I thought I was seeing things. First, I read a notice on the website of the Directorate of Defense Trade Controls (“DDTC”) saying that DDTC was putting a temporary hold on export licenses where BAE Systems was an applicant or manufacturer while the agency studied BAE’s recent guilty plea to charges that it paid bribes in violation of the Foreign Corrupt Practices Act and violated the Arms Export Controls Act by failing to report these bribes as “commissions” in export license applications.” Then the notice was gone.

According to this article in Defense News Daily, I wasn’t hallucinating:

In an Internet notice posted after BAE pleaded guilty on March 1, the State Department said the hold applied to license applications where BAE Systems PLC “or any of its subsidiaries is an applicant, consignee, end user, manufacturer or source.”

In the notice, the department advised export license applicants to determine whether they could modify their applications to remove BAE products. If they could, the notice instructed license applicants to withdraw their applications and amend them. That notice was withdrawn within a day and replaced by one that did not offer advice to license applicants hoping to export BAE products.

And that notice, in turn, was withdrawn and not replaced.

Notwithstanding the confusing impressions left by these disappearing web notices, a State Department spokesman, according to the article, asserted that DDTC was considering whether to debar BAE from exports. Meanwhile a BAE spokesman said that the company interpreted the removal of the web notices to indicate that no hold was currently in place.

Whatever is going on here, DDTC’s continually shifting public position doesn’t permit much confidence in its decision-making process on this issue.

The Directorate of Defense Trade Controls (“DDTC”) has posted the settlement documents for the case involving Interturbine Aviation Logistics GmbH and its Texas subsidiary which was reported by this blog last week. And — now, don’t faint from shock — an overeager business development executive and one of his employees appear to have been the source of Interturbine’s problems.

According to the Proposed Charging Letter, the $1 million penalty was premised on one shipment of 400 kilograms (880 pounds) of Dow Corning Ablative 93-104 Ablative Material and Sealant. The substance can be used to provide heat-protective coatings on missile tips and is controlled under Category IV(f) of the United States Munitions List.

In 2004 Dow Corning notified its customers that DC 93-104 was a USML item and could no longer be shipped outside the United States. On of Dow Corning’s former customers, Bayern-Chemie, began to look for a new supplier and contacted Interturbine’s German office. A business development employee of Interturbine thereafter met with GmbH. The employee then prepared a report stating that DC 93-104 couldn’t be sold outside the United States and that this presented an “excellent opportunity” to acquire a “profitable new customer.”

The Interturbine employee instructed an intern to prepare a purchase order. When the intern noted that the material was export-controlled the business development employee falsely told the intern that the export had been cleared. The intern then ordered DC 93-104 from Dow Corning for shipment to Interturbine’s Texas office.

Once the shipment from Texas to Germany had been made, the Vice-President of Business Development in Interturbine’s German office altered records to show that the 400 kilograms of DC 93-104 were still in Texas. He also created a delivery note indicating, falsely, that the material had been shipped to Bayern-Chemie from Interturbine’s facility in Germany.

Things went downhill rapidly after that. Bayern-Chemie questioned the absence of a U.S. export license, quarantined the shipment and refused to pay Interturbine for the shipment. Interturbine conducted an internal investigation and requested Bayern-Chemie to return the shipment to Texas. U.S. Customs seized the shipment on its way back to Texas. And the rest is now history.

Even though the Interturbine employees were selling missile products, it’s safe to say they weren’t rocket scientists. Trying to make an illegal export to Bayern-Chemie without having everyone at Bayern-Chemie in on the scheme is a little bit like writing a bank robbery demand note on the back of your own business card.

The biggest news today was the announcement by the Bureau of Industry and Security (“BIS”) of a U.K. company’s agreement to pay a $15 million fine, the largest fine ever collected by BIS. I’ll write about that when the charging and settlement documents are released.

In the meantime, however, I want to share with you a bumper crop of company press releases over the past few days announcing registration under Part 122 of the International Traffic in Arms Regulations. And, as always, these press releases are a never-ending source of amusement.

New-Hampshire-based Ion Beam Milling’s announcement perpetuates the myth that ITAR registration represents some kind of certification by the Directorate of Defense Trade Controls (“DDTC”):

Upon verification of a company’s ITAR compliance, an ITAR Registration Code is assigned and certifies the company’s clearance to work in conjunction with the US military and its counterparts.

Ion Beam also wins the award for the most original spin ever on ITAR registration:

ITAR Registration enhances Ion Beam Milling’s existing Intellectual Property and Document control policies.

A free subscription to this blog will be awarded to any reader who figures out just what the heck this means.

California-based Lenthor Engineering scores a first by issuing a press release announcing that it has renewed its registration. I can just imagine someone in the company saying that they’ve paid $2,250 and will be darned if they’re going to let that money go to waste.  Don’t be surprised if Lenthor announces next week that the company added another copy of the Pocket ITAR to the company’s library.

Munich-based computer hardware manufacturer Kontron AG’s announcement notes that the company

has registered and is in compliance with International Traffic in Arms Regulations (ITAR) administered by the United States Department of State Directorate of Defense Trade Controls who [sic] controls the export and import of defense articles and services.

Obviously Kontron didn’t have to take the legendary DDTC certification test or it would have known that DDTC only controls temporary imports of defense articles.

We previously reported a change announced by the Directorate of Defense Trade Controls (“DDTC”) adding a sixth exception to National Security Presidential Directive–56 which mandated a 60-day processing time for export license applications. Sharp-eyed reader Robin noted that there was more in that notice than meets the eye, or at least met my eye.

Although the notice announcing the change characterized the change as simply adding a sixth exception, in fact the notice also changed, without any mention, the fourth exception to the processing guidelines. Previously, the fourth exception read as follows:

(4) Department of Defense has notified the Directorate of Defense Trade Controls that an overriding national security exception exists.

But now take a look at exemption 4 in the DDTC notice announcing the sixth exception:

(4) The Department of Defense has not yet completed its review.

Sneaky. I suppose DDTC didn’t really want to highlight that the Pentagon feels that it’s above such silly civilian nonsense as processing deadlines. Or that the last time DDTC asked the Pentagon about where it was on an application, the Pentagon told DDTC to “take a hike” although it likely did so using somewhat more “colorful” terms.

For reasons known only to the IT folks at the Directorate of Defense Trade Controls (“DDTC”), the agency’s electronic export licensing system (D-Trade) adopted the quirky, non-standard PureEdge Viewer as the software required to fill out and digitally sign export license applications forms rather than the industry standard (and widely installed) Adobe Acrobat. It’s probably safe to assume that no one had ever heard of PureEdge before it became a mandatory part of D-Trade.

Well, an interesting notice that appeared at the end of December should have raised a few eyebrows about DDTC’s choice of PureEdge Viewer. It seems that PureEdge isn’t compatible with Windows 7 and that PureEdge forms can’t be digitally signed by exporters who have upgraded their computers to Windows 7. And, as you may know, if you can’t digitally sign a license application, you can’t submit it to DDTC. (Can you sign an Adobe form in Windows 7? You bet your bippy you can.)

DDTC’s solution would make a Luddite, but not anyone else, smile:

Industry is strongly encouraged to maintain a Windows XP system with Internet Explorer versions 6 or 7 to use for all DTrade transactions at this time.

Another solution that DDTC says might work is to upgrade to IBM’s Lotus Forms Viewer 3.5.1. IBM bought PureEdge in 2005, so that Lotus Forms Viewer 3.5.1 is, in essence, the newest version of the PureEdge Viewer. Of course, Lotus Forms Viewer, although it has a trial version that can be used for free for 60 days, comes at a hefty price. The price is particularly hefty since Lotus Forms largely duplicates the functionality of Adobe Acrobat which most companies have already purchased.

Prior to Adobe Acrobat becoming the standard solution for filling out government agency forms, many companies kept a sad-looking IBM Selectric hidden away for those few forms that could still only be typewritten. Well, move over typewriter and make way for a new neighbor — an XP computer that’s being kept around for filling out DDTC export licenses, including, ironically, licenses to export cutting-edge technology.