Where Industry and Security Intersect
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The Department of Commerce's Bureau of Industry and Security (BIS) announced that Silicon Graphics, Inc. (SGI) of Mountain View, California pled guilty to two felony charges that the company violated Commerce Department regulations by illegally exporting high performance computers to a Russian nuclear laboratory in 1996. SGI agreed to pay $1 million in criminal fines to resolve the charges. In a related administrative case, SGI agreed to pay $182,000 B the maximum penalty authorized by the Export Administration Regulations (EAR) B to settle civil charges arising from the same exports to the Russian nuclear laboratory, as well as additional charges relating to illegal computer exports to Israel and for failure to meet reporting requirements for exports to China, Qatar, and the United Arab Emirates.
As part of the settlement of criminal charges, SGI admitted that, on two occasions in 1996, the company exported four Challenge L computer systems, upgrades, and peripheral equipment to the All-Russian Institute for Technical Physics (Chelyabinsk-70) in violation of U.S. export control regulations. Chelyabinsk-70, located in Snezhinsk, Russia, is a nuclear laboratory operated by Russia=s Ministry of Atomic Energy and is engaged in research, development, testing, and maintenance of nuclear devices.
In addition to the monetary penalties, the civil settlement agreement provided that SGI's exporting privileges to Russia will be denied for a period of three years. The denial of export privileges will be suspended provided that SGI does not commit any export control violations involving Russia during the suspension period. SGI also agreed, for a period of three years, not to exercise its eligibility to use License Exception CTP for exports and reexports to Russia, or to engage in any activity B such as repair or maintenance of computers B involving any military or nuclear end-user or end-use in Russia without the prior written consent of BIS. Finally, SGI agreed to report to BIS, within 45 days, all of its exports to certain countries of concern during the last six months.
In announcing the settlement, Acting Assistant Secretary of Commerce for Export Enforcement Lisa Prager stated that Athis case demonstrates the Bureau's determination to rigorously enforce its controls over items that can be used in the proliferation of weapons of mass destruction.
The Department of Commerce, through BIS, administers and enforces export controls for reasons of national security, foreign policy, anti-terrorism, nonproliferation, and short supply. Criminal penalties and administrative sanctions can be imposed for violations of the EAR.