Chinese Spy Arrested for Export Violations During Atlanta Layover
Posted by Clif Burns at 8:32 pm on July 9, 2009
Category: Criminal Penalties
Chi Tong Kuok, a citizen of the PRC, was indicted earlier this week for violations of the Arms Export Control Act in connection with an attempted export of a General Dynamics KG-175 Taclane Encryptor to Kuok at his address in Macau. Kuok became the subject of an undercover investigation in 2006 after he sought to buy from a defense industry employee a device used for encrypted satellite communications between military aircraft and satellites. That defense industry contact referred Kuok to an undercover agent, who ultimately negotiated with Kuok to sell him the KG-175 Taclane Encryptor for export.
There doesn’t seem to be much question that the Taclane Encryptor is in Category XIII(b)(3) of the United States Munitions List. Although the General Dynamics web page describing the product doesn’t explicitly state that the item is USML, it is clear that the item was designed for, and primarily used for, military applications. Kuok also seemed to be quite aware that the export of the device was illegal. In the affidavit filed in support of the criminal complaint, Kuok allegedly expressed concern that the undercover agent was FBI and allegedly indicated he preferred to pay by Western Union rather than through PayPal because the U.S. government monitored PayPal transactions.
Several interesting background details to the indictment are provided in this article in Wired. First, since Kuok was operating out of Macau, the federal agents running the investigation had to lure him back into the United States. The undercover agreed to deliver the encryption device in Panama. Kuok flew to Panama . . . through Atlanta. Oops. Kuok was arrested in Atlanta and is now being held without bail.
Second, Kuok told federal investigators after his arrest that he was acting on behalf of the government of the PRC. According to Kuok, the PRC government was seeking the encryption device, and other similar devices he had obtained or tried to obtain, to eavesdrop on U.S. military and government communications.
Third, after Kuok was arrested investigators were able to examine Kuok’s eBay account. This examination allegedly revealed that Kuok had purchased export-controlled items over eBay for export to China starting in 2005.
Once again, eBay seems to be developing as a major source of leakage of sensitive export-controlled items. Sellers on eBay are not likely to be very sophisticated about the export-status of the items they are selling and are unlikely to be concerned about much more than guaranteeing that they are paid for items before they ship them. And the Chinese government seems well aware of vulnerabiity and is all too willing to exploit it. At some point eBay and Craig’s List will be forced to address this issue on their own or risk possible government intervention to correct the problem.
Just another good example of how Web 2.0 and the rise of online social platforms continues to facilitate the violation of U.S. export laws. I think you’re right on point when stating that if these companies don’t start addressing these issues, the government’s going to get very involved very soon.
I think DDTC is trying to build up a comprehensive case. They don’t want a slap in the wrist for behemonts like e-Bay or Craig. They want everyone to read a big headline like the one with ITT. Good deterrant for possible violators. Go through the settlement, fines and penalties by the millions, setting up an export compliance program, hiring export compliance experts. Hey! I got to polish my resume…..
in ’06, engine parts for a T-56 engine were listed for sale on eBay. Perhaps, eBay ought to consider incorporating an export compliance department.
The feds should start planning now to build a new Supermax prison just for eBay and Craigslist criminals. After all, we need someplace to put all of those nefarious Cuban cigar buyers. . .unless we just send them to Gitmo.
Gives new meaning to the old joke here in The South: Whether you’re going to Heaven or to Hell, you’ve got to go through Atlanta.
Before the US govt gets heavy-handed on eBay sellers (et al) it might be a prime time to overhaul the contents of the USML, address the problem of dual-use items, and generally reform the export control system. I’d speculate that DDTC is ill-staffed to handle the barrage of requests, issues and questions if they tried to impose some form of export controls on eBay or others without cleaning up the general useability of the regulations for the average well-meaning Web 2.0 punter. Otherwise it might become a case of “Be careful what you ask for”!
There’s a lot of existing silliness on the SME/CLI/CCI/USML lists that needs to be sorted before Uncle starts getting heavy-handed with Ebay vendors and buyer/collectors, as Hugh has said. Right now those non-exportable lists expand daily as items are added without an awful lot of thought given as to just how some nefarious group is exactly supposed to exploit 20 year old outboard motor parts or ancient Simpson voltmeters that have been available at every swap meet and Hamfest since the Garden of Eden – yet such are regularly DEMIL D and are added to these prohibitive lists with a casual bureaucratic cluelessness people seem prepared to dismiss with a patriotic wave of the flag. It’s wrong, people. Someone needs to get a handle on all this before the jails fill up with “National Security Risks” who just bought some accessory for their restored Humvee on Craigslist. Orwell wasn’t far off. Jackboots are Jackboots irrespective of who’s doing the wearing.
I agree that the USML and CCL need to be reviewed and rationalized but the Chinese weren’t trying to buy the outmoded stuff still on those lists (e.g., vintage military electronics). eBay already has a million or so restrictions on stuff that can be sold — from alcohol to weapons, from human remains to used cosmetics, from hazardous materials to pets. There is no reason for it to permit sales of current military items without an export restriction. I was just suggesting that if eBay doesn’t respond to this problem, the USG may respond for it. I wasn’t really calling for eBay auctions of vintage combat walkie-talkies to result in criminal prosecutions.