04 August 1998
(Doj: Company exported computers to nuclear weapons lab) (1080)
Washington -- The Department of Justice announced July 31 that IBM
East Europe/Asia Ltd. pled guilty to illegally exporting computers to
Arzamas-16, a Russian nuclear weapons laboratory, and was sentenced to
pay $8.5 million, the maximum criminal fine, plus $171,000, the
maximum civil fine.
IBM East Europe/Asia Ltd., the Russian subsidiary of International
Business Machines Corporation (IBM), admitted to selling and exporting
the computers in late 1996 and early 1997, while having reason to
believe that they would be used in the production of nuclear devices.
The Commerce Department's Bureau of Export Administration (BXA) also
"denied IBM East Europe/Asia Ltd. export privileges for a two-year
period, but suspended the denial during a two-year 'probation'
period," according to DOJ. "IBM East Europe/Asia Ltd. agreed that
during the two-year period it will not engage in transactions
involving any nuclear or military end-users and will not use certain
license exceptions to export any high performance computers."
Following is the text of the press release:
(Begin text)
U.S. Department of Justice
United States Attorney
District of Columbia
July 31, 1998
IBM EAST EUROPE/ASIA LTD. ENTERS GUILTY PLEA TO UNLAWFUL EXPORT OF
COMPUTERS AND FINED MAXIMUM $8.5 MILLION
Washington, D.C. -- U.S. Attorney Wilma A. Lewis, U.S. Department of
Commerce Assistant Secretary for Export Enforcement Amanda DeBusk, and
U.S. Customs Service Assistant Commissioner Bonnie Tischler, Office of
Investigations, announced today that IBM East Europe/Asia Ltd. entered
a plea of guilty before United States District Court Judge Norma
Holloway Johnson to a 17-count Criminal Information charging
violations of the International Emergency Economic Powers Act and the
Export Administration Regulations relating to the unlawful export of
computers to Arzamas-16, a Russian nuclear weapons laboratory. IBM
East Europe/Asia Ltd. was sentenced to pay $8.5 million, the maximum
fine authorized by law for the violations alleged in the Criminal
Information.
U.S. Attorney Lewis, Assistant Secretary DeBusk and Assistant
Commissioner Tischler noted that these unlawful transactions
constitute serious violations of export control laws designed to
protect the national security of the United States and further our
non-proliferation goals. They noted further that IBM cooperated with
the government's investigation of this matter and acted in a
responsible manner in bringing resolution to this case.
In entering this guilty plea, IBM East Europe/Asia Ltd., the Russian
subsidiary of International Business Machines Corporation (IBM),
admitted that it sold and exported computers subject to the Export
Administration Regulations to Arzamas-16 in late 1996 and early 1997,
having reason to believe that the computers would be used directly or
indirectly in research on or development, design, manufacture,
construction, testing, or maintenance of nuclear explosive devices.
The Department of Commerce Bureau of Export Administration ("BXA")
imposed the maximum civil penalty of $171,000 for the violations. BXA
also denied IBM East Europe/Asia Ltd. export privileges for a two-year
period, but suspended the denial during a two-year "probation" period.
IBM East Europe/Asia Ltd, agreed that during the two-year period it
will not engage in transactions involving any nuclear or military
end-users and will not use certain license exceptions to export any
high performance computers.
In early 1995, IBM Fast Europe/Asia Ltd. began negotiations to sell
computers to Arzamas-16. In connection with these negotiations, a
Russian company named Jet InfoSystems was acting as the agent of the
Russian lab. IBM East Europe/Asia Ltd. knew that Arzamas-16 had
responsibility for research involving nuclear explosive activities. In
February 1996, IBM filed an application with the Department of
Commerce seeking authorization for IBM East Europe/Asia Ltd. to sell
and export an IBM RS/6000 Model 9076-304 computer to Arzamas-16. This
export also required a license from the Government of Germany, the
location from which IBM intended to ship the computer to Russia. In
May 1996, the German government advised IBM that the export of the
computer to Arzamas-16 would not be approved.
In or about May 1996, IBM East Europe/Asia Ltd. separately began
negotiations with a Russian affiliate of Jet InfoSystems named Ofort
for the sale of a network of RS/6000 computers connected by a high
speed fiber channel switch. In connection with this negotiation, IBM
East Europe/Asia Ltd. arranged for employees of Arzamas-16 to travel
to a Japanese government facility to examine the operation of a
network of RS/6000 computers connected by a high speed fiber channel
switch system. In September 1996, IBM East Europe/Asia sold 16 RS/6000
Model 7013-591 computers, two fiber channel switches, and related
hardware and software valued at approximately $1.5 million to Ofort,
with knowledge that the computers were destined for Arzamas-16. These
computers were shipped from an IBM facility in Europe to a freight
forwarder in The Netherlands and then transported by truck to
Arzamas-16 in early October 1996. No license was applied for or
obtained from the Department of Commerce for this export. In
mid-October 1996, the Department of Commerce advised IBM that the
application for a license to export an RS/6000 Model 9076-304 computer
to Arzamas-16 would not be granted at that time. In November 1996, an
employee of IBM East Europe/Asia Ltd. participated in the installation
of the 16 computers at Arzamas-16.
In November 1996, Ofort ordered one RS/6000 Model 9076-308 computer
and related hardware and software valued at approximately $600,000
from IBM East Europe/Asia Ltd. IBM knew that this computer was
destined for Arzamas-16. This computer was shipped by an IBM facility
in Europe to the same freight forwarder in The Netherlands that
handled the earlier unlawful export. In February 1997, this computer
left The Netherlands by truck consigned to Arzamas-16. No license was
applied for or obtained from the Department of Commerce for this
export.
U.S. Attorney Lewis, Assistant Secretary DeBusk and Assistant
Commissioner Tischler commanded the cooperative effort of the U.S.
Attorney's Office, the Department of Commerce Office of Export
Enforcement, and the U.S. Customs Service, Office of Investigations,
in handling this very complicated investigation of international
scope, which is ongoing. They also commended Assistant United States
Attorney Eric Dubelier, who conducted the investigation.
(End text)