U.S. Extradition Request for Export Defendant Heard by French Court
Posted by Clif Burns at 9:03 pm on January 20, 2010
Category: Criminal Penalties • Iran Sanctions
ABOVE: Majid Kakavand
Amir Ardebili, who we posted on here and here, is not the only Iranian being chased by U.S. prosecutors for activities he committed entirely outside the United States and which were legal in the country where they took place. Majid Kakavand, on whom we previously posted here, used a company of his in Malaysia to order electronic components from U.S. companies and then transshipped those components to Iran. He was provisionally arrested in France in March 2009 at the request of the United States and is currently in France, out of jail but unable to leave France, awaiting the French court’s decision on the U.S. extradition request.
According to this article in the New York Times, a hearing was held last week by a French court on the extradition request. Kakavand’s lawyers argued that Kakavand’s activities did not violate any laws of France or the European Union and that the items were innocuous items that were not useful in the defense industry. Because these items could be legally shipped to Malaysia without an export license and because the U.S. criminal information against Kakavand did not allege that the items in question were on the Commerce Control List or the United States Munitions List, this argument seems to have some force. Another hearing has been scheduled by the French court for February 17.
And as with the Ardebili case, the Iranians were quick to link the fate of Kakavand with an Iranian trial. In this case, the trial in question is a prosecution brought by Iran against a 24-year-old French academic, Clotilde Reiss, in connection with her alleged participation in opposition protests following the Iranian elections last June. Apparently, the concept of a fair trial is so foreign to Iran that it hasn’t occurred to the Iranian government that a French court might actually listen to defense arguments and make a decision based on the rule of law.
Virginia Company Pleads Guilty to Arms Brokering Charges
Posted by Clif Burns at 10:14 pm on January 14, 2010
Category: Criminal Penalties • Part 129
Virginia-based Taipan Enterprises Ltd. pleaded guilty to, and paid a $15,000 fine for, charges that it illegally engaged in arms-brokering without registering with, and obtaining licenses from, the Directorate of Defense Trade Controls (“DDTC”). The Statement of Facts that supported the guilty plea revealed that Taipan’s woes began when its President, Ioannis Papathanassiou, was questioned by U.S. Customs upon returning from Brazil and told the customs agents that he was in Brazil selling farm equipment. An inspection of his luggage revealed product brochures from Agrale for military vehicles which Papathanassiou allegedly falsely stated were for farming purposes.
The Statement of Facts detailed subsequent transactions that involved the attempted sale of night vision goggles, machine pistols, M4 rifles and gas grenades among other items. Significantly, however, there is no allegation in the Statement of Facts that any of the sales ever occurred. Instead, in each instance, the Statement of Facts said that Papathanassiou “attempted” to sell the items. Notwithstanding that the only charges against Papathanassiou related to transactions that were attempted but uncompleted, he was charged with arms brokering without registering with DDTC as an arms-broker or obtaining necessary licenses for arms-brokering. Apparently just discussing a potential transaction requires registration.
The problem with this theory is, of course, the definition of “broker” in Part 129 of the International Traffic in Arms Regulations under which Taipan was charged. Under that definition, found in section 129.2(a), “broker” is defined as:
any person who acts as an agent for others in negotiating or arranging contracts, purchases, sales or transfers of defense articles or defense services in return for a fee, commission, or other consideration.
It’s probably safe to say that Taipan didn’t receive a fee or commission from the manufacturers of the defense articles for proposed sales that never occurred. Even if Taipan did receive a fee or commission for these attempted sales, the receipt of the fee or commission from the manufacturers is a necessary element of the charged criminal violation and needed to be alleged in the Statement of Facts in order to support the plea.
Cloudy with a Chance of Fines
Posted by Clif Burns at 9:23 pm on January 12, 2010
Category: Technology Exports
As enterprises began to confront the issues raised by cloud computing, this article on TMCnet is a good reminder that export issues may be some of the most intractable. Although some clouds, like Amazon’s EC2, provide servers in defined locations, other cloud providers, Google notably, are more secretive about where their clouds are located or on which clouds user data is stored. If ITAR-controlled technical data or CCL-controlled technology is stored by a U.S. company on a cloud outside the United States, an export has occurred. If no license has been obtained it is safe to say that this is going to be a cloud without a silver lining.
BIS did issue an advisory opinion in January 2009 on cloud computing. The advisory opinion was requested by an unnamed provider of cloud computing service and fails to address the export issues relating to users of such cloud computing services. In the advisory opinion, BIS stated, among other things, that the provision of cloud computing services is not an export subject to the EAR and that the cloud provider is not considered to be the exporter of any data that users place on and retrieve from the cloud.
The TMCnet article focuses unduly on the location of the server while neglecting that even if the cloud is wholly within the United States an export could occur if foreign nationals employed by the cloud provider in the United States have access to controlled technology or technical data. The same article also neglects to point out that export issues are raised in other Internet contexts. If an email contains controlled technology or technical data an illegal export will have occurred if the email transits a foreign server even if the email is sent from a server in the United States and is addressed to a server in the United States. The same issue could exist for VOIP voice communications if the VOIP provider utilizes any servers located outside the United States.
The BIS advisory opinion shows a laudable effort to understand and accommodate issues posed by cloud technology, at least from the perspective of the cloud provider. Hopefully, it will show the same practical considerations for users of cloud technology. Whether OFAC and DDTC will demonstrate similar understanding of the technology remains to be seen.
The Pentagon Will Get to It When It Gets to It.
Posted by Clif Burns at 8:17 pm on January 11, 2010
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.
DDTC Tells Exporters To Maintain Outdated Computer Systems
Posted by Clif Burns at 9:09 pm on January 7, 2010
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.