Keysight Technologies penalized $6.6 million after exporting unauthorized software

Santa Rosa-based Keysight Technologies Inc. has agreed to pay a $6.6 million penalty to the U.S. Department of State for exporting unauthorized software used for testing radar equipment to foreign countries such as Russia and China.

The case centers on a period from December 2015 to April 2018 and was originally flagged by a unit with the State Department, the Office of Defense Trade Controls Policy (DDTC), which alleged Keysight had misclassified the software it was exporting. The software is known as multiemitter scenario generation.

In the process Keysight violated both the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR) without receiving proper authorization from the federal government, according to the State Department..

The software had been shipped out in 24 instances to 17 countries including allies such as the United Kingdom and Canada, according charging document in the case.

The State Department said that the Keysight software could be combined with certain hardware equipment to model and simulate electronic warfare scenarios. It added in the charging document “that Keysight’s exports to the PRC (China) and Russia harmed U.S. national security.”

The top local technology firm, Keysight is one of Sonoma County’s largest private employers with 1,530 workers and designs and manufactures electronic test and measurement equipment and software that is used by businesses, government and defense sectors.

The company cooperated with the State Department in the probe and agreed to the settlement, which was announced Aug. 9 on the department’s website.

“The settlement demonstrates the department’s role in strengthening U.S. industry by protecting technical data from unauthorized exports,” the department said in a statement.

“The settlement also highlights the importance of obtaining appropriate authorization from the department for exporting software as well as determining proper export jurisdiction,” it added.

Under the agreement, the department agreed to suspend $2.5 million of the penalty to be used by Keysight for compliance measures. The company must hire a special compliance officer for two years and conduct an external audit to ensure new safeguards are in place.

In a statement, the company noted it cooperated with the State Department’s investigation into its conduct and already has undertaken several compliance measures.

“We take this matter seriously and are looking forward to working with the special compliance officer, as well as DDTC and the State Department to continue to improve and enhance our ITAR compliance program,” said Jeffrey Li, senior vice president and general counsel.

The company’s stock price has not been affected by the disclosure. It started the week at $166.42 per share and closed on Friday at $166.10 per share.

You can reach Staff Writer Bill Swindell at 707-521-5223 or [email protected] On Twitter @BillSwindell.