Archive for the ‘DDTC’ Category



BIS Halts Processing on All Export Licenses for Russia

Posted by Clif Burns at 12:28 pm on March 27, 2014
Category: BISDDTCRussia DesignationsRussia Sanctions

A notice that further processing of all export licenses for CCL items to Russia just appeared in the last several days in the slider on the home page of the website for the Bureau of Industry and Security (“BIS”):

(I’m posting a screenshot because there is no reliable permalink to the slider image).

Existing licenses are not affected; only license applications that were not granted as of March 1, 2014, are covered by this policy. Compare this to the U.K. action which suspended all existing licenses and applications for military and dual-use items destined for the Russian military “which could be or are being deployed against Ukraine.” The State Department has not yet taken action on licenses and applications for USML items to Russia, although possible action in that regard is rumored.

UPDATE: DDTC has just posted this on the home page of its website:

The Department of State has placed a hold on the issuance of licenses that would authorize the export of defense articles and defense services to Russia. State will continue this practice until further notice.

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Ignorance Is Indeed a Defense: NASA Ames Edition

Posted by Clif Burns at 6:06 pm on March 5, 2014
Category: DDTCDeemed ExportsITAR

Aerial View of NASA Ames Research Center [Public Domain]The NASA Office of Inspector General completed its investigation of unlicensed releases of ITAR-controlled technology to foreign nationals working at the Ames Research Center and — surprise! surprise! — it found no evidence of any violations of law. According to a summary of the OIG report, ITAR-controlled information was released without proper authorization to foreign nationals working at Ames. However, this was not a violation of law, just “poor judgment,” which is a nice way of saying that ignorance of the law can be a defense if you work at NASA and are being investigated by the NASA OIG. The full report was withheld because of privacy concerns, i.e., it mentioned the names, I would presume, of all the people running around at Ames and exercising poor judgment.

As they say on the car commercials: “Professional government workers exporting on closed course. Do not attempt this yourself.” In other words, “poor judgment” will not be enough to exonerate deemed exports in the private sector.

The reason for this all being just a lapse of judgment and not an export violation is this:

We … found significant disagreement between scientists and engineers at Ames and export control personnel at the Center and NASA Headquarters as to whether the work the foreign nationals were performing at Ames involved ITAR-controlled technology.

For you and me, such confusion means you need to file a Commodity Jurisdiction request with the State Department to clear things up. For NASA workers it means that export controls are hard and engineers can’t be blamed for getting hard questions wrong. This statement is somewhat incredible in the context of this finding in the report:

In addition, on two occasions a senior Ames manager inappropriately shared documents with unlicensed foreign nationals that contained ITAR markings or had been identified as containing ITAR-restricted information by NASA export control personnel.

But, yeah, everybody was still confused and disagreeing over whether this stuff was ITAR-controlled or not.

Then we have the part of the report which suggests that Professor Roth probably wishes he worked at NASA and not the University of Tennessee.

We also found that a foreign national working at Ames inappropriately traveled overseas with a NASA-issued laptop containing ITAR-restricted information. Even though the foreign national had an ITAR license at the time, the regulations forbid taking such export-controlled information out of the country. However, we were unable to substantiate concerns that the foreign national shared ITAR-protected information while overseas.

Professor Roth is sitting in a federal correctional facility in part because he carried a laptop with ITAR-controlled data to China without any evidence whatsoever that he even opened those files on his computer while in China. I think this is what some people might call a double standard.

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Praise the Lord and Pass on Exporting the Ammunition

Posted by Clif Burns at 8:15 pm on February 4, 2014
Category: Criminal PenaltiesDDTCUSML

U.S. Court of Appeals for the Fourth Circuit via [Public Domain]
ABOVE: Fourth Circuit Court of Appeals

The Fourth Circuit recently handed down a decision in United States v. Bishop in which it upheld the conviction of Brian Bishop, a U.S. foreign service officer, who was convicted of an attempted export of ammunition in connection with his move from his residence in Alabama to his post in Jordan. Bishop’s appeal centered on the knowledge requirement for an export conviction, arguing that he was unaware that the items he was exporting were on the USML. The Fourth Circuit held that specific knowledge that the items were USML is not necessary to support a conviction and ruled that the District Court had adequate evidence that Bishop knew that the exports were illegal.

The odd part of this finding is that Bishop had left the ammunition in the boxes in which the ammunition was purchased and which were clearly labelled “ORM–D” and “cartridges, small arms.” Indeed, the District Court relied on that labeling to acquit Bishop on charges of delivering ammunition to a carrier without notice in violation of 18 U.S.C. § 922(e). Generally speaking, criminal export cases almost always rely on mislabeling the goods as the most significant indicia of criminal intent, so this case is a bit of an outlier.

The evidence of Bishop’s intent relied on by the District Court, and upheld by the Fourth Circuit, seems pretty sketchy. The Fourth Circuit cited State Department training that Bishop received on the Foreign Affairs Manual, which states that shipment of ammunition is prohibited. The FAM cites 27 C.F.R. § 478 as authority for that prohibition and that regulation cites the Arms Export Control Act, although there is no suggestion that Bishop looked up the text of that regulation, not cited in the FAM, and saw its reference to the AECA. And, worse yet, the State Department employee who provided the FAM training to Bishop herself testified: “I can’t tell you what the State Department’s reasoning is” for prohibiting the shipment of ammunition.

The Fourth Circuit further cites an email from the moving company that Bishop’s wife received after the moving company had taken possession of the household effects stating that the shipment of the ammunition was illegal. This hardly seems probative of Bishop’s state of mind when he gave the ammunition to the moving company for export. Also cited by the Court was an inventory, prepared by the movers, which Bishop signed, and which did not mention the ammunition.  However, there was no evidence that he read the inventory carefully or noticed the omission. The worst evidence for Bishop is, perhaps, the fact that some of the ammunition was repacked by Bishop in boxes labelled “weights,” although it seems hard to rely on that when some of the ammunition remained in its original packaging and was clearly marked as ammunition.  Indeed, all of the evidence cited by the two courts cannot trump the simple fact that Bishop shipped the ammunition in clearly marked boxes.

Ironically, in a case that turns on knowledge of illegality, the court and the prosecutors themselves seem to be confused about what ammunition is and isn’t on the USML. Excluded from the AECA charges were “nearly 2,000 rounds of .45–caliber and 12–gauge shotgun ammunition.” These were only included in the count alleging delivery of ammunition without notice to a carrier. The 12-gauge shotgun shells are probably not Category III of the USML because shotguns with barrel lengths of 18 inches or longer are excluded from Category I. That ammunition would therefore be controlled under ECCN 0A984 and could be exported to Jordan without license. But .45 caliber ammunition is clearly covered under USML Category III, so it is odd that it was excluded from the count alleging the AECA violations.

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DTrade Vulnerability Could Allow Foreign Spies to Hack Your Network

Posted by Clif Burns at 2:25 pm on January 24, 2014
Category: DDTC

Chinese Army training with computers [Fair Use]Back in December, IBM issued a security alert relating to the IBM Forms Viewer 8.0.1 which must be used as part of filing licenses through DTrade. The alert says this:

A XFDL form can be created in such a way that could cause a stack buffer overflow to occur in the IBM Forms Viewer that could allow remote code execution to occur if the form is loaded.

That, of course, is geekspeak meaning that running DTrade on your network can allow a hacker to take over your system remotely and download whatever strikes his or her fancy, including ITAR-controlled technical data.

There is a fix. The security bulletin says to download IBM Forms Viewer Sadly you can’t download that version without a Support Agreement with IBM. I know. I tried. And the only version available on DDTC’s site, even though the vulnerability is almost two months old, is version 8.0.1.

Query: since using DTrade exposes your system to data theft by foreign nationals, does everyone using DTrade have to file a voluntary disclosure with DDTC admitting that their ITAR-controlled technical data is, by virtue of the DTrade vulnerability, accessible to foreign nationals?

Seriously, DDTC needs to either make the new version available immediately or enable users to uninstall DTrade and use an alternate method for filing license applications. (Oh, and remember that DDTC selected the IBM XFDL format over PDF because it was, allegedly, more secure.)

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California Man Sentenced to Three Years for Export Violations

Posted by Clif Burns at 6:14 pm on January 13, 2014
Category: Criminal PenaltiesDDTCITAR

Philip He Family Photo via [Fair Use]
ABOVE: Philip Chaohui He

Last February, this blog reported on the indictment of Philip Chaohui He, who had been indicted on charges that he attempted to export to China $549,654 worth of ITAR-controlled, radiation hardened, space qualified memory chips to China without the required export license. On December 19, Mr. He, who had entered a guilty plea to the charges, was sentenced to three years in prison.

Since our original post, several interesting details have emerged with respect to Mr. He and his attempted export to China. The first relates to the potential involvement of the Chinese government in these exports. The San Francisco Chronicle tells an interesting story as to the ship on which He tried to load the memory chips. The ship was owned by ZPMC, a Chinese state-owned enterprise that was fabricating steel towers for the San Francisco Bay Bridge renovation, a project on which Mr. He was working as an engineer. Mr. He told Jim Yang an employee of ZPMC that one of their employees had left behind in San Francisco a package of personal effects and that he would like to return the package to the employee via a ZPMC ship that was soon departing from the port in Long Beach, California.

Yang said he wondered why He would want to drive seven hours to make the delivery, but he had replied, “Fine.”

“So he drove down by himself with a couple of boxes in his vehicle,” Yang said. “And we had dinner together because he was doing us a favor.”

The next morning, Yang said, He followed him in his car to the Port of Long Beach, where they entered the ZPMC dock site using Yang’s security badge.

Mr. He was immediately arrested on the dock. Yang denies that he knew what was in the package or that ZPMC was in cahoots with He. The red flag here is not just the one flying over Beijing. Why was He driving seven hours with a package of personal effects as a favor to a ZPMC employee he met on the Bay Bridge Project? He couldn’t figure out any other easier way to return the box? Then Yang uses his badge and let’s He on the dock with a package of completely unknown contents that could have been a dirty bomb for all Yang knew. Uh huh. Sure. And if you believe that I’ve got a Bay Bridge to sell you.

The second detail relates to the participation of the memory chip manufacturer, Aeroflex, in the apprehension of Mr. He. We speculated in the original post that He’s large order of stuff he had little demonstrated need for set off alarm bells in Aeroflex and that they set the law on him. This lengthy investigative report on the case by Reuters confirms that this was the case.

People and companies who buy these kinds of rad-chips are usually well-established, repeat customers – more multinational corporation than mom & pop. Aeroflex salesmen had never heard of “Philip Hope” or his company, “Sierra Electronic Instruments.”

Most suspicious of all, just days after placing the order, Hope sent Aeroflex a certified check for the full amount, $549,654. That was rare. Buyers were expected to make a deposit, but nobody paid up front.

Of course, being alert to red flags and lending a helping hand to the government did not result in any expression of gratitude from the Government which, not long after, fined Aeroflex $8 million for export violations that Aeroflex voluntarily disclosed to the Government. My guess is that in the future Aeroflex will simply decline to make sales like this one that are suspicious and won’t feel particularly motivated to pick up the phone and tell the feds about it.

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