Carmel Forge fraudulently tested engine parts - report

Pratt & Whitney told "The Wall Street Journal" the alleged fraud affected tens of thousands of engine parts used on business jets.

"The Wall Street Journal" reports that United Technologies Corporation (NYSE: UTX) unit Pratt & Whitney has disclosed and broken up an alleged fraudulent-testing scheme by sister company, Carmel Forge Ltd. in Haifa.

According to "The Wall Street Journal", the scheme affected tens of thousands of engine parts used on popular business jets and turboprop aircraft flown by airlines around the world. It quotes Pratt & Whitney officials as saying that the investigation "uncovered an elaborate, yearslong effort to doctor metallurgical test results, so as to make certain engine forgings appear to meet extra-stringent standards when they actually fell short."

Pratt & Whitney launched the investigation in 2011, after a tip-off from a Carmel Forge employee. Pratt & Whitney's chief spokesman Jay DeFrank said that the scheme, which began in the mid-1990s, systematically altered or manipulated readings from certain tests to check the strength of forgings for more than 40,000 disks, and that the metal parts were used in various engines made by Pratt & Whitney's Canada. The company said that the parts do not pose any safety hazard, but added that it was shocked by the scale of the duration of the testing irregularities and that it was reassessing its quality-control systems and oversight of parts suppliers.

"The Wall Street Journal Report" says, "Pratt & Whitney's description amounts to one of the aerospace industry's longest and most-pervasive examples of improper testing in recent years." It adds that the US Federal Aviation Authority (FAA) launched a formal administrative proceeding, after it was notified of the affair.

Pratt & Whitney Canada is Carmel Forge's largest customer. Pratt & Whitney Canada manufactures engines for private planes, business jets and turboprops, including Textron Inc.'s (NYSE: TXT) Cessna Aircraft Co., General Dynamics Corporation's (NYSE: GD) Gulfstream Aerospace and Dassault Aviation SA (Euronext: AM), and Bombardier Inc.'s (TSX: BBD) Q400 turboprops and smaller aircraft brands including Piper Aircraft Inc.

Other customers include US aircraft engine makers General Electric Co. (NYSE: GE) and Honeywell International Inc. (NYSE: HON), and European companies.

Carmel Forge former CEO Eli Yaffe did not return a phone call from "The Wall Street Journal" seeking comment.

Published by Globes [online], Israel business news - www.globes-online.com - on March 4, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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