10. During the development phase of the program, each Z10 military attack helicopter was powered by two PWC PT6C-67C turboshaft engines. PWC delivered ten of these development engines to China. Two of the ten development engines were used in China on a ground test rig; six engines were used on three flight test aircraft; and the remaining two engines were used as spare development engines.
11. PWC’s development engines were identical to the PT6C-67C engines that PWC was already supplying for a commercial helicopter. As a result, PWC determined that the engines themselves, including the Electronic Engine Control hardware in those engines, did not constitute “defense articles” requiring an export license under the ITAR. However, because the Electronic Engine Control software (“EEC software”) used to test and operate those engines was modified to interface with a military helicopter application, the modified EEC software did constitute a defense article and did require an export license from the Department of State, which was never sought or obtained. The EEC software was provided by HSC. Versions of the EEC software were exported by HSC to PWC in Canada and exported by PWC to China, where they were downloaded for use in the ten development engines. Specifically, between January 2002 and October 2003, HSC delivered versions of the EEC software to PWC in Canada twelve times. PWC subsequently exported six of those twelve software versions to China. On four occasions between November 2004 and June 2005, PWC also exported to China versions of HSC’s EEC software that PWC modified on its own.
12. From the inception of the project, PWC knew that the PRC was developing a military attack helicopter, for which U.S-sourced components would be prohibited. PWC also recognized that the Chinese Z10 project raised export compliance issues both in Canada and the United States, yet they failed to share those concerns, or their knowledge regarding the development of the attack helicopter, with UTC or HSC until years later. Instead, PWC knowingly turned a blind eye to the attack helicopter application and went along with the “sudden appearance” of a parallel civil program, the existence of which PWC openly questioned as “real or imagined,” in order to facilitate PWC’s obtaining Canadian export licenses for the engines and the EEC software from HSC, a U.S.-based UTC subsidiary.
