mts030608
On the homepage
Pardon Board
Out There
Petters
Vikings
MTS Systems would pay U.S. $1 million in fines
MTS is believed near an agreement to settle federal misdemeanor charges concerning the sale of nuclear-testing equipment to India.
Print this story
E-mail this story
Save to del.icio.us
Share on Facebook
Share on Digg
Minnesota business by the numbers
See Minnesota's top earning companies, CEOs and non-profits
More from Business
MTS Systems is negotiating a $1 million settlement to resolve a federal investigation into the sale of equipment several years ago that could have been used to test nuclear weapons in India.
Eden Prairie-based MTS disclosed the anticipated plea agreement with the U.S. Department of Justice in a recent filing with federal regulators.
Neither MTS, its attorney nor the Justice Department would comment Wednesday. In 2003, the Star Tribune reported that a grand jury heard testimony from an employee responsible for the company's compliance with federal export laws governing the sale of test equipment.
"In the plea agreement, the company has agreed that the [Department of Justice] could have proven that [MTS] filed applications with the [Department of Commerce] in 2003 that failed to properly disclose that company employees had collective knowledge of a possible use of the equipment to test the safety of structural components in India's nuclear power plants," MTS said in its filing with the Securities and Exchange Commission. "This constitutes an end use that is prohibited by the United States due to the unregulated nature of the nuclear power plants.
"These omissions made the applications false."
Under the proposed deal, which would be reviewed by a federal judge, MTS would plead guilty to two misdemeanor charges, pay a $400,000 fine, sponsor an export compliance symposium, and improve its export-management and compliance controls.
MTS expects total fines paid to the Justice and Commerce departments would come to about $1 million, plus the cost of its multiyear defense.
The company added that it expected that the outcome would not have a significant detrimental effect on its finances or operations.
MTS, which has 1,600 employees, is a leading global provider of mechanical testing systems and simulation equipment. It had 2007 earnings of $42 million on revenues of $421 million. It is best known for hydraulic machines that shake and roll automobiles, test the strength of aircraft parts and evaluate the performance of medical devices.
In 2003, CEO Chip Emery, an engineer and former Navy officer, disputed that MTS did anything wrong or illegal.
The United States closely monitors exports that could be used for nuclear-weapons research in India and other nuclear-armed countries. Emery said at the time that the equipment was not sent to any of the Indian organizations that are denied certain U.S. equipment without the approval of the U.S. Commerce Department.
In 2006, MTS settled a portion of a Department of Commerce civil complaint and paid a fine of less than $100,000. The company began to discuss terms to resolve the criminal investigation last year.
MTS said in the federal filing that its board concluded there had been "no willful violations" of laws by any of its employees and that it has developed a "model export management system" in recent years and enhanced its related training programs.
Neal St. Anthony • 612-673-7144
Recent Business stories
Program to help trucking companies cross Mexican border attracts drug smugglers - March 6, 2008
Program to help trucking companies cross Mexican border attracts drug smugglers - A U.S. program that offers trusted trucking companies speedy passage across American borders has begun attracting just the sort of customers who place a premium on avoiding inspections: Mexican drug smugglers. More
Blog: Patent Pending
Lights out at U energy conference. Irony police notified.
Just as Lawrence Kazmerski, a top official at the National Renewable Energy Laboratory, was about to give the keynote address at the University of Minnesota's annual E3 conference at the RiverCentre in St. Paul, the lights went out, bathing the audience in darkness and a deep sense of irony.
Comment on this story | Be the first to comment | Hide reader comments