Apr
9
Close Enough for Government Work
Posted by Clif Burns at 3:03 pm on April 9, 2007
Category: BIS • Criminal Penalties • DDTC
They say that close only counts in horseshoes and hand grenades. It also, however, counts in indictments, and the recent Sudarshan indictment, which we reported last week, is a case in point. That indictment is only half right, but that would be enough, if a jury buys it, to send Mr. Sudarshan to jail.
The half of the indictment that appears right is pretty straightforward. The indictment alleges that Mr. Sudarshan, through Singapore-based Cirrus Electronics took orders for electronic components from the Vikram Sarabhai Space Centre (“VSSC”) and Bharat Dynamics, Ltd (“BDL”) both Indian-government related companies on the Entity List. Sudarshan would then use a U.S. subsidiary of Cirrus to source these parts from U.S. vendors. The U.S. subsidiary would then ship the components to Cirrus in Singapore which would then ship the components to VSSC and BDL without obtaining the licenses required by the Bureau of Industry and Security (“BIS”) for exports to parties on the Entity List.
When the U.S. vendors requested end-use statements for the parts being sold to Cirrus, Sudarshan would lie to them and claim that the parts were destined for the Navy Physical and Oceanographic Laboratory in Kochi, India. If the allegations are proven, Mr. Sudarshan, who was arrested two weeks ago in South Carolina, may have to delay his return trip to Singapore for a good deal longer than he expected.
The second half of the indictment alleges that Sudarshan exported defense articles without the necessary license from the Directorate of Defense Trade Controls (“DDTC”), and it’s here that the indictment appears to start getting things wrong. The indictment alleges that Sudarshan obtained and exported without DDTC authorization Intel i960 microprocessors, which the indictment alleges is an item on the United States Munitions List. Additionally, the indictment singles out exports by Sudarshan of M39014/01-1284, M39014/01-1299, M39014/01-1317, M39014/01-1535, and M39014/01-1553 capacitors, which it also alleges were USML items. Neither seems to be the case.
The Intel i960 processor was popular in the 1990s. Only one flavor of the chip, the i960MX, was specifically designed or configured for military use. The indictment, however, doesn’t allege that the i960MX chip was involved and refers only to the i960. Moreover, the i960MX was apparently no longer even in production during the time frame covered by the indictment.
The i960 chip itself is a microprocessor that can be used in a wide variety of applications and is, according to Intel, “a time-proven and excellent choice for local and wide-area networking, telecom and imaging applications.” It is also used in slot machines, not normally considered a military application.
Sudarshan obtained the i960 chips from a vendor in Newburyport, Massachusetts, which produced these chips under license from Intel. The vendor also apparently did not believe that the i960 chip that it was selling to Sudarshan was USML. According to the indictment:
SUDARSHAN falsely assured representatives of the vendor in Newburyport, Massachusetts, that the i960 microprocessors were going to remain in Singapore for use in a joint Government of India project with Lockheed Martin, when, in fact, Cirrus Singapore was going to re-export the i960 microprocessors to ADE [the Aeronautical Development Establishment] in India for use in the navigation and weapons guidance systems of the Tejas Light Combat Aircraft.
Thus, it was clear to the vendor that the i960 was being exported by Cirrus to ADE and yet it did not insist that Sudarshan obtain a DDTC license for that export.
The capacitors identified by the indictment as exported without the necessary DDTC license are widely available “off-the-shelf” components, as a simple Google search demonstrates. There is no indication that they were specifically designed or configured for military use, making any claim that they are USML more than a little untenable.
It appears that the government’s theory is that these items were USML because they were being shipped to India for use with the Tejas Light Combat Aircraft. That, however, has never been enough to turn a commercially-available, off-the-shelf item into a defense item on the USML.
Perhaps DDTC should start doing export training for Assistant U.S. Attorneys.
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Copyright © 2007 Clif Burns. All Rights Reserved.
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10 Comments:
Again, you have to wonder whether Bush Buddy Alberto’s Dept. of Justice is actually requiring AUSAs to follow the US Attorney’s Manual and get Main Justice approval, or whether, under Alberto, Main Justice is just so incompetent that no one there understands the AECA and ITAR. Bring back Joe Tafe.
Mil-spec processors are vastly different than it’s civilian counterpart. To say the i960 is the same as the MX version, put it mildly, is insane.
The i960 processor is a comidity readilly available within China. I found it on Hong Kong and Shenzhen electronic sites, even Ebay China:
http://tinyurl.com/36w6y4
Spec on the i960 says it’s based on 0.8 micron fabrication process. While China’s semiconductor industry is behind the times, is 4 generations ahead of that. There are Chinese and Japanese chip companies making similiar microprocessors:
http://tinyurl.com/2orgno
[Edited by site owner to shorten URIs.]
Do you really think an AUSA would charge a case like this if the items in question were not certified by DDTC as USML? That would be a very quick way to lose a case (and a job). It is doubtful the AUSA prosecuting this case would make that mistake.
Many electronic components, such as the microprocessors and capacitors in this case, are considered USML based on their testing parameters (ability to withstand heat, shock, and vibration) and how they are being used (ie navigation and weapons guidance systems). Facts regarding end-use are often not disclosed to US vendors by exporters operating illegally, which is likely what is happening here.
Mr. McKallor — end use doesn’t render a COTS item a defense article on the USML. Period. Electronics components aren’t USML unless they have been specifically designed or modified for military use.
Would the AUSA charge this without getting a certification from DDTC? Maybe, maybe not. I wouldn’t have thought the AUSA could misread section 126.1 as erroneously as they did in the Mak case either.
Of course, it’s possible that this was a special i960 chip designed for military use other than the MX. Or maybe it was the MX. And maybe the capacitors were specially modified for military use, but they sure looked like standard issue capacitors to me.
There is evidence in the indictment that these i960s were not COTs microprocessors. On Pages 24-25 of the indictment, defendant attended a testing of the i960s to ensure “the i960 microprocessors satisfied the criteria set forth in ADE’s purchase order for the items.”
Sounds like a special order to me. And, as I’m sure we all know, a special order to meet criteria for a
-continued-
Combat Aircraft can at least be arguably construed as specifically designed or modified for a military application.
Sorry for the accidental submission and continuance.
Performance testing can also apply to published specs for COTS items as well as to custom specs. If the government’s claim was that the i960s were USML because ADE supplied custom specs, it would have been easy enough to plead it. But, you’re right, if the ADE did supply custom specs designed to integrate the chips into the Tejas fighter jet, the i960 would be USML
Now, the question is where, and what are these custom specs? What are the tests? Do they support the “mil-spec” accusation?
The i960 are inside things like DVD player and computer network router, and they all have “specs”.
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I’ll share some personal experience. While back a customer in China inquired about some 15 year old drill beds. I located them but was not able to export them, after learning that they required exemption.
The CAD/CAM software came with is on 5.25″ floopy (if anyone still remember what that is) and is a very popular model everyone else in the world have been selling them to China.
But we consider it “munition”. No wonder those containers are going back to China empty.
[…] Jeffrey Lewis, who works at a DC think tank and who blogs at Arms Control Wonk, took issue with our post on the Sudarshan indictment. Unfortunately, it doesn’t appear that either he or Scott Gearity, whom he quotes, bothered to read what we said very carefully: Clif Burns at export law blog [sic] suggests one of the microprocessors—the i960—in the second half of the indictment isn’t controlled, noting that its out of production and obsolete. […]
[…] The Bureau of Industry and Security (”BIS”) has issued a temporary denial order against everyone in sight involved in the Cirrus Electronics matter. As we previously reported, Cirrus Electronics took orders for electronic components from the Vikram Sarabhai Space Centre (â€VSSCâ€) and Bharat Dynamics, Ltd (â€BDLâ€) both Indian-government related companies on the Entity List. […]
