Case Study: Export Controls Violations - The case of "Business World"

Five Men Indicted for Operating an International Procurement Network to Export U.S.-Origin Goods to Pakistan’s Nuclear Program


Taken from the press release of the US Department of Justice


Five men, all associated with the front company “Business World” in Rawalpindi, Pakistan, and including Muhammad Kamran Wali (Kamran), 41, of Pakistan; Muhammad Ahsan Wali (Ahsan), 48, and Haji Wali Muhammad Sheikh (Haji), 82, both of Mississauga, Ontario, Canada; Ashraf Khan Muhammad (Khan) of Hong Kong; and Ahmed Waheed (Waheed), 52, of Ilford, Essex, United Kingdom, were indicted in federal court for conspiracy to violate the International Emergency Economic Powers Act and the Export Control Reform Act. The grand jury returned the indictment on Oct. 16, 2019, and it was unsealed today.


US goods to Pakistan's weapons program

“The defendants smuggled U.S. origin goods to entities that have been designated for years as threats to U.S. national security for their ties to Pakistan’s weapons programs,” said Assistant Attorney General for National Security John C. Demers.  “This indictment puts the world on notice not to do business with these defendants and demonstrates our commitment to holding them accountable. It also stands as an example of the kind of deceptive behavior U.S. businesses need to watch out for in designing appropriate export control and sanctions compliance programs.”


The importance of export control laws

“Federal export control laws are vital tools that help prevent items from being exported overseas where they could be used in ways that can jeopardize our national security,” said U.S. Attorney Scott W. Murray for the District of New Hampshire. 


“The alleged behavior of these five individuals presented more than a violation of U.S. export laws, it posed a potential threat to the national security interests of the United States and to the delicate balance of power among nations within the region,” said Jason Molina, Acting Special Agent in Charge, Homeland Security Investigations.


Counterproliferation efforts

“The indictments unsealed today are a result of the ongoing coordination and collaborative counterproliferation efforts by the Office of Export Enforcement, the Justice Department, the Defense Criminal Investigative Service, and Homeland Security Investigations,”said Special Agent in Charge William Higgins of the Office of Export Enforcement. “The Boston Field Office of the Office of Export Enforcement will continue to vigorously pursue violators with all its partners to stem illicit trade that threatens U.S. national security and undermines U.S. foreign policy.”


Multi-Agency Effort

"Stopping the illegal exportation of sensitive defense technology is a top priority for the Defense Criminal Investigative Service (DCIS) and today's indictment is the result of a multi-agency effort," stated Special Agent in Charge Leigh-Alistair Barzey, DCIS Northeast Field Office.  "The DCIS is committed to working with the USAO-NH, Homeland Security Investigations and the Office of Export Enforcement, to protect our nation's security by identifying, investigating and prosecuting criminal procurement networks."


About the case

According to the indictment, between September 2014 and October 2019, the defendants operated an international procurement network of front companies that existed to acquire U.S.-origin goods for the Advanced Engineering Research Organization (AERO) and the Pakistan Atomic Energy Commission (PAEC), and to cause those goods to be exported from the United States to the entities without export licenses in violation of federals law.


AERO and PAEC Part of the Entity List

Both AERO and PAEC were on the Commerce Department’s Entity List, which imposes export license requirements for organizations whose activities are found to be contrary to U.S. national security or foreign policy interests.  PAEC was added to the Entity List in 1998.  AERO was added to the Entity List in 2014, after the U.S. Government found that it had used intermediaries and front companies to procure items for use in Pakistan’s cruise missile and strategic UAV programs.


Front companies & intentional false declaration of End-Use

According to the indictment, the defendants attempted to conceal the true destinations in Pakistan of the U.S.-origin goods by using the conspirators’ network of front companies as the supposed purchasers and end-users of the goods and as the apparent source of payments for the goods, even though the goods were ultimately received in Pakistan and paid for by AERO or PAEC


The defendants caused the U.S. companies to file export documents that falsely identified the Ultimate Consignees of the shipments as entities other than AERO and PAEC.


No export license application

The defendants never applied for or obtained an export license from the Department of Commerce authorizing the export of goods to AERO or PAEC in Pakistan.


38 exports - 29 different companies - global operation

The indictment identified 38 separate exports from the U.S. that the defendants caused, involving 29 different companies from around the country. Three of those companies are in New Hampshire.  None of the U.S. companies is alleged to have been complicit in the illegal exports. 


Conspiracy

Each defendant is charged with two felony counts of conspiracy.  Although arrest warrants are pending, none of the five defendants has thus far been apprehended. 


This matter was investigated by the Department of Commerce’s Office of Export Enforcement; the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; and Immigration and Customs Enforcement’s Homeland Security Investigations.  The case is being prosecuted by Assistant U.S. Attorney John Davis and Trial Attorney Nicholas Hunter of DOJ’s Counterintelligence and Export Control Section, National Security Division.


The charges and allegations contained in an indictment are merely accusations.  A defendant is presumed innocent until and unless proven guilty.


Source: https://www.justice.gov/opa/pr/five-men-indicted-operating-international-procurement-network-export-us-origin-goods-pakistan (15 January 2020)


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