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Raytheon puts CFO on leave in probe

Raytheon Co. puts its chief financial officer on leave and said it is offering $51 million to settle a federal probe of its accounting practices and a separate class-action lawsuit.
/ Source: Reuters

Defense contractor Raytheon Co. put its chief financial officer on leave Friday
amid an SEC investigation and offered $51 million to settle both the probe and a separate class-action suit.

The big defense contractor is trying to close the door on a troubled period between July 1999 and March 2000 when its stock fell 75 percent after it disclosed a
series of charges and sharply lowered its outlook.

The Securities and Exchange Commission investigation focused on accounting practices at its Raytheon Aircraft Co. unit from 1997 to 2001, when the maker of business
jets was struggling financially.

Raytheon said SEC staff had recommended approval of a settlement under which Raytheon would pay a civil penalty of $12 million without admitting or denying any wrongdoing.

The company said it put Chief Financial Officer Edward Pliner and another non-executive employee on leave after the SEC’s staff made a preliminary decision to bring action against the
two. Pliner is being replaced by vice president and controller Biggs Porter, who will become acting CFO.

Raytheon, which also makes weapons including the Patriot missile which became one of the most famous parts of the U.S. arsenal during the 1991 Gulf War, did not identify the other
employee put on leave.

Raytheon's move “should not jeopardize their financial prospects, because their operations are under good control,” said Cai von Rumohr, an analyst with SG Cowen, adding that “there are lots of other capable people running the show.”

Pliner was a partner at PriceWaterhouseCoopers advising Raytheon until 2000, when he became Raytheon’s controller.

Moving to clean up another legal headache from the past, Raytheon said it had agreed to pay $39 million to settle a class-action lawsuit related to the company’s sale of its engineering and construction business in July 2000.