Where Industry and Security Intersect
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I am very pleased to be here with you again this year. It is a distinct pleasure and an honor to serve in President Bush’s Administration and under the leadership of Secretary Gutierrez, and our new Bureau of Industry and Security Undersecretary, Mario Mancuso.
20th Anniversary of Update
As you know, this year we welcome you to our 20th anniversary of Update.
Our theme for this year’s conference is looking at the past, the present, and the future.
In that regard, it has been an interesting year for me as Assistant Secretary. Among the places I have visited this year is one that is rooted in the distant past, although it continues to have great impact on the present and the future. Indeed, we might consider it to be the birthplace of American technology – Menlo Park, New Jersey. There, Thomas Edison had his famous laboratory. It is considered to be the world’s first modern research-and-development center. There, Edison obtained approximately 400 patents, including those for the light bulb and the phonograph.
My travels have taken me from the East to today’s center of technology in Silicon Valley on the West Coast. That America’s ingenuity is unparalleled has been reinforced time and again during those travels. From that vantage point, the future of American technology and innovation looks bright.
The Future of Export Enforcement at BIS
I also believe the future of Export Enforcement at BIS is bright, which bodes well for our country’s national security, foreign policy and economic interests.
Following me on the Enforcement Panel will be the three Office Directors who represent the future of Export Enforcement at BIS. I believe that they will represent it very well for years to come.
Two of the three members of that panel are new to Export Enforcement at BIS, and joined us this year. Both are seasoned managers who come to us with a wealth of experience.
The new Director of our Office of Export Enforcement (OEE) is Special Agent Kevin Delli-Colli. Special Agent Delli-Colli has a considerable investigative experience. Before he came to us, he enjoyed a long career as a Special Agent with Immigration Customs Enforcement (ICE) that involved enforcing export controls, as well as other matters.
The new Director of our Office of Enforcement Analysis (OEA) is Glenn Krizay. Before joining us, Glenn has had a long career in intelligence analysis that spans both the private sector and government.
The third member of the Enforcement Panel needs no introduction to those of you who have come to these conferences in the past. He is Ned Weant, the Director of our Office of Antiboycott Compliance (OAC). Ned is now the most senior Office Director in Export Enforcement at BIS.
An interesting observation, in keeping with this year’s theme, is that the Office of Antiboycott Compliance is older than these Update Conferences.
You will hear more about that from Ned.
Post 9/11 Incidents
In keeping with the theme of this year’s conference, let’s take a look at the present. Let’s consider the environment in which export enforcement operates today – which, of course, by its very nature, is global in scope.
All of these are post-9/11 terrorist attacks and attempts. Add to them the various other terrorist plots that have been disrupted – including several here in the United States.
The July 2005 transit bombings in London killed more people there in one day than any attack since World War II. And it would be difficult to argue that those who attempted the more recent terrorist attacks on London preferred detonating car bombs, which perhaps might kill a hundred or so people, as opposed to killing thousands in Piccadilly Circus by means of a chemical or biological attack.
Earlier this year, in an article he authored in The Wall Street Journal, the President said, “Our priorities begin with defeating the terrorists who killed thousands of innocent Americans on September 11, 2001 – and who are working hard to attack us again.” The President has repeatedly stated that doing so is his first priority. In that same article, he said, “America’s priorities also include keeping our economy strong.” Export Enforcement shares in both of those priorities.
The Mission of Export Enforcement at BIS
Export Enforcement at BIS works to ensure that U.S. goods and technology – which are widely-recognized to be the best in the world – are not used against us in such an attack.
In addition to that formidable challenge, Export Enforcement also confronts a range of others posed by rogue states and by the unauthorized diversions of dual use good to military end uses. Accordingly, we describe our mission as “Keeping the most sensitive goods and technology out of the most dangerous hands.”
BIS Case Examples
Export Enforcement at BIS continues to focus the bulk of its active investigative efforts to countering weapons of mass destruction proliferation, terrorism and terrorist support, and unauthorized military end use. More than 75% of our active investigative efforts are focused on those three priority areas. Eighty percent of the criminal convictions in our cases for the past fiscal year fell within those priorities.
Our criminal convictions this year include:
Special Agent Kevin Delli-Colli will discuss this year’s enforcement efforts in more detail during the Enforcement Panel that follows.
The remaining 25% of our investigative efforts are also important. Our overarching goal is to have a comprehensive enforcement program.
Thus, cases involving foreign policy, crime control and other relevant issues are also important. They are important in and of themselves, as well as for broader reasons of national security.
Common sense, as well as experience, tells us that those who seek to find potential vulnerabilities in our system may try to do so by probing for them by conducting transactions involving goods that do not fall within our three priority areas. So, we must remain vigilant.
As President Bush said in his Commencement Address at the Coast Guard Academy earlier this year, “To strike our country, the terrorists only have to be right once; to protect our country, we have to be right 100 percent of the time.” Accordingly, we do not take lightly violations that show disregard for the foundation of our export system, such as false statements on Shippers Export Declarations and similar matters.
Continuing to Meet Older Challenges
Export Enforcement meets these new challenges, while also continuing to deal with older challenges.
End Use Checks
By conducting end use checks, we continue to facilitate trade as well and security.
Through our pre-license checks and post-shipment verifications, we work to ensure that goods being exported actually go to the destinations they are intended for, and that they are being used consistently with the purposes for which they were exported. OEA Director Glenn Krizay will discuss our end use checks in more detail shortly.
Antiboycott
Our Office of Antiboycott Compliance continues to work with U.S. businesses against unsanctioned boycotts. OAC ensures compliance with the antiboycott provisions of the Export Administration Regulations.
Doing so benefits the economies of the U.S. and our trading partners worldwide.
In just a bit, you will hear more from Ned Weant, who will tell you how priorities and challenges in the field of antiboycott compliance have developed and changed over the years. It will include some real OAC success stories.
Losing Focus – Export Controls and National Security
As we look to the not-too-distant past, it is fair to say that, for some, the nexus between the export control laws and national security became somewhat less clear after the collapse of Soviet Communism. But the importance of that nexus was reawakened with the September 11th attacks. We must not fall back into a slumber.
Just yesterday, at a speech at the Heritage Foundation, the President said,
“It’s been now more than six years since the enemy attacked us on September the 11th, and we are blessed that there has not been another attack on our soil. With the passage of time, the memories of the 9/11 attacks have grown more distant. And for some, there’s a temptation to think that the threats to our country have grown distant as well. They have not.”
The President went on to state that we know that the enemies who struck us on that day intend to do so again because they have told us so. He then discussed a threat issued by Osama bin Laden to the American people, just last year. Bin Laden warned the American people that, “Operations are under preparation, and you will see them on your own ground once they are finished.” Seven months later, the British broke up the most ambitious plot since 9/11. It involved blowing up transatlantic airliners flying to the United States. The President said our intelligence community believes that the plot was just weeks away from execution. And if it had been carried out, it could have rivaled 9/11 in death and destruction.
Greater Accountability in the Future
Accordingly, the future points toward the need for greater accountability and consequences for those who do not take these responsibilities seriously. If our nation is to remain secure and prosperous, Export Enforcement cannot remain mired in 1979, or even in 2001. It must change and adapt so that it can encourage meaningful compliance and achieve deterrence in today’s circumstances.
The Department of Justice Export Enforcement Initiative
The future is reflected in the increased focus and oversight the Department of Justice recently announced it will provide to enhance the prosecution of criminal export enforcement cases around the country.
As you know, the Department of Justice’s newly-formed National Security Division recently announced an Export Enforcement Initiative. That initiative will focus on export controls and technology transfers. This is an important recognition of the significant impact that export control violations have on our national security.
As a part of the initiative, the Department of Justice will train additional federal prosecutors around the country to handle these cases and form task forces involving various law enforcement agencies around the country.
Increased IEEPA Penalties
Next, as you heard from Undersecretary Mancuso at his luncheon speech yesterday, Export Enforcement welcomes the new penalties provided by the IEEPA Enhancement Act.
Among other things, that legislation raises the IEEPA penalties to $250,000 for pending enforcement actions.
For purposes of administrative penalties, BIS interprets an “enforcement action” to be “pending” if a Final Order has not been signed by the Under Secretary of Commerce for Industry and Security or Assistant Secretary of Commerce for Export Enforcement, as appropriate.
BIS will generally not pursue the Enhanced Penalties provided under the IEEPA Enhancement Act in the following circumstances:
Recent Prior Changes to IEEPA, Section 206
Prior to these most recent amendments, the IEEPA penalties were last increased on March 9, 2006, pursuant to the USA PATRIOT ACT Improvement and Reauthorization Act of 2005.
The PATRIOT Act reauthorization increased the civil penalties from $10,000 to $50,000.
It also increased the maximum jail time violators can be given, in criminal cases. That Act only applied to violations that occurred after March 9, 2006.
BIS revised its charging and penalty practices to reflect the enhanced administrative penalties provided by the PATRIOT Act reauthorization.
BIS will now apply those revised charging and penalty practices to all BIS administrative enforcement actions under the IEEPA Enhancement Act, with the exception of the five circumstances identified above.
Those charging and penalty practices include:
A case that is instructive regarding our newly-adopted charging and penalty practices is Ace Systems, Inc.
It was the first administrative case decided under the USA PATRIOT Act reauthorization, which increased the penalties under IEEPA from $11,000 to $50,000.
It was also the first case involving a violation of General Order #3, although the goods involved were not IED components.
The potential administrative penalty in Ace was $50,000.
But the actual penalty imposed was $36,000.
The Export Enforcement Act
The future also points toward the need for enhanced law enforcement authorities for the Special Agents in Export Enforcement at BIS. Securing passage of the Export Enforcement Act, which was introduced in the Senate earlier this year and includes a renewal of the Export Administration Act, remains an important goal.
To investigate these national security cases, our Special Agents need permanent law enforcement authorities, and a full complement of law enforcement tools. To fully investigate these cases, which can span across the globe and involve conspiracies, our Special Agents need explicit authority to conduct overseas investigations, expanded undercover authorization, and forfeiture. Additionally, wiretap authority, which is commonly used to penetrate other types of criminal conspiracies, will give law enforcement access to the inner-workings of export control conspiracies as they are occurring. Such evidence will provide invaluable evidence to a jury about the knowledge and intention of the parties.
Although the increased penalties afforded to us by the IEEPA Enhancement Act help, they still are not enough. Accordingly, we will continue to seek higher penalty amounts in the Export Enforcement Act.
National Security and Prosperity
All of this points to the need for a future shift in paradigm. Protecting national security and fostering trade were thought to be mutually exclusive concepts. Indeed, they were often seen as being at odds with each other. In some quarters, that may still be true today. In the future, however, that cannot be.
We must now view national security and fostering trade as concepts that reinforce each other. President Bush put it best in the spring of last year when he welcomed China’s President, Hu Jintao to the White House. He said, “Prosperity depends on security ….” And it does.
By suppressing illegitimate trade, we foster legitimate trade. And by countering proliferators, terrorists and others, we foster not only the national security of the United States, but also global security, which must be protected if we are to have legitimate trade among nations.
Industry’s Responsibility - Compliance
Industry has important duties in that regard. Those duties include conducting business in a responsible manner that safeguards our national security. By doing so, business also ensures that there is a level-playing field for all.
In short, the responsibility of business is one of compliance with our laws and regulations. In today’s environment, where so much is at stake, compliance can no longer be stingy or begrudging. Rather, it must be vigorous and robust.
Accordingly, the future points toward the need for even greater compliance by industry with the export control laws. That includes broader implementation of effective compliance programs.
Compliance must also include Voluntary Self-Disclosures, which permit the government insight into attempted illegal transactions than may be apparent to those who making those disclosures.
International Cooperation
Finally, the future also points to the need for broader cooperation among nations on export controls and enforcement. There are approximately representatives from various countries represented here, which is truly wonderful.
Once again, we thank those of you who have traveled from other countries to attend this conference. Cooperation on regulatory and enforcement matters protects the global economy and global security.
Our Export Control Officers from Beijing, Hong Kong, Moscow, the UAE and New Delhi are all here. I hope that many of you have had the opportunity to meet with them. Those of us at BIS enjoy the interaction that we are able to have with you both here and during the course of the year on these important matters.
Those of you here are working to demonstrate your interest and commitment to those responsibilities. As you leave here later today to go back to your communities and even to other countries, I urge you to personally take up the task of encouraging others in your industries to do the same.
Conclusion
Those of us in government and in industry must continue working together as partners. We must continue to forge stronger bonds in compliance, which is the first line of defense in protecting our national security. Nations must also work together to protect global security and legitimate trade.
If we all work together toward these important ends, we will do far better than merely meeting the challenges we confront today. If we follow that course, with vigor, dedication and perseverance, as President Bush has said, “We will prevail.”