Nice Work If You Can Get It
Posted by Clif Burns at 8:26 pm on June 4, 2013
Category: BIS • Criminal Penalties
Lisong Ma, a Chinese national, pleaded guilty last week to charges that he attempted to export carbon fiber from the United States without a license. Carbon fiber meeting certain technical qualifications is classified as ECCN 1C010 and would require a license from the Bureau of Industry and Security (“BIS”) before it could be exported to China. Reading the DOJ press release announcing the plea suggests that the defendant was either incredibly stupid or that something else was going on.
According to the DOJ account, the defendant contacted an undercover agent online and inquired into the purchase of a large amount of Toray T800 carbon fiber. What is strange is that the defendant actually came to the United States to close the deal. And, of course, the rest is history.
But what make this strange is that the Toray carbon fiber is made in Japan and appears to be readily available in China. Either the defendant was just dumber than the carbon fiber he was trying to buy or, possibly, the agents proposed an incredibly attractive price to lure him into the United States. Admittedly the failure to recognize a price “too good to be true,” if that is what happened here, is probably also a form of stupidity
As is typical with press releases of this kind, the government agencies involved spare no effort to pat themselves on the back for nabbing this dangerous criminal through “covert cyber operations.” Although “covert cyber operations” sounds intriguing, what it means, ultimately, is having a bunch of federal agents surf the net and hang out at alibaba.com looking for exporters to nab by dangling sweet deals in front of them. As they say (or sing sometimes): nice work if you can get it.
UMass Lowell Fined For Entity List Violations
Posted by Clif Burns at 4:54 pm on May 20, 2013
Category: BIS • Entity List
Back in April the University of Massachusetts at Lowell (the “University”) agreed to pay to the Bureau of Industry and Security (“BIS”) a suspended penalty of $100,000 in connection with its unlicensed export of an atmospheric sensing device, antennae and cables valued at slightly more than $200,000 to Pakistan’s Space and Upper Atmosphere Research Commission (“SUPARCO”). The fine will be waived if the university does not commit any more export violations during a probationary period of two years.
The items at issue were all classified as EAR99. The violation occurred because SUPARCO is on BIS’s Entity List. The licensing policy for SUPARCO has a presumption of approval for EAR99 items, so had the university applied for a license for these exports, it almost certainly would have been granted.
The atmospheric sensing device is likely the basis for this research paper titled “Study of maximum electron density NmF2 at Karachi and Islamabad during solar minimum (1996) and solar maximum (2000) and its comparison with IRI” and co-authored by employees of SUPARCO and a professor at the University. This paper raises an interesting deemed export issue since transfer of technology, even EAR99 technology, would be a violation of the EAR unless the transferred technology was “publicly available” or if it qualifies as “fundamental research.” It is not always easy to determine whether discussions with foreign persons on the Entity List fall within these exceptions, so cooperative projects with such persons by a university will always entail more than a modicum of risk.
Snooping on the Snoopers
Posted by Clif Burns at 6:02 pm on May 2, 2013
Category: BIS • Syria
ABOVE: Computerlinks FZCO
HQ, DSO Building, Dubai
The Dubai subsidiary of Munich-based Computerlinks recently agreed to pay $2.8 million dollars to the Bureau of Industry and Security (“BIS”) to settle charges that the Dubai subsidiary exported sophisticated Internet surveillance software to Syria without the required licenses. BIS had previously placed one individual and one company in the U.A.E. on the entity list in connection with the unlicensed export of these Internet devices to Syria
The charging documents are unusually detailed and reveal what appears to have been a systematic effort by the Dubai subsidiary to lie to Blue Coat, the manufacturer of the devices, about the ultimate destination of the equipment. One of the exports at issue was described as follows:
On or about October 29,2010, Computerlinks FZCO placed an order with Blue Coat for eight devices used to monitor and control web traffic along with accompanying equipment and software. Computerlinks FZCO falsely stated that the items were intended for the Iraq Ministry of Telecom, concealing the fact that the items actually were destined for Syria. Upon receiving the order, Blue Coat reexported the items from its facility in the Netherlands to Computerlinks FZCO in the U.A.E. On or about December 15, 2010, Computerlinks FZCO directed the items’ transfer within the U.A.E. for their subsequent shipment to Syria for use by the state-run Syrian Telecommunications Establishment (STE).
This is one of the highest fines BIS has ever imposed, ranking, by my count, only behind the $15 million imposed on Balli Aviation and related companies in 2010. This is due, in part, to the fact that this violation was not voluntarily disclosed. In fact, judging from the gleeful and somewhat self-serving press release from Blue Coat commending BIS for whacking Computerlinks, it is reasonable to assume that Blue Coat discovered the diversion and dropped the dime on Computerlinks.
No doubt Blue Coat discovered the diversion because the devices that Syria used to snoop on its citizens were probably also snooping on Syria at the same time. And you have to be more than a little surprised that the people at the Dubai subsidiary of Computerlinks were too stupid to realize that this would happen.
T-Platforms Placed on Entity List; SUNY No Longer Feels Sunny
Posted by Clif Burns at 8:11 pm on April 18, 2013
Category: BIS • Entity List
Some tech writers have just discovered the Bureau of Industry and Securities’ Entity List and they are, well, perplexed. Arstechnica, Slashdot and HPC Wire all weighed in on the mysterious list, with all three expressing some surprise that U.S. companies could no longer supply components to T-Platforms, the Russian supercomputer manufacturer that BIS put on the Entity List back in March.
The BIS notice putting T-Platforms on the Entity List cited two rationales. First, the company had received shipments of a number of export-controlled items that had been shipped without the required licenses. Second, the notice stated that there was “reason to believe” that T-Platform was involved with the Russian military’s research on nuclear weapons. As a result, BIS stated that all exports of items subject to the EAR would require licenses and that the licensing policy would be a presumption of denial.
By focusing on the impact of the designation on exports of components and hardware to T-Platforms, the articles all missed a more interesting issue. Last year, T-Platforms delivered a supercomputer to the State University of New York at Stony Brook. My educated guess is the SUNY paid a small fortune and expected and received an agreement from T-Platforms that it would provide maintenance and service as needed for the supercomputer.
Uh-oh. To say the least. Somebody at SUNY right now is probably asking who on earth had the bright idea to buy this thing from Russia, because I’m sure that someone has realized by now that most requests for service by T-Platforms of this leviathan would inevitably require that SUNY transfer EAR99 technology to T-Platforms. Such a transfer would occur to the extent that the request would transfer to T-Platforms non-public information on the development, production or use of the computers.
How long before we see SUNY’s new supercomputer on eBay for $19.99 OBO?
Apple’s Newest Fanboi?
Posted by Clif Burns at 2:39 pm on March 29, 2013
Category: BIS • North Korea Sanctions
Well, well, well. It seems that North Korea’s well-fed Dear Leader is planning his attack on the United States mainland using a 21.5 inch aluminum unibody iMac. Or perhaps he just uses it to play Call of Duty Mac Edition in between snacks and drawing pictures. It’s hard to tell.
But, you may ask, what’s he doing with an iMac? Don’t we have laws against that? Yes, we do. Currently, exports to North Korea of all items other than food and medicine classified as EAR99 require a license from the Bureau of Industry and Security (“BIS”). An iMac is classified as ECCN 5A992. Under EAR § 742.19(b)(vii), licenses to export 5A992 items to North Korea are subject to a general policy of denial, so I think we can reasonably assume that no license was issued by BIS to export the iMac to our Dear Leader.
So where did he get it? Um, where do you think? China, probably..