Order
The Bureau of Export Administration, United States Department of Commerce (hereinafter “BXA”), having notified TAL Industries, Inc. (hereinafter “TAL”) of its intention to initiate an administrative proceeding against it pursuant to section 13(c) of the Export Administration Act of 1979, as amended (50 U.S.C. app. secs. 2401-2420 (1994 & Supp. IV 1998)) (hereinafter the “Act”), and the Export Administration Regulations (currently codified at 15 CFR parts 730-774 (2000)) (the “Regulations”), based on allegations that TAL committed 24 violations of the former Regulations, to wit, 1 violation of § 787.3(b), 13 violations of § 787.5(a)(1), and 10 violations of § 787.6 of the former Regulations, as follows:
The Act expired on August 20, 1994. Executive Order 12924 (3 CFR, 1994 Comp. 917 (1995)), which had been extended by successive Presidential Notices, the most recent being that of August 3, 2000 (65 FR 48347, August 8, 2000), continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706 (1994 & Supp. IV 1998)) until November 13, 2000 when the Act was reauthorized, See Pub. L. 106-508, 114 Stat. 2360.
The alleged violations occurred in 1994 and 1995. The Regulations governing those violations are found in the 1994 and 1995 versions of the Code of Federal Regulations (15 CFR parts 768-799 (1994-1995)) (hereinafter the “former Regulations”). The former Regulations define the violations that BXA alleges occurred. Since that time, the Regulations have been reorganized and restructured; the Regulations establish the procedures that apply to the matters set forth herein.
1. 15 CFR 787.3(b): Conspiracy
Beginning in 1992 and continuing into 1995, TAL committed 1 violation of § 787.3 of the former Regulations by conspiring and acting in concert with others to violate the Act and former Regulations. The goal of the conspiracy was to obtain Department of Commerce export licenses authorizing the export of machine tools from the United States to the CATIC Machining Company, Ltd. in Beijing, China for use in the machining of parts and components of civil aircraft that were planned for a joint project with the McDonnell Douglas Corporation (hereinafter the “Trunkliner program”) and then to divert the machine tools to unauthorized end-users in China, including the Nanchang Aircraft Manufacturing Company. To accomplish the goal of the conspiracy, the conspirators, including TAL, took actions in furtherance of the conspiracy, primarily by making or causing to be made false and misleading representations of material fact, directly and indirectly, to BXA and other U.S. Government agencies. The false and misleading representations included misrepresentations about the end-user and end-use of the machine tools. The conspirators, including TAL, represented that the CATIC Machining Center, Ltd. in Beijing, China would be the end-user of the machine tools and the end-use of the machine tools was for the Trunkliner program. However, the CATIC Machining Company, Ltd. in Beijing, China was not the end-user nor the ultimate consignee of the machine tools, and the machine tools were not for use in the Trunkliner program.
2. 15 CFR 787.5(a)(1): Misrepresentation and Concealment
a. On or about May 26, 1994, TAL committed 10 violations of § 787.5(a)(1) of the former Regulations by making or causing to be made false or misleading representations of material fact to BXA and other U.S. Government agencies in connection with 10 separate export license applications submitted to BXA by Douglas Aircraft (the McDonnell Douglas Corporation) for the export of machine tools to China. For each of these 10 license applications, TAL falsely gave assurances and represented on end-user and ultimate consignee statements, export control documents as defined in § 770.2 of the former Regulations, that the CATIC Machining Company, Ltd. in Beijing, China would be the end-user of the machine tools and the end-use of the machine tools was for machining the parts and components of civil aircraft in the Trunkliner program. However, the CATIC Machining Company, Ltd. in Beijing, China was neither the end-user nor the ultimate consignee, and the machine tools were not for use in the Trunkliner program.
b. On or about June 7, 1994 and on or about June 23, 1994, TAL, through the McDonnell Douglas Corporation, committed two violations of § 787.5(a)(1) of the former Regulations by falsely representing to BXA and other U.S. government agencies that the machine tools were to be exported to the CATIC Machining Company, Ltd. in Beijing, China, they were for use in the Trunkliner program, and the Trunkliner program was being was carried out in accordance with the 1992 contract. However, the CATIC Machining Company, Ltd. in Beijing, China was neither the end-user nor the ultimate consignee, the machine tools were not for use in the Trunkliner program, and the Trunkliner program had been delayed and was not being carried out in accordance with the 1992 contract.
c. On or about June 5, 1995, TAL, through the China National Aero-Technology Import and Export Corporation, committed 1 violation of § 787.5(a)(1) of the former Regulations by submitting a letter to BXA falsely representing that the machine tools that were authorized for export to the CATIC Machining Company, Ltd. in Beijing, China and diverted to the Nanchang Aircraft Manufacturing Company in Nanchang, China in violation of the terms and conditions of the licenses would not be unpacked until authorization was received from the U.S. Department of Commerce. However, the stretch press had been unpacked and placed in a building in Nanchang, China.
3. 15 CFR 787.6: Export, Diversion, Reexport, and Transshipment
Between on or about November 12, 1994 and on or about February 18, 1995, TAL committed 10 violations § 787.6 of the former Regulations by violating or causing the violation of the terms and conditions of 10 separate Department of Commerce export licenses. The 10 export licenses named China National Aero-Technology International Supply Company as the purchaser, China Aviation Supply and Marketing Corporation, North China Branch, as the intermediate consignee, CATIC Machining Company, Ltd. as the ultimate consignee, and the Trunkliner program as the end-use. TAL violated the terms and conditions of each of the 10 export licenses by diverting the machine tools to unauthorized end-users in China, including the Nanchang Aircraft Manufacturing Company.
BXA and TAL having entered into a Settlement Agreement pursuant to § 766.18(a) of the Regulations whereby they agreed to settle this matter in accordance with the terms and conditions set forth therein, and the terms of the Settlement Agreement having been approved by me;
It is therefore ordered:
First, that a civil penalty of $1,320,000 is assessed against TAL, which shall be paid to the U.S. Department of Commerce within thirty days from the date of entry of this Order. Payment shall be made in the manner specified in the attached instructions.
Second, that, pursuant to the Debt Collection Act of 1982, as amended (31 U.S.C. 3701-3720E (1983 and Supp. 2000)), the civil penalty owned under this Order accrues interest as more fully described in the attached Notice, and, if payment is not made by the due date specified herein, TAL will be assessed, in addition to interest, a penalty charge and an administrative charge, as more fully described in the attached Notice.
Third, that for a period of ten years from the date of this Order, TAL Industries, Inc., 901 Corporate Center Drive, Suite 207, Monterey Park California 91754, shall be denied its U.S. export privileges as described herein (hereinafter the “denial period”). TAL and all of its successors, assigns, officers, representatives, agents, and employees, may not participate, directly or indirectly, in any way in any transaction involving any commodity, software, or technology (hereinafter collectively referred to as “item”) exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations, including, but not limited to:
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
Fourth, that no person may, directly or indirectly, do any of the following:
A. Export or reexport to or on behalf of TAL or its successors, assigns, officers, representatives, agents, or employees (hereinafter the “denied person”) any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the denied person or the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the denied person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the denied person of any item subject to the Regulations that has been exported form the United States.
D. Obtain from the denied person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to serve any item subject to the Regulations that has been or will be exported from the United States and that is owned, possessed or controlled by the denied person, or service any item, of whatever origin, that is owned, possessed or controlled by the denied person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
Fifth, that, after notice and opportunity for comment as provided in Section 766.23 of the Regulations, any person, firm, corporation, or business organization related to the denied person by affiliation, ownership, control, or position of responsibility in the conduct of trade or related services may also be made subject to the provisions of this Order.
Sixth, that this Order does not prohibit any export, reexport, or other transaction subject to the Regulations where the only items involved that are subject to the Regulations are the foreign-produced direct product of U.S.-origin technology.
Seventh, that TAL shall produce to the Department of Commerce any documents, in its custody, care or control, that were supplied to the United States in the case of U.S. v. CATIC, et al., No. 99-353 (PLF), and TAL hereby certifies that these documents are all the documents that are relevant to the sale, licensing or diversion of the machine tools from the McDonnell Douglas plant in Columbus, Ohio that were allegedly to be used in the Trunkliner program;
Eighth, that for the purposes of authenticating documents and as otherwise agreed to by the parties, TAL shall, at its own expense, made its appropriate employees, representatives, officers or agents available to the Department of Commerce to testify at any administrative proceeding initiated by BXA in connection with the sale, licensing and diversion of the machine tools from the McDonnell Douglas plant in Columbus, Ohio that were allegedly to be used in the Trunkliner program.
Ninth, that the proposed charging letter, the Settlement Agreement, and this Order shall be made available to the public.
This Order, which constitutes the final agency action in these matters, is effective immediately.
Dated: Entered this 11th day of May, 2001.
Dexter M. Price,
Acting Assistant Secretary for Export Enforcement.
[FR Doc. 01-13024 Filed 5-22-01; 8:45 am]
BILLING CODE 3510-DT-M