Boeing to Pay $10-Million Sea Launch Fine

Boeing Co. has agreed to pay a $10-million civil penalty to get its commercial space venture in Long Beach, known as Sea Launch, back on track after allegedly disclosing sensitive information to its Russian and Ukrainian partners.

The settlement will allow Boeing to reinstate an agreement with its foreign business partners to proceed with the 3-year-old, $500-million project to launch satellites from a sea platform. The State Department had suspended the agreement on July 27.

“We continue to work diligently with the State Department to have the license reinstated and resume normal activities as soon as possible,” Boeing spokesman Dick Dalton said.

Congressional sources said Boeing had broken the terms of its export license by sharing technical information with RSC-Energia of Moscow and the Ukrainian company KB Yuzhnoye/PO without a State Department representative present.

The $10-million fine is the largest ever assessed for violations of the Arms Export Control Act. Boeing will pay the government $7.5 million, with the first $3.5 million to be paid within 10 days, according to State Department documents.

The remainder--$2.5 million--will be used to set up a computerized document control system at Boeing’s Long Beach facility. The system will allow the State and Defense departments to monitor the whereabouts of sensitive technical information and its dissemination to the international business partners, the settlement said.

A State Department official, who spoke on condition of anonymity, said this week that Boeing had violated the license 207 times, adding that none of the violations damaged national security or harmed U.S. foreign policy.

Boeing still faces a criminal investigation by the Justice Department, which Crain’s Washington Outlook newsletter says includes a grand jury in Seattle.

Boeing has agreed not to challenge criminal prosecution on the constitutional grounds of double jeopardy as part of its civil penalty agreement.

The penalty could have been worse. The company could have been banned from continuing the Sea Launch partnership and from receiving any future export licenses.

That didn’t happen because Boeing cooperated fully in the investigation, which failed to show any damage to national security, the State Department official said.

Boeing has a 40% stake in the Sea Launch program and is overall project manager. The technology, however, primarily is that of other nations.

The program, which has contracts for 18 launches, will use a modified version of the Soviet SS-18 intercontinental ballistic missile to boost satellites into space from a platform, which is a converted oil rig, positioned at the equator.