Export License

Johnson Trading & Engineering Company, Ltd. of Taiwan has agreed to pay BIS $90,000 to settle charges that it knowingly caused the unlicensed export of computer chips to the People’s Republic of China, and for evading the EAR. The computer chips are subject to the EAR and controlled for national security and anti-terrorism reasons.

Between February 2003 and December 2003, on seven different occasions, Johnson Trading ordered computer chips from a US exporter and provided the exporter with false documentation that the country of ultimate destination was Taiwan. When the chips reached Taiwan, Johnson Trading arranged for them to be shipped to the PRC via Hong Kong.

Johnson Trading has agreed to the fine and will be suspended for a five-year period encompassing the denial of export privileges and an audit of the company’s export compliance program. If Johnson Trading fully complies with all terms of the agreement (which has yet to be published), $30,000 of the $90,000 penalty will be suspended.

“BIS is taking a hard-line with license exceptions being used to evade licensing requirements,” explained Kevin Delli-Colli, Deputy Assistant Secretary for Export Enforcement at BIS.

More information:

• BIS News Release

BIS announced that effective October 20, 2008, it will require the following applications or notifications to be submitted through SNAP-R:

• Export and reexport license applications
• Classification requests
• Encryption review requests
• License exception AGR notifications
• Any related documents to be submitted with the above mentioned; PDF files can be submitted as “attachments”

The requirement does not apply to applications for Special Comprehensive Licenses or in certain situations in which BIS authorizes paper submissions.

Section 748.1 “General provisions,” Section 748.3 “Classification requests, advisory opinions, and encryption review requests,” and Section 748.6 “General instructions for license applications,” have been amended to comply with the new ruling.

More information:

Federal Register Notice - August 21, 2008

J. Reece Roth, a 70 year old retired University of Tennessee professor faces up to 160 years in prison and more than $1.5 million in fines for 18 counts of conspiracy, fraud and violating the Arms Export Control Act. Roth, an expert in plasma research, agreed to serve as a subcontractor on a US Air Force project which was awarded to Knoxville technology firm Atmospheric Glow Technologies Inc.(AGT) The project involved the development of advanced plasma actuators for use on the wings of Air Force drones, a defense munitions item.

Roth assigned two of his graduate students, Truman Bond an American and Xin Dai a Chinese foreign national, to work on the project with him. At first, Xin Dai was not allowed to view Truman Bond’s work to ensure that export laws were not broken. Soon after, Roth and Atmospheric Glow Technologies representative Daniel Max Sherman agreed that this was slowing the process and allowed the graduate students to work together and share all information. Read More

BAX Global of Wisconsin has been charged with committing three violations of the EAR. Between June 2004 and October 2004 the company forwarded HLA Tissue Typing Trays to Syria on three separate occasions without obtaining the required licenses.

According to the charging letter BAX will pay a civil penalty of $20,000, the company will not be denied any export privileges.

More information:

Charging Letter (PDF

The president has issued a letter to the House permitting temporary exports to the People’s Republic of China for the Beijing Olympic Games. The restrictions will pertain only to firearms and related items for use by US and non-US athletes competing in shooting events, and military gyroscopes that are embedded in mobile high definition television camera systems for use by US filming crews.

Licensing requirements will remain in place for these exports and will require review and approval on a case-by-case basis. All equipment will be returned to the US following the end of the games.

More information:

• Letter from the President to House of Representatives and the Senate

In 2003 Omega Engineering Incorporated of Connecticut was charged with 18 violations by BIS. In April 1997 the company attempted to get a license to export laboratory equipment including load cells, load bolts, strain gauges and related parts to Pakistan. The export license was denied; Omega appealed the denial, which was eventually rejected. Then Omega exported the items anyway, and got caught.

Beginning in June 2007 the company sent the laboratory equipment to Newport, Germany where it was then shipped to Pakistan with Omega’s full knowledge. Charges 1-17 are all violations of false statements on Shipper’s Export Declarations, Omega filed SED’s filing that Germany was the ultimate destination when it knew that Pakistan was the actual ultimate destination. The final charge was a violation of 764.2(e), the company acted with knowledge that they were committing a violation when they continued to export the goods after their export license was denied. Read More

WaveLab, Inc. of Virginia was sentenced to one year supervised probation and fined $15,000 along with a forfeiture of $85,000 in profits that the company had made on the illegal exports. The company willfully admitted that it exported more than 2,400 power amplifiers to the People’s Republic of China without obtaining licenses.

The power amplifiers are used for satellite communication of data, voice, and video signals, as well as in wireless data communications. The amplifiers contained military applications and were controlled for national security reasons under the CCL.

More information:

• DOJ News Release: Virginia Corporation Sentenced for Unlawful Export of Sensitive Electronic Components to China

Hassan Saied Keshari, owner of Kesh Air International and Traian Bujduveanu, owner of Orion Aviation Corp, both face up to 20 years in prison and fines up to $1 million. The two men, Keshari from California and Florida resident Bujduveanu were indicted for their purchasing and selling US aircraft parts to Iran on numerous occasions.

Records indicate that Keshari would receive email orders from buyers in Iran, he would then request quotes from Bujduveanu and the two worked together to send the shipment to a company in Dubai who would then forward the parts to Iran. Overtime the pair shipped US parts for the CH-53 military helicopter, the F-14 Tomcat fighter jet, and the AH-1 attack helicopter, all notoriously used by the Iran military.

Because all parts were manufactured in the US they are designated as “defense articles” on the US munitions list requiring any exports to be licensed, especially to Iran. Keshari and Bujduveanu have been indicted on 11 counts of violating the International Emergency Economic Powers Act (IEEPA), the United States Iran Embargo, and the Arms Export Control Act. The charges are as follows:

• Charge 1: Conspiracy to export goods to Iran
• Charges 2 through 7: Exporting military aircraft parts from the US to Iran
• Charges 8 through 9: Exporting defense articles from the US to Iran by way of Dubai, United Arab Emirates
• Charge 10: Making false statements by misrepresenting the contents of a package containing military aircraft parts being exported from the US

More information:

• DOJ News Release: Two Munitions Dealers Indicted on Charges of Exporting Military Aircraft Parts to Iran

Parthasarathy Sudarshan, Cirrus Electronics CEO was sentenced to 35 months in prison for his involvement in illegal exports to India. In March of this year he pled guilty to felony charges of conspiracy to violate the International Emergency Economic Act (IEEPA), EAR, Arms Export Controls Act, and the ITAR.

Sudarshan and other employees at Cirrus Electronics exported items to Vikram Sarabhai Space Centre (VSSC), an enterprise within the Department of Space of the Government of India, and Bharat Dynamics, Ltd. (BDL), within the Ministry of Defense of the Government of India. Both companies are on the Department of Commerce’s Entity List, any exports of U.S. origin commodities are restricted and require a license, which was never acquired. The company also exported over 500 microprocessors for the Teja’s, a fighter jet in development in India, to the Aeronautical Development Establishment, yet another enterprise within the Ministry of Defense of the Government of India. The microprocessors are on the U.S. munitions list and require a license, which, with no surprise, was never obtained.

Cirrus provided US companies with fraudulent certificates that showed the end-user to the electrical components going to non-restricted entities in India. The company would send the products from its South Carolina facility to its Singapore facility and would then resend the packages to India to further conceal the illegal exports.

More information:

• DOJ News Release: Businessman Sentenced for Supplying Indian Government with Controlled Technology
• Cirrus President Pleads Guilty for Sales to Indian Missile Programs

BIS has revised a license exception in the Export Administration Regulations which will allow individuals to export mobile phones as gifts to eligible recipients in Cuba. The change was brought about because BIS feels that this will provide support for individuals to sustain democracy-building efforts for Cuba by allowing Cuban citizens to have contact with persons in other countries. The president announced that this will support, “Cubans who work to make their nation democratic and prosperous and just.”

The terms of License Exception Gift Parcels and Humanitarian Donations (GFT) will now allow mobile phones and related software, batteries, memory cards, chargers, and other accessories for mobile phones to be included under gift parcels. The value on gift parcels has also increased from $200 to $400; this will allow donors to still send medicines and medical supplies along with the mobile phone and accessories without having to make any reductions in the quantities of other supplies in the gift parcel. Read More

The United States Government has decided to take another small step to aid the peoples of Southern Sudan by agreeing to approve certain exports of defense articles to Southern Sudan to support the peace arrangement between Southern Sudan and the murderous Government of Sudan which, along with its Janjaweed henchmen, is known to support or be involved in the murdering and burning of babies, women and children as part of its genocide against certain groups in Sudan.

The Department of State alongside with Foreign Operations has authorized the US to provide non-lethal defense services to the Government of Southern Sudan. This will include military assistance, military education and training, and defense services controlled under the International Traffic in Arms Regulations. It has been determined by State that this is in the best interest of the United States and Southern Sudan and that the assistance may be provided pursuant to section 666(e) of the ITAR.

More information:

• Federal Register Notice

Kabba & Amir Investments, Inc., d.b.a. International Freight Forwarders (IFF) of Canada have been fined $6,000 for export violations. The company is a freight forwarding company. In June 2000, IFF took possession of shipment of X-Ray Film Processors, items subject to the Regulations, and exported them to Cuba without a license.

The company worked with known and unknown co- conspirators to export the processors to Cuba via Canada without obtaining a BIS export license. IFF violated the regulations when they took possession of the items in the United States and took them to Canada.

After several reviews, and IFF claiming that they were unaware that a license was necessary, BIS found that they do not have to prove that the company knew or did know that they needed a license. As long as IFF pays their fine within 30 days of their final charging letter they will not be denied export privileges, if they do not, their export privileges will be denied for three years.

More information:

• efoia.bis.doc.gov/exportcontrolviolations/e2045.pdf (PDF)

Willbros Group Inc. and Willbros International Inc., a wholly owned subsidiary, have agreed to pay over $32 million in penalties, disgorgement and interested in criminal case with the Department of Justice and with the Securities and Exchange Commission. The companies are both publicly traded and provide construction, engineering and other services in the oil and gas industry. Read More

The Bureau of Industry and Security has proposed to amend the Export Administration Regulations by making changes to ensure consistency within the language and terminology of Part 744. Because this is only a proposed rule, none of the changes are in force at this time.

Part 744 of the EAR deals with the end-user and end- use based control policy. Sections 744.3 (missile catch-all control), 744.4 (chemical/biological weapons catch-all control), and 744.6 (US persons involvement in weapons of mass destruction proliferation activities) all prohibit exports, reexports and transfers (in-country) of items subject to the EAR. 744.2 (nuclear catch-all control) presently only states it prohibits exports and reexports of items subject to the EAR. The proposed amendment would change the nuclear catch-all control language to prohibit export, reexport, and transfers (in-country) to conform to the other sections.

The rule also proposes to amend the “is informed” paragraph (B) of the sections of part 744 to ensure that the same terminology is used throughout all sections. Read More

The Directorate for Defense Trade Controls (DDTC) has posted an updated chart to show the past year’s license processing times. DDTC says it gives out these processing times so that US defense firms can clearly predict the amount of time required for license submissions. In the past year the average processing times have been cut from 35 days down to 15. These processing times are only for applications submitted electronically via the D-TRADE system. Beginning in May DDTC will release April 2008 hardcopy statistics which will provide a more accurate average processing time.

Editor’s Note: 15 days average processing times..hmmm. Well, if I were you, I wouldn’t tell anybody in my company that the average license processing time is 15 days because when all of your staffed applications take well over 15 days, everybody in your company is going to blame you for the delays. — John Black

More information:

• DDTC License Processing Time