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Archive for March, 2008

Mar

19

Failed Negotiations with Iranian Company Lead to Guilty Plea

Posted by Clif Burns at 7:24 pm on March 19, 2008

ABOVE: Allied Telesis iMAP

Allied Telesis Labs, the Raleigh-based subsidiary of Japanese conglomerate Allied Telesis Holdings K.K., yesterday pleaded guilty to charges that it conspired to violate the U.S. sanctions against Iran. The interesting wrinkle in this case is that the charges are based simply on unsuccessful negotiations that Allied Telesis Lab employees had with Iran’s Information Technology Company to rebuild telecommunications facilities in Tehran and other cities in Iran.

Allied Telesis Labs designs high-capacity “multiservice access platforms,” known as iMAPs, and similar products. Such iMAPs, which can route a large volume of telecommunications traffic, were a central component of the redesign and had been designed in Raleigh. In anticipation of concluding the contract, $2 million worth of iMAPs for the Iranian project had already been manufactured for Allied Telesis at facilities in Singapore.

Court documents, however, indicated that:

The contract negotiations [with Iran’s Information Technology Company] eventually collapsed, the telecommunications system was not installed and the iMAPs were sold elsewhere at a loss.

The only public comment from Allied Telesis on the guilty plea was that the employees involved in the contract negotiations had been fired.

Since the charges here were conspiracy to violate the Iran sanctions, the prosecution would not have needed to prove any exports or attempted exports to Iran. It would only need to prove sufficient overt acts in furtherance of the conspiracy. Certainly the negotiations with the Iranian company, the design of the iMAPs, and, most significantly, the actual manufacture of those iMAPs in anticipation of the award, would be sufficient overt acts in furtherance of the conspiracy.

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Mar

18

Dubai Prosecutes Export Violation; Hell Freezes Over.

Posted by Clif Burns at 4:54 pm on March 18, 2008

Category: General

ABOVE: Dubai Court House

According to a recent report in Gulf News, the English-language daily newspaper based in Dubai, a man who was attempting to export zirconium from the UAE was referred to the Dubai court for prosecution.

Judge Esam Eisa Al Humaidan, Attorney General, … told Gulf News the suspect was referred to court last week and a hearing will be held today. He said this is believed to be one of the very few cases of its kind, if not the first ever.

We’ll put our money on “first ever.”

Humaidan, no doubt aware that his country’s first tiny baby-step into the world of export control is being careful watched by certain people at the Department of Commerce, made clear that he’s doing everything he can not to screw it up:

“We have conducted thorough investigation in the case, to guarantee the complete and accurate implementation of the law,” he said. All procedures were done according the highest levels of accuracy, including ordering the arrest of the suspect, searching him, interrogating him and the other witnesses and the examination of the seized metal, he added

We’re not so sure what the “highest levels of accuracy” in interrogation means in the UAE, but we will take the Attorney General at his word and simply hope that the application of water wasn’t involved.

The background to all of this is, of course, an earlier threat by the Department of Commerce to put the UAE on a special list of countries of “diversionary concern,” which would have made exports of dual-use items to the UAE more difficult. The Department later retracted that threat after noting that the UAE had passed a new export law.

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Mar

17

What’s the Penalty for Violating the “Spirit” of the Iran Sanctions Act?

Posted by Clif Burns at 7:05 pm on March 17, 2008

Category: Iran Sanctions

Natural Gas Pipeline in Iran Swiss energy company EGL issued a press release today announcing that it had inked a contract to buy natural gas from Iran over the next 25 years. Most of the natural gas purchased by EGL under the contract is destined to Italy via the Trans-Adriatic Pipeline, which EGL is building with Norway’s StatoilHydro ASA.

The United States was not amused:

Lisbeth Keefe, spokeswoman for the U.S. Embassy in Bern, said Washington had told the Swiss that “major new oil and gas deals with Iran send precisely the wrong message at a time when Iran continues to defy U.N. Security Council resolutions requiring it to suspend enrichment-related and reprocessing activities.” She said Washington was studying whether the deal actually violates the Iran Sanctions Act.

Actually it shouldn’t take much studying. Section 14(9) of the Iran Sanctions Act specifically excludes from the Act “entry into, performance, or financing of a contract to sell or purchase goods.” My guess is that Keefe knew that because she also said:

“But we believe the deal in any case violates the spirit of the sanctions,” Keefe said.

This is the first time I’ve heard anyone argue — presumably with a straight face — that the “spirit” of a U.S. law should have extraterritorial application.

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Mar

12

Best Acronym Ever: “POOF”

Posted by Clif Burns at 5:16 pm on March 12, 2008

Category: DDTC

Microwave Antenna Tower Robert Bigelow is a Las Vegas hotel billionaire who owns Bigelow Aerospace and wants to put a Budget Suites of America motel somewhere in space near you. Such facilities are apparently called privately-owned orbital facilities or POOFs. Seriously.

Of course, the folks at Bigelow think that their dreams of space tourism may be negatively impacted by the anti-POOF forces over at the Directorate of Defense Trade Controls (“DDTC”). Those grinches take the view that most space-qualified stuff is on the USML and needs an export license, which, of course, is a major annoyance for someone who wants to build hotels (and other commercial facilities) in the sky.¹ So, according to an editorial by Bigelow’s general counsel in the print edition of Space News, Bigelow is going to file a commodity jurisdiction (“CJ”) request to transfer the company’s “space habitat” (or POOF) technology from the United States Munitions List to the Commerce Control List (“CCL”).

Anyone who has filed a CJ request is probably giggling more over the idea that Bigelow’s CJ request will be addressed by DDTC anytime soon than they are over the acronym POOF. Similarly, the idea that DDTC will move space technology, even for space hotels, over to the CCL will provoke similar snorts. And, of course, once DDTC says no to Bigelow’s request, that will be the end of the story since such decisions are shielded from judicial review under section 2778(h) of the Arms Export Control Act.

But you can’t blame Bigelow for dreaming, can you?

[Thanks to Res Communis and Hobbyspace for info on the Space News editorial]

¹Under section 120.17(a)(6) a space launch of a payload is not itself an export of the payload. However, Bigelow appears to be hoping to launch its components from outside the United States, and thus would be required to export them prior to launch.

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Mar

11

Virginia Company Admits Illegal Exports to China

Posted by Clif Burns at 7:13 pm on March 11, 2008

Category: Criminal Penalties

Microwave Antenna Tower Virginia-based Wavelab pleaded guilty today to charges that it exported 2,400 microwave power amplifiers to China without the required licenses from the Bureau of Industry and Security (“BIS”). The company also agreed to forfeit the $85,000 it was paid for the amplifiers. Sentencing is scheduled for June 6, and the Court could impose additional fines.

The company’s website, which defaults to Chinese but is also available in English, lists 6 microwave amplifiers as its product line. Based on the spec sheets for these six products, it appears that they aren’t covered by ECCN 3A001.b.3 or 3A001.b.4, the two available classifications for microwave amplifiers. But the website also suggests that the company will custom produce microwave amplifiers for its customers, so it seems likely that such custom amplifiers were involved.

The company admitted in its plea agreement that it knew that the amplifier’s required licenses. Indeed, the ECCNs in question are relatively easy to apply and are based on the amplifier’s average output power, its frequencies of operation, its size and dimensions and its fractional bandwidth. (Fractional bandwidth is is the bandwidth of a device divided by its center frequency.) Although there are certainly ECCNs that pose difficulties in determining their applicability, these two are not among them.

An AP reporter that called the company for comment was told that everyone was “too busy” to talk and then hung up on.

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