Singapore

Laura Wang-Woodford, director of Monarch Aviation Pte, Ltd. (“Monarch”) of Singapore was arrested and has been arraigned on a 20-count federal indictment. Wang-Woodford is accused of exporting components for Chinook military helicopters from the US to Singapore and then to Iran in violation of the International Emergency Powers Act, after identifying them as commercial components.

Ms Wang-Woodford and her husband ran Monarch, which has been importing and exporting military and commercial aircraft components for more than 16 years. Brian Woodford remains fugitive since his wife was arrested on December 23, 2007 at San Francisco International Airport.

The indictment charges consist of charges of:

1. Conspiring to export aircraft parts to Iran
2. Several counts of exporting aircraft parts to Iran against the IEEPA
3. Conspiring to export defense articles without a license
4. Exporting and attempting to export defense articles without a license in violation of the AECA and ITAR
5. Conspiring to launder the proceeds of the unlawful export of defense articles
6. Illegal export of US military aircraft components
7. Falsely identifying components in export documents filed to the US government
8. Conspiring to transmit funds from Singapore to Cincinnati, Ohio with the intent to promote the illegal export scheme in violation of the federal money laundering statutes

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The first-ever National Export Control Coordinator for the Department of Justice was appointed last June 20, 2007. Steven W. Pelak, a veteran prosecutor for 18 years, has been an Assistant U.S. Attorney and Senior Litigation Counsel in the National Security Section of the U.S. Attorney’s Office for the District of Columbia and, since September 2001, has served as the Anti- Terrorism Coordinator for the U.S. Attorney’s Office. Mr. Pelak is detailed to the Counter-espionage Section of the Justice Department’s National Security Division, wherein he will have some of the following responsibilities:

• development of comprehensive training materials on export control investigations and prosecutions for federal prosecutors nationwide
• solicit and receive regular progress reports from U.S. Attorneys’ offices on the development of export control cases
• coordinate between the Justice Department and the many other U.S. law enforcement, licensing and intelligence agencies that play a role in export enforcement.

Attorney General Alberto Gonzales mentioned in his June 11 speech on nuclear terrorism that the Justice Department’s National Security Division where federal prosecutors were provided instruction and guidance on export control cases, with trainers from the Justice Department and the relevant investigative agents on hand providing comprehensive prosecutorial instruction.

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Includes Chinese, Singaporean, Malaysian, and Mexican Entities

In the April 17, 2007, Federal Register the US State Department announced sanctions on 14 new entities due to actions that potentially make a material contribution to the development of Weapons of Mass Destruction in Iran and Syria. The sanctions prohibit export license approvals and US Government procurement from, assistance to, and exports to the listed entities. The sanctions have little impact on the newly listed entities in Syria and Iran because those countries are already subject to comprehensive US trade sanctions.

Specifically, the sanctions on the entities are:

1. No department or agency of the U.S. Government may procure goods, technology or services from listed entities.
2. No department of agency of the U.S. Government may provide assistance to listed entities.
3. No department or agency of the U.S. Government may sell any item on the United States Munitions List to listed entities.
4. No new licenses for transfer of items controlled under the EAR or the Export Administration Act of 1979 will be granted and all existing licenses will be suspended for transfer to listed entities.

The Listed Entities are:

• China National Precision Machinery Import/Export Corporation (CPMIEC) (China) and any successor, sub-unit, or subsidiary thereof
• Shanghai Non-Ferrous Metals Pudong Development Trade Co. Ltd. (China) and any successor, sub-unit, or subsidiary thereof
• Zibo Chemet Equipment Company (China) and any successor, sub-unit, or subsidiary thereof
• Challenger Corporation (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Target Airfreight (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Defense Industries Organization (DIO) (Iran) and any successor, sub-unit, or subsidiary thereof
• Hizballah and any successor, sub-unit, or subsidiary thereof
• Sokkia Singapore PTE Ltd. (Singapore) and any successor, sub-unit, or subsidiary thereof
• Army Supply Bureau (Syria) and any successor, sub-unit, or subsidiary thereof
• Syrian Air Force (Syria) and any successor, sub-unit, or subsidiary thereof
• Syrian Navy (Syria) and any successor, sub-unit, or subsidiary thereof
• Industrial Establishment of Defense (Syria) and any successor, sub-unit, or subsidiary thereof
• Challenger Corporation (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Target Airfreight (Malaysia) and any successor, sub-unit, or subsidiary thereof
• Aerospace Logistics Services (Mexico) and any successor, sub-unit, or subsidiary thereof
• Arif Durrani (Pakistan)

The penalties will be in effect for 2 years unless the Secretary of State deems otherwise.

Source:

• Federal Register - April 23, 2007 (Volume 72, Number 77, pp. 20158-20159)

The FBI has charged two persons of Indian origin of knowingly violating US export regulations by conspiring to export dual-use electronic components to organizations on the Entity List without obtaining the proper licenses. The two arrested parties are Parthasarathy Sudarashan, founder of Cirrus Electronics in Singapore, and Mythili Gopal, who launched Cirrus USA in Simpsonville, SC. Both are legal residents of the US. Two unnamed Indian government officials were referred to as co-conspirators.

The items exported were computer chips and other electronic components of a “dual-use” nature which can be used in missile guided systems and aircraft navigation systems. The modus operandi was to purchase the components in the US, illegally export them to Cirrus Singapore, and then re-export them to three Indian companies: Vikram Sarabhai Space Centre (VSSC) for possible use in missile production, Aeronautical Development Establishment (ADE) for use in the Tejas Light Combat Aircraft project, and Dharat Dynamics for an unnamed defense project. VSSC is on the Department of Commerce Entity List.

One of the unnamed alleged co-conspirators is posted at the Indian Embassy in the United States according to the FBI. The other is an official of ADE. Sudarashan and Gopal will have their first court appearance in early April according to a spokesperson for the US Attorney for the District of Columbia.

Source:

• The Indian Express April 4, 2007

Who would have thought that a company right here in my peaceful Shenandoah Valley of Virginia would set the export fine record with a $100 million penalty? (And, no, ITT is not and was not a client of mine). ITT agreed to plead guilty to criminal charges of illegally exporting controlled night vision technology and omitting material facts in statements to the government. The penalties stemmed from ITT’s outsourcing of components for their leading edge night-vision goggles. According to government and published reports, ITT exported technical data without the required licenses to the UK and Singapore. ITT was aware of violations in the mid 1990’s and voluntarily disclosed some limited infractions but omitted large amounts of material information and provided false information to hide the full scope of the problem. It seems like in the course of looking into UK violations it was discovered that there were even more significant violations involving Singapore.

There are many lessons that export compliance professionals can learn, from this story.

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The Iran export violation hit parade continues with the settlement (pdf) between Ali Khan, CEO of Turboanalysis, Inc. and Turbo Technologies, LLC and BIS in the amount of $110,000. The settlement covers ten charges related to the alleged 2003 exports of aircraft parts classified 9A991 and worth over $1,000,000 to Iran via Malaysia and Singapore.

Now class, here’s your homework assignment. Compare and contrast the Iran-related settlements of Encore ($101,000 penalty for about $7,000 worth of EAR99 exports) and Khan ($110,000 penalty for over $1,000,000 of aircraft part exports subject to anti-terrorism controls). Explain how the BIS administrative penalty and mitigation guidelines apply to each case. Show your work.

Customs agents issued search warrants on 18 US companies accused of illegally exporting to Multicore, a UK-based company allegedly acting a front company to purchase equipment for the Iranian military. The 18 companies are small companies located across the United States, in Long Island, South Carolina, Florida, Kansas, Texas, Louisiana, New Hampshire, Wisconsin, Oregon and Colorado.

Multicore allegedly has been engaged in procuring parts for the Iranian military for some time now. Nearly three years ago, Aerospace Export Control Update reported on the arrest of Multicore officials in California who purchased F-14 parts on Iran. At that time we pointed out that for some reason the US Government did not add Multicore to the denied persons list (which it easily could have done), and, thereby, officially notifying all exporters that it would be illegal to deal with them. We did, however, we advised our readers to treat Multicore as suspicious even though they were not denial listed.

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