. On 4 October, Taiwan’s Minister of National Defense Wellington Koo announced outside the Legislative Yuan the Taiwanese Government’s intention to seek a full reimbursement for said overcharges; notably a Patriot system purchase in 2013 and a radar purchase in 2017.
On 7 October, the Minister answered several more questions regarding the incidents. One press member raised concerns regarding the exorbitant maintenance fees of the PAVE PAWS radar system in Hsinchu County (樂山雷達), also contracted by Raytheon. The system was built in 2013 with NT$40 Billion, and over the last 15 years maintenance fees have totaled to around another NT$37.7 Billion. The new developments have indicated this is potentially the most expensive loss for Taiwan. The Minister replied that the United States took the initiative to inform the Taiwanese Government of the scandal after its own investigation, highlighting that the U.S. Government was as much a victim as Taiwan herself.
On 30 August, the U.S. Department of State announced that it had concluded an administrative settlement with RTX Corporation to resolve 750 violations of the Arms Export Control Act. This came after the Office of Defense Trade Controls Compliance had conducted an extensive compliance review. It is unclear if this review also touched on Taiwan’s issues.
Reaffirming relations between the two governments, Minister Koo stressed that the two governments have remained in close contact regarding the incident and that a full compensation will be fulfilled as the situation concludes. He also commented on portrayals of Taiwan being “the sucker” in various media outlets, saying that it does not reflect reality and considered such comments as disinformation intended to weaken the Taiwanese population’s faith in the United States.
The Minister also admitted to procedural flaws that allowed ROCAF Missile Defense to sign a maintenance contract worth NT$18.2 Billion with Raytheon without proper approval. The Patriot-3 missile system maintenance contract was signed without informing of Air Force Command or the Ministry of National Defense. Noting that the involved officers have been reprimanded and the contract has since cleared the Legislative Yuan.
RTX Corporation have not commented on Taiwan’s allegations specifically but Neil Mitchill Jr., RTX’s chief financial officer, did state during a Q2 2024 earnings call that measures to avoid similar future issues had been put in place and that the company expected “to pay about $1 billion related to these matters this year”. Going forward, Minister Koo promises a full reimbursement, but that details are likely to be sparse as this case involves multiple U.S. allies working together to resolve the situation.