ITAR

Parker Hannifin Corporation, Aerospace Group

Contract Senior Contracts Administrator

Parker Electronics Systems, an industry leader in the design and mfr of fuel mgmt systems and controls, seeks individual to administer contracts for complex programs and ensure fulfillment of contractual, fiscal & performance obligations. The successful candidate will demonstrate their ability to perform the essential functions of proposal preparation, contract review and negotiation of price, terms and other performance requirement in accordance with FAR/DFAR. Candidate shall also possess a strong working knowledge of ITAR, EAR administration (i.e. TAA’s, MLA’s DSP-5’s). Requires a Bachelors degree in Bus Admin or related field and 6+ years of related experience, preferably in the military aerospace Industry.

We offer competitive salaries & benefits. To be considered, please email: hresd [at] parker.com, fax 631.273.2817, or send your resume to: HT Dept-CC, Parker Hannifin Corp., Electronics Systems, 300 Marcus Blvd, PO Box 9400, Smithtown, NY 11787.
EOE

www.parker.com

After announcing an “enhanced counter-proliferation effort” the government has lost a major Arms Export Control Act (AECA) trial under the new Justice Department initiative.

The AECA is the law that authorizes the International Traffic in Arms Regulations (ITAR). Although it seems that the there is a high success rate in many AECA prosecutions, the fact is that nearly all cases result in guilty pleas before a trial ever begins.

In 2003 Axion Corp, a small family owned contracting business won a contract with the government to make weight assembly systems for the Black Hawk. The company made the block of tungsten that attaches to the propeller rotors to reduce vibrations. As the company began filling orders, Axion’s owner Alex Latifi found that he could save time, weight and money in the process. Latifi, an engineer found that if he used virgin tungsten instead of the recycled blocks he would save the government millions. The only problem Latifi faced was the fact that virgin tungsten is only available in China, Latifi was not concerned because the Black Hawk plan furnished to him from the Defense Department did not contain any markings restricting them from export.

On April 13, 2004 the FBI and Army criminal investigators began to investigate only after an Axion secretary had been secretly providing the Army criminal investigators with information to indict Latifi. The investigators seized equipment, supplies, computers and records, including cell phones belonging to Latifi, his wife and children. Latifi, an American citizen, born in Iran, and Axion were charged with sending technical data drawings of Blackhawk helicopter parts to China in violation of the AECA. The government went on further to allege that the company and its owner falsified test reports for the Blackhawk and pushed for a forfeiture of Axion’s assets and a significant prison term for Latifi.

Over the course of 4 years Axion lost all of its business, and its reputation. Oddly enough, the secretary who was secretly informing the investigators was convicted of forging Latifi’s name on nearly $13,000 in company checks. Her disinformation of the case was eventually proven to be immaterial and flat out not true.

Latifi made the choice to have a bench trial simply because of the negative connotation that his Iranian background may have had on a jury. During the trial it was shown that there were no customary warnings on the Blackhawk drawings that were sent to China. Latifi’s lawyers were also sure to make the point that the drawings were made available on the internet, making them public domain, in turn exempting them from certain arms control provisions. Two days later the judge acquitted Latifi on the grounds that the government had no means to prove that any AECA criminal violations were committed by the defendant and that the undisputed evidence demonstrated that the Axion and Latifi had acted in good faith.

Latifi and his lawyers have now filed a claim for compensation from the government, known as a Hyde motion. The motion allows acquitted federal criminal defendants to argue that the Justice Department engaged in wrongful prosecution and allows them to collect whatever money they spent on their legal defense. Henry Frohsin, Latifi’s lead lawyer explained, “It will be a mini-trial, I plan to put Alice Martin (secretary) on the witness stand. I plan to subpoena federal agents. If this doesn’t qualify as a vexatious, misguided prosecution, then nothing will.” The trial is set for April 15, 2008.

So, will this case change the way many businesses handle AECA charges? Nearly all of the AECA cases are settled with negotiated pleas, this may have been why they continued with the indictment against Latifi even after their only witness was convicted of embezzlement and the only real evidence they had was weak at most. It could be that this case may have a positive effect on the government to the extent that it might focus its attention on the new initiative of developing strong cases and leave the weak, marginal cases to ensure that errors of this caliber are never taken to this level of the court system. It could be that the lesson is if the government is desperate to make a case against you, it will ignore ethics and not hesitate to ruin your small business by dragging you through long and costly legal proceedings.

More information:
The Birmingham News article

The US Department of State’s Bureau of Political-Military Affairs, under the Directorate of Defense Trade Controls has published the Implementing Arrangement for the proposed US-UK Defense Trade Cooperation Treaty. This initial review of the arrangement still leaves many questions as to how the treaty will work unanswered.

The main points that were referenced in the Implementing arrangement were:

• Defense articles are termed as being, “articles, services, and related technical data, including software, tangible or intangible form, listed on the Munitions List of the International Traffic in Arms Regulations, as modified or amended. Many will notice throughout the document that no mention of ITAR controlled information is referenced although the Treaty is expected to cover the export controlled ITAR information.
• The bulk of the arrangement procedures focused on what UK participants must do to be eligible to receive US Defense Articles under the Treaty
• The criteria for determining whether a nongovernmental UK entity will be included in the UK Approved Community includes:
  • Entity or facility must be on Her Majesty’s Government’s “List X” of approved facilities
  • UK defense companies under foreign ownership, control, or influence will be handled on a case-by-case basis
  • Previous US convictions of US or UK export control laws or regulations will be considered by the US Government
  • US export licensing history of the entity or facility
    National security risks, for both the US and UK
• Any individuals working at UK companies must have security clearance from the UK, and a need to know to be eligible to have access to US Defense Articles.
• In order to “Retransfer” or Reexport” US Defense Articles to entities outside the UK Approved Community must request approval through the UK MOD process for the approval of the release of classified material, as well as apply US authorities approval.

The approved lists of operations, programs, and US and UK Defense Articles which are exempt under the treaty have yet to be published.

More information:
Implementing Arrangement

BAE Systems in South Australia, a defense company, has been granted an exemption from the equal opportunity laws. The company may discriminate on the basis of nationality when selecting employees for US contracts in order to satisfy the US International Traffic in Arms Regulations.

Linda Matthews, the South Australia Equal Opportunity Commissioner argued that basic human rights should not be overridden by commercial considerations. Her strong opposition of BAE’s application was not enough to convince the Department of Justice to deny their application. BAE’s legal counsel is denying all allegations that the company ever violated South Australia Equal Opportunity laws before the date of the approval of the company’s application.

This development allows BAE to comply with US ITAR requirements that certain foreign nationals not access US defense articles without violating the laws of Australia.

More information:

http://www.tradingmarkets.com/.site/news/Stock News/1058903/

Beginning January 22, 2008 the State Department, Directorate of Defense Trade Controls Web site got a new format. DDTC says the changes are designed to assist users in searching for defense trade information. Many of the pages have been updated and most of the content from the current site can be found on the new site.

More information:

www.pmddtc.state.gov/new_look_for_website.htm

President Bush issued an Export Control Directive on January 22, 2008, the directive is presumed to improve the way in which the Department of State responds to the many licenses it receives for the export of defense equipment, services, and technical data. Bush promised, “a more efficient and transparent export license process” and better “dispute resolution mechanisms” but was sure to include that there will remain a strong monitor on protecting national security.

The specific changes include:

1. Additional financial resources and intelligence support to provide timely adjudication of defense trade licenses
2. New guidelines requiring decisions by the U.S. Government on defense trade export license applications within 60 days unless there is strong reason for additional time which must be approved
3. The electronic licensing system will be upgraded to allow all types of defense trade licenses and their submission
4. An interagency will be created to allow for timely resolution of licensing jurisdiction issues under the Commodity Jurisdiction process
5. A multi-agency working group will be created to improve procedures for export enforcement investigations

Read More

The Quebec Human Rights Commission issued a press release on January 17, 2008 regarding the settlement between Bell Helicopter Textron Canada Ltd. and a Haitian-born man who held Canadian citizenship but was denied an internship because of his ethnicity and the ITAR. According to the ITAR, individuals who hold citizenship in 25 countries, Haiti included, cannot work on U.S. military contracts.

The man was initially hired for the internship with Bell Helicopter until it was found that his citizenship would affect the company’s compliance with the ITAR so he was denied the position. The man has lived in Canada for 30 years and was a citizen, but because he was born in Haiti he was restricted by the ITAR to perform duties at Bell Helicopter.

Quebec Human Rights Commission is now encouraging other individuals of dual citizenship to bring cases to the human rights commissions if they have suffered, are suffering or will suffer in the future discrimination by companies who are complying with the U.S. ITAR. Companies are urged to develop policies and procedures to comply with Canada’s Charter of Rights and Freedoms. This however, will be difficult because certain policies and procedures will not be appropriate and work for the laws in both Canada and the United States.

On January 10, 2008, Thirunavukarasu Varatharasa, a citizen of the Democratic Socialist Republic of Sri Lanka, was sentenced to 57 months in prison and three years of supervised release after being convicted of conspiracy to provide material support to a the Tamil Tigers, a designated foreign terrorist organization and attempted exportation of arms and munitions.

From April to September 29, 2006 Varatharasa and his associates, Haji Subandi, Haniffa Osman, and Erick Wotulo, conspired to export state of the art firearms, machine guns and ammunition, surface to air missiles, night vision goggles, and other military weapons to the Tamil Tigers in Sri Lanka. The weapons would have been used to fight against the Sri Lankan government forces.

The defendants aided the Tamil Tigers by requesting price quotes and negotiating purchases for the military weapons on their behalf. They contacted a Maryland business run by undercover agents and sent an itemized list of 53 military weapons. On September 25, 2006 Varatharasa and Osman met undercover officers in Saipan and later in Guam to inspect the weaponry that was ordered including various machine guns and surface to air missiles. They agreed to arrange for the transfer to the money into the undercover agents bank account as payment.

Robert Craig, the Acting Special Agent in Charge of the Defense Criminal Investigative Service, quoted that, “DCIS will continue working with out partners in law enforcement to ensure that DoD weapons systems and technologies are secure.”

More information:

media-newswire.com/release_1059459.html

Effective December 26, 2007, it is the policy of the U.S. to deny applications for licenses and other approvals to export or transfer defense articles and services to Sri Lanka. The only exception will be that certain licenses will be issued for technical data or equipment made available for the limited purposes of maritime and air surveillance and communications. These licenses will be subject to case by case review.

Legislation explains that the embargo will continue until three conditions are met:

1. members of the Sri Lankan military alleged to have engaged in human rights violations are suspended and brought to justice;
2. journalists and humanitarian organizations are given access to all parts of the country consistent with international humanitarian law;
3. the Sri Lankan government has consented to a field office of the United Nations High Commissioner for Human Rights with sufficient access to monitor and to report allegations of human rights abused in Sri Lanka.

Human Rights Watch, a humanitarian organization, released a report last August giving great details of documented cases of attacks on displaced civilians, extrajudicial executions, “disappearances” and abductions, and failure to take action against the allied Karuna group’s forced enlistment of child soldiers.

More information:

DDTC Policy

Human Rights Watch report (PDF)

Some Canadian companies in the defense industry are finding themselves in a catch-22 situation. If they comply with the U.S. ITARs and restrict access on employees with certain nationalities, then the employees are taking the company to the provincial human rights tribunal. If they do not comply with the U.S ITARs, they cannot obtain U.S business and they may be committing an offence under U.S. law (if there is a connection to a U.S. based company). Read More

On December 19, 2007, an amendment to the ITAR was published that revised the licensing procedures with regards to third party/dual nationals for technical assistance and manufacturing license agreements. It is no longer required that additional approval for a release of technical data, defense services, and access to defense articles for third part/dual national employees from NATO, EU, Australia, New Zealand, Japan, and Switzerland. Read More

“Beware of apparently good news.” — John Black

In the December 19, 2007 Federal Register, the Directorate of Defense Trade Controls (DDTC) of the State Department announced its new policy for dual and third country nationals. The change primarily is related to the requirement that when you apply for a Technical Assistance Agreement (TAA) or Manufacturing License Agreement, you must identify the foreign nationalities of the foreign signatories to the agreement. Read More

On December 19, 2007, the Department of State issued an amendment to the International Traffic in Arms Regulations concerning exports and sales which were prohibited by United Nations Security Council embargoes. The amended list will add countries subject to such embargos. The current list includes: Cote d’Ivoire, Democratic Republic of Congo, Iraq, Iran, Lebanon, Liberia, North Korea, Rwanda, Sierra Leone, Somalia, and Sudan.

More information:

Federal Register 72FR71575.pdf (PDF)

60-Day Deadline Imposed

On December 13, the U.S. Department of State announced changes to the Voluntary Disclosure provisions of the International Traffic in Arms Regulations (ITAR), effective immediately. The amended regulations now impose a requirement that a complete voluntary disclosure be submitted within 60 calendar days of initial notification to State of the discovery of a violation, which must be supplied immediately after the discovery.

The voluntary disclosure regulations, found at 22 C.F.R. § 127.12, are designed to encourage disclosure to the Directorate of Defense Trade Controls (DDTC) of any violations of the export control provisions of, or any authorizations issued under the authority of, the Arms Export Control Act. Specifically, the regulations provide that a disclosure may be considered a mitigating factor in determining whether and to what degree administrative penalties may be imposed for the violation. In practice, many companies have found the voluntary disclosure program to be an effective tool, and have taken advantage of the opportunity to benefit from penalty mitigation in exchange for explaining to DDTC their prior violations and how they will be prevented from recurring.

As the focus on compliance has increased in recent years, so has the number of disclosures submitted to DDTC and the time involved in managing the program. In order to expedite the process, and to eliminate perceived abuses by exporters, DDTC has amended the regulations to require full disclosure within the 60 calendar day period following initial notification. A failure to complete full disclosure to DDTC’s satisfaction within the 60-day period may result in a determination by DDTC not to consider the notification as a mitigating factor in its assessment of the appropriate penalties. An allowance has been made for the request of an extension of the period where a full investigation and reporting of the violation cannot be completed within the 60 days. Read More

Special Guest Article from Pillsbury Winthrop Shaw Pittman LLP

The U.S. Government recently completed the negotiation of two defense trade cooperation treaties, one with the United Kingdom and the other with Australia. These treaties establish a bilateral framework with each country to enhance defense cooperation and reduce barriers to the exchange of defense goods, services and information. If ratified, the treaties will allow the U.S. to streamline licensing for items subject to the International Traffic in Arms Regulations (ITAR) when exported to members of an “Approved Community” in each country for specified programs. Read More