Back in 1997, the folks at Omega Engineering were very bad. They applied to the Bureau of Industry and Security (“BIS”) for a license to ship laboratory equipment to Pakistan. The license was denied. The appeal of the license denial was denied. They shipped the goods anyway with an intermediate stop in Newport, Germany. BIS was not amused. Omega agreed to a $187,000 fine and an order, entered in November 2003, forbidding it from being involved in any exports to Pakistan for five years.

Fast forward to 2008. Omega is no longer an export scofflaw. Indeed, Omega helps BIS obtain a criminal indictment against an individual who was trying to export U.S.-origin goods to Iran without a license. The reward? BIS agreed last week, in consideration of the “extraordinary cooperation” of Omega, which helped BIS obtain “crucial” evidence, to suspend the reminder of the export denial order which otherwise would have remained in effect until November 2008.

And who says you never get a second chance?

A Florida man and a California man who ran separate aviation parts businesses have been arrested and charged, in a criminal complaint unsealed yesterday, with violations of the Arms Export Control Act and the U.S. embargo on Iran in connection with alleged exports to Iran of spare parts for F-14s and other military aircraft. According to the criminal complaint (not yet available on Pacer but as described by the Miami Herald), orders for the parts were received by email and then shipped to Dubai — that’s a huge surprise!! — for re-export to Iran.

One of the defendants is represented by Robert Abreu, a Miami criminal defense attorney who appears to have made the mistake of speaking to the New York Times before actually reading the Arms Export Control Act and the International Traffic in Arms Regulations that govern the case:

Robert Abreu, a lawyer for [one of the defendants], said in an interview that based on his initial reading of the case: “It does not deal apparently with any weapons or munitions. As far as I know, it was simply dual-use aircraft parts, and I think this is being trumped up to an arms violation where it’s not.”

Perhaps Mr. Abreu was misquoted, but this seems to suggest that he thinks that aircraft parts can’t be the predicate of an Arms Export Control Act prosecution because they aren’t “weapons or munitions.” Aircraft parts “specifically designed or modified for” military aircraft fall under Category VIII(h) of the United States Munitions List, and their exports are controlled by the Arms Export Control Act. One of the parts mentioned in the criminal complaint was an F-14 harness, and this is clearly a part specifically designed for the F-14 and not usable in any other craft.

ABOVE: John L. Withers, II

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On Friday, a federal grand jury indicted arms dealer AEY and four company officials on charges, among others, that they committed procurement fraud and lied to U.S. officials about the origin of Chinese manufactured ammunition supplied by the company to Afghan forces in Afghanistan pursuant to a U.S. Government contract. Section 126.1 of the International Traffic in Arms Regulations provides that it is the policy of the United States to deny approvals for exports and imports of defense articles originating in China.

Today, Henry Waxman, the Chairman of the House Committee on Oversight and Government Reform, released a letter detailing evidence the Chairman said suggested that John L. Withers, II, the U.S. ambassador to Albania, was involved in efforts to conceal the origin of the Chinese ammunition. The Chinese-made ammunition was being sold to AEY by the Albanian Ministry of Defense through the Military Export Import Company of Albania (MEICO). Because the Ministry, AEY and MEICO knew that Chinese ammunition couldn’t be sold by AEY, the Chinese ammunition was being repackaged at a facility in Albania prior to its export. When a New York Times reporter wanted to inspect the facility, the Albanians became alarmed.

According to testimony before the Oversight and Government Reform Committee by Major Larry Harrison, a Defense Department official working in Albania, the Albanian Defense Minister requested an urgent meeting with the U.S. Ambassador in November 2007:

Major Harrison stated that in response to the Albanian Defense Minister’s request, he contacted the U.S. Embassy’s Deputy Chief of Mission, Stephen Cristina, who arranged for a meeting to take place at his private residence in Tirana that evening. Major Harrison personally attended the meeting, along with the Albanian Defense Minister, Ambassador Withers, Deputy Chief of Mission Cristina, and the Embassy’s Regional Security Officer, Patrick Leonard.

According to Major Harrison, the meeting lasted for several hours, ending around midnight. Major Harrison told the Committee that during this meeting, the Albanian Defense Minister asked for help from the U.S. Ambassador?l According to Major Harrison, “He made several comments to the effect of how he had been a friend of the U.S., he’d help the U.S…. He felt the U.S. owed him something.”

Major Harrison stated that the officials then discussed how to handle the New York Times reporter. He stated that his advice was to not allow the reporter to visit the facility, but that his advice was not accepted. Instead, the Albanian Defense Minister called the commanding general of the Albanian military forces and instructed him to remove all Chinese ammunition boxes from the site of the repackaging operation so that “there would be nothing for the reporter to see.” According to Major Harrison, “the Ambassador agreed that this would alleviate the suspicion of wrongdoing, if Mr. Wood [the New York Times reporter], while he was at Rinas, did not see Chinese ammo boxes.”

Waxman also alleges that U.S. embassy officials also attempted to conceal information about the November 2007 meeting from the Committee. This allegation is based on a document which the Embassy supplied to the Committee on its meetings with Albanian officials with respect to AEY contract and which did not fully describe the meeting at issue.

Neither the State Department, nor Ambassador Withers, has issued a response to these charges, but we won’t be surprised if the State Department makes allusions to a certain novel by Joseph Conrad and a character named Kurtz.

Alexander Latifi, who was acquitted last February on criminal export charges, has been busy seeking vindication, including seeking an award of attorneys’ fees under the Hyde Amendment. In a motion filed on June 12, 2008, we get a better idea of some of the defense arguments that the court may have relied upon in acquitting Latifi.

We have previously speculated that the availability on the Internet of the bifilar weight assembly drawing that was exported was a significant factor, although DDTC has continued to maintain the absurd position that drawings and photographs on the Internet might not be “public domain” material. Additionally, Latifi’s Hyde Amendment motion argues that the drawing, which was provided to Latifi by Redstone Arsenal as part of the bid solicitation, did not bear the legends required by Department of Defense Directive 5230.24. That directive provides, at paragraph E3.1.1.8, as follows:

All technical documents that are determined to contain export-controlled technical data shall be marked “WARNING – This document contains technical data whose export is restricted by the Arms Export Control Act (Title 22, U.S.C., Sec 2751, et. seq.) or the Export Administration Act of 1979, as amended, Title 50, U.S.C., App. 2401 et. seq. Violations of these export laws are subject to severe criminal penalties. Disseminate in accordance with provisions of DoD Directive 5230.25.”

Failure by the U.S. government to comply with this labeling requirement is not in itself a defense to a prosecution for a violation of the Arms Export Control Act and the International Traffic in Arms Regulations. But it could be relevant to the scienter requirement if the defendant did not otherwise know that the data or drawing contained technical data. Because of the scienter requirement for AECA and ITAR prosecutions, the government must prove that the defendant knew that the export was unlawful. But if there was other evidence that the defendant knew the export of the drawings was illegal, the failure of the DoD to abide by its own labeling regulations wouldn’t be relevant.

[Hat tip to David Brady who sent me a copy of Latifi’s Hyde Amendment motion]

Iranian sanctions legislation is back on Congress’s menu and Iranian caviar is not. Today the Senate Finance Committee approved a markup of The Iranian Sanctions Act of 2008, a re-tooling (and improvement) of the Iran Counter-Proliferation Act of 2007. The House approved similar legislation earlier this year.

Although the text of the mark-up is not yet available, a mark-up document posted on the Senate Finance Committee site describes the new legislation. Like the previously proposed legislation, the Iranian Sanctions Act of 2008 would forbid all exports from Iran to the United States, including carpets and food products — like caviar — which Iran can currently export to the United States. And it forbids foreign subsidiaries of U.S. companies from violating the sanctions, departing from current law which would permit foreign subsidiaries to trade with Iran if that trade is not controlled by the parent company or other U.S. persons.

The biggest change between the Iranian Counter-Proliferation Act of 2007 and the Iranian Sanctions Act of 2008 is that someone apparently looked at the text of the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) and made sure that the Iranian Sanctions Act of 2008 is consistent with the language of TSRA. Under the Counter-Proliferation Act exports of “food and medicine” were exempted from the export ban. Now the proposed Iranian Sanctions Act of 2008 exempts “agricultural commodities, medicine and medical devices,” thereby broadening the exemption to track TSRA.

The informational exemptions first past under the Berman Amendment are also preserved in the currently proposed legislation. And although the proposed legislation doesn’t codify the exemption for goods, service and technology to insure air safety, the proposed bill allows the President to make exceptions to the export bans and notes that the President had previously permitted the export of civilian aircraft parts.