by Ronald Machen
Former U.S. Attorney for the District of Columbia
In the District of Columbia, we have devoted significant resources to combating the national security threat posed by the proliferation of weapons of mass destruction and the procurement efforts by and for state sponsors of terrorism. We have done so through the vigorous enforcement of our export control laws. Our work in this area has been successful in large part due to the collaboration and coordination among our many law enforcement partners. We work closely with the Department of Homeland Security, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI); the Federal Bureau of Investigation (FBI); and the Department of Commerce, among many other departments and agencies.
Each partner brings unique skill sets, resources, and investigatory authorities to bear on the threat. For example, HSI has deep experience in this area, a variety of undercover platforms, extensive relationships with foreign customs services, and broad border search authority. The FBI has both criminal and intelligence missions and significant related capabilities, along with a tremendous overseas presence through its legal attaché offices. Commerce has a strong outreach to the business community, the ability to deter violations through administrative export denial orders, and licensing expertise. Joint investigations among these and other agencies have produced impressive results.
The stakes could not be higher, particularly regarding nuclear proliferation. The case of Asher Karni was an early example for us that these investigations are about more than just the export of widgets. On August 4, 2005, Karni, the owner of Top-Cape Technology, a South African import-export company, was sentenced to three years in prison for illegally exporting “dual use” items to Pakistan. Karni admitted that he had ordered from U.S. manufacturers 200 high-speed electrical switches called triggered spark gaps, falsely claiming they were destined for a customer in South Africa, when in fact they were to be re-exported to Pakistan. Triggered spark gaps required U.S. export licenses for Pakistan (but not South Africa) because they can be used as nuclear weapons detonators. Karni was arrested in 2004 when he traveled to the U.S. on vacation, and in 2005 he pled guilty under a cooperation agreement. The case was investigated by ICE and Commerce.
In a more recent example, in December 2010, PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of U.S.-based PPG Industries, Inc., pled guilty to conspiring to illegally export U.S.-origin epoxy paint suitable for use in the reactor core of a nuclear facility to the Pakistan Atomic Energy Commission, which is a restricted end user. Xun Wang, the Chinese national at the center of this conspiracy, was arrested in July 2011 when she traveled to the U.S. to visit relatives. She is pending trial in the District of Columbia. Commerce has been investigating this case, with the assistance of Customs and Border Protection in effecting Wang’s arrest.
We also place great emphasis on procurement networks that attempt to supply state sponsors of terrorism – particularly Iran – with U.S.-origin goods or services. For example, in September 2009, Aviation Services International, B.V. (ASI), an aircraft parts supply company in the Netherlands; Robert Kraaipoel, a citizen of the Netherlands and the director of ASI, and Robert Neils Kraaipoel, a citizen of the Netherlands, the sales manager of ASI and son of Robert Kraaipoel, each pled guilty to federal charges related to a conspiracy to illegally export aircraft components and other items from the U.S. to entities in Iran via the Netherlands, the United Arab Emirates, and Cyprus. From about October 2005 to about October 2007, the defendants negotiated purchases of U.S.-origin goods on behalf of Iranian customers, providing false end-user certificates to certain U.S. companies to conceal that customers in Iran would be the true recipients of the goods. ICE, FBI, Commerce, and the Defense Criminal Investigative Service worked together on this investigation and prosecution.
In addition to disrupting specific proliferation and procurement efforts, we have sought to bar access to the U.S. banking system, where such access furthered these illicit efforts. Funds had flowed through our banking system in connection with export control violations, because many illegal export deals were denominated in U.S. dollars. Some foreign banks had willingly supported those deals, but had unlawfully concealed their supporting roles from the pertinent U.S. authorities. In May 2010, the former ABN AMRO Bank N.V., now named the Royal Bank of Scotland N.V., entered into a deferred prosecution agreement and agreed to forfeit $500 million in connection with a conspiracy to defraud the U.S., to violate the International Emergency Economic Powers Act, and to violate the Trading with the Enemy Act, as well as a violation of the Bank Secrecy Act. The bank admitted that, from about 1995 to December 2005, it facilitated illegal U.S. dollar transactions on behalf of financial institutions and customers from Iran, Libya, the Sudan, Cuba, and other sanctioned countries by systematically stripping information from transactions involving sanctioned entities and countries. This investigation was worked jointly by agents from the FBI and the Internal Revenue Service.
Working together with our many law enforcement partners, we can successfully combat this national security threat.