Jun
4
eBay Auction Supplied Military Parts to Iranian Air Force
Posted by Clif Burns at 4:51 pm on June 4, 2009
Category: General
A press release from Her Majesty’s Revenue and Customs (U.K.) supplied some further and very interesting details relating to the conviction of three UK residents (including two Iranians granted political asylum) for the attempted export to Iran of oxygen cylinders used in fighter jets. This story was first reported here on April 29 as the three men went to trial. All three men were convicted and sentenced to serve, respectively, five years, 30 months, and 30 months, in jail.
Of particular interest is the source of the oxygen cylinders: the defendants bought them on eBay. The decision by the three defendants to use eBay was quite canny and illustrates how the US export control system is vulnerable when military parts are sold by unsophisticated and inexperienced sellers using the auction site. While many established manufacturers and distributors have had the “know-your-customer” mantra drilled into their heads by now, such niceties are probably unheard of by, and unknown to, eBay sellers, often working out of their garages and basements. The only questions such sellers are likely to have about their buyers is how quickly they can pay. The eBay seller in this question didn’t pause long enough to realize that the purchase by an Iranian in the U.K of military parts might be problematic.
The press release also notes that in cases of prior exports of military goods to Iran by the trio, more sophisticated businesses which weren’t selling their good through eBay had indicated that they needed export licenses to ship the goods to the U.K. In those instances, the three men would pretend that their actual customer was in the United States and asked the businesses to ship the goods to an address in Florida where, of course, the three men would then have the goods transshipped to themselves in the UK. This wasn’t just a red flag, it was a red banner the size of a football field, and the U.S. businesses never should have shipped the items to the Florida address.
In all events, the eBay connection in this case should serve as a wake-up call to the Pentagon as to the many problems in its current program of military surplus sales to the general public. Sales to casual sellers who then plan on disposing of these goods over eBay is equivalent to the Pentagon selling them to a store with window signs saying “Iranians Welcome,” “Free Shipping to Tehran” and “Get Your F-14 Parts Here!”
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5 Comments:
The issue of U.S. military surplus sales and U.S. domestic sales to both legitimate U.S. distributors/resellers and foreign front companies was the topic of a hearing yesterday, June 4, in the House Energy and Commerce Subcommittee on Oversight and Investigation. Representatives of GAO reported the results of an investigation into the vulnerability of domestic sale for illegal exports of dual-use and military items. To do this study,GAO created a dummy corporation, established fictitious corporate identities, established a website, and completed a number of commercial transactions to acquire items such as gyrochips, night vision equipment, and triggered spark gaps by using e-mail or the sellers’ websites. No face-to-face meetings were held before the transactions were completed.
The GAO testimony, as well as the testimony of three corporations that sold the items to GAO, is available on the House Energy and Commerce website. The GAO reports were issued June 4 and are available from the GAO website.
Expect to hear more on this issue from the Congress, given enforcement actions involving “domestic
sales” that are not subject to U.S. export controls.
I just finished reading the GAO report and plan to post on it over the weekend. Interestingly, the report excluded eBay and Craigslist from its investigation.
The GAO also recently created a fake company with a fake website, a fake investigational drug product, and a fake research project — all to be approved by commercial IRBs. An IRB (Institutional Review Board) is an ethics committee designed to determine which products are safe to test in humans. If testing goes well, the FDA is asked to review/approve the drug and that’s how drugs get to market. I’m oversimplifying here, but the gist is that these GAO stings are currently happening in multiple fields.
After the GAO sting, 1 commercial IRB was required to testify before Congress. It went badly, and rather than take FDA sanctions head-on, they closed the business. The rest of the industry listened & are making sure that the work they do is as compliant with federal regulations as possible. In this way, the GAO is almost acting as an unofficial regulatory body.
chris w (certified IRB professional)
Ah — and the GAO IRB sting excluded a lot of major players with whom they were familiar. It seems the IRB sting was intended to look at how the small guys are doing business. (i.e. flying under the radar?)
Yes, although the GAO investigation excluded Craigslist from its covert investigation, during the question and answer period of the hearing, Mr.Kutz (GAO) noted that an offering on Craigslist advertising body armor stated that it is “a must for any ganster”.
