A spy helicopter thriller, with comic notes It sounds like a third-rate thriller designed to provoke alarmists" worst fears about China's efforts to exploit western technology. An arm of a large US corporation, more focused on profit than wider ethics, sells sensitive technology - software to control helicopter engines - to China. China's aerospace industry then goes on to acquire a decisive military capability that it previously lacked: the ability to build modern attack helicopters. Yet, rather than emerging from a scriptwriter's head, these real events were described last Thursday in a courtroom in Bridgeport, Connecticut, as a subsidiary of one of the US's largest defence contractors pleaded guilty to illegally exporting vital technology behind China's new Z10 attack helicopter. The documents that the US Department of Justice published after the guilty plea by a subsidiary of United Technologies Corporation nevertheless paint a picture that has elements of Ealing comedy as well as Hollywood. The company as a whole appears to have stumbled into illegality through the determination of a few employees at Pratt & Whitney Canada, its Canadian aero-engine maker, to view the Chinese helicopter programme - inaccurately - as a joint civilian and military one. The documents underline how crucial it is likely to be for UTC's future to persuade the US authorities that its internal controls - which it promised under the plea agreement to reinforce - are properly functioning. "PWC knowingly turned a blind eye to the attack helicopter application and went along with the "sudden appearance" of a parallel civil programme, the existence of which PWC openly questioned as "real or imagined,"" one of the DoJ documents said. The subsidiary did so to make sure it would secure the necessary export licences for the engines and software from Canada and that Hamilton Sundstrand, another of UTC's subsidiaries, would develop the necessary software. Even within PWC, confusion about the programme's purpose was so complete that one engineer was shocked when the programme's chief at China Aviation Industry Corporation, the state-owned Chinese aerospace company, showed him a two-seat attack helicopter, rather than the 12-seat transport craft he expected. "Where are the other ten seats?" the engineer asked. "According to the engineer, the programme chief laughed off his comment," the DoJ documents report. At the heart of the events that led to the courtroom, according to the Department of Justice, was China's determination, despite international arms embargoes, to secure technology for modern attack helicopters. After initially failing to secure the technology, Avic started in 2000 to tell suppliers the programme was a joint military and civilian one. The explanation suited sales staff at PWC who wanted a foothold in China's civil helicopter market, where European rivals were in the lead. The DoJ probe found several emails from PWC sales staff to others in the organisation discussing how best to present the programme to avoid raising concerns. China's civil helicopter market was expected to provide between $500m and $2bn of revenue for the company over several years, internal estimates suggested. PWC's effort to cover up the military aspects even, according to the DoJ, affected Hamilton Sundstrand, which supplied the engine control software. PWC hid from Hamilton Sundstrand why it needed software modifications. PWC knew that it would need an export licence if the software was modified for military ends. That incident fits into the wider sense that PWC had become determined to complete the work, no matter the obstacles. The engineer who saw the military version of the helicopter told investigators he was kept working on the helicopter, despite discovering its military purpose. PWC pressed on with its involvement even after Hamilton Sundstrand, becoming suspicious about the programme, demanded certification of the technology's use and, in February 2004, ordered its staff to stop co-operating. Yet an investor activist - identified only as "a non-governmental organisation offering advice to investors" - would, eventually, bring the scheme to light. The activist contacted UTC's investor relations department in February 2006 expressing concern about the Z10 and prompting the company to tell the US government about its involvement. Inaccuracies in that statement were the subject of some of the charges. The fines and forfeitures levied will total at least $55m and possibly as much as $75m if federal officials are unconvinced that UTC has tightened export controls sufficiently. The company could lose still more money, meanwhile, if the Chinese incident leads the US defence department to award future work to other suppliers in preference - or if it has greater problems securing export licences. It is a pill that may be all the harder to swallow because the prize PWC was chasing turned out to be illusory. China has never proceeded with a civilian version of the Z10 helicopter, according to the DoJ documents. When China started developing another, heavier civilian design, the craft was so different that PWC in 2006 withdrew from the competition to supply its engines.