Tuesday, July 3, 2012

United Technologies Subsidiary Pleads Guilty to Criminal Charges for Helping China Develop New Attack Helicopter

United Technologies, Pratt & Whitney Canada, and Hamilton Sundstrand Corporations Also Agree to Pay More Than $75 Million to U.S. Government

BRIDGEPORT, CT—Pratt & Whitney Canada Corp. (PWC), a Canadian subsidiary of the Connecticut-based defense contractor United Technologies Corporation (UTC), today pleaded guilty to violating the Arms Export Control Act and making false statements in connection with its illegal export to China of U.S.-origin military software used in the development of China’s first modern military attack helicopter, the Z-10.

In addition, UTC, its U.S.-based subsidiary Hamilton Sundstrand Corporation (HSC), and PWC have all agreed to pay more than $75 million as part of a global settlement with the Justice Department and State Department in connection with the China arms export violations and for making false and belated disclosures to the U.S. government about these illegal exports. Roughly $20.7 million of this sum is to be paid to the Justice Department. The remaining $55 million is payable to the State Department as part of a separate consent agreement to resolve outstanding export issues, including those related to the Z-10. Up to $20 million of this penalty can be suspended if applied by UTC to remedial compliance measures. As part of the settlement, the companies admitted conduct set forth in a stipulated and publicly filed statement of facts.

Today’s actions were announced by David B. Fein, U.S. Attorney for the District of Connecticut; Lisa Monaco, Assistant Attorney General for National Security; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); Ed Bradley, Special Agent in Charge of the Northeast Field Office of the Defense Criminal Investigative Service (DCIS); Kimberly K. Mertz, Special Agent in Charge of the FBI New Haven Division; David Mills, Department of Commerce Assistant Secretary for Export Enforcement; and Andrew J. Shapiro, Assistant Secretary of State for Political-Military Affairs.

The Charges
Today in the District of Connecticut, the Justice Department filed a three-count criminal information charging UTC, PWC, and HSC. Count one charges PWC with violating the Arms Export Control Act in connection with the illegal export of defense articles to China for the Z-10 helicopter. Count two charges PWC, UTC, and HSC with making false statements to the U.S. government in their belated disclosures relating to the illegal exports. Count three charges PWC and HSC with failure to timely inform the U.S. government of exports of defense articles to China.

While PWC has pleaded guilty to counts one and two, the Justice Department has recommended that prosecution of UTC and HSC on count two and of PWC and HSC on count three be deferred for two years, provided the companies abide by the terms of a deferred prosecution agreement with the Justice Department. As part of the agreement, the companies must pay $75 million and retain an Independent Monitor to monitor and assess their compliance with export laws for the next two years.

The Export Scheme
Since 1989, the United States has imposed a prohibition upon the export to China of all U.S. defense articles and associated technical data as a result of the conduct in June 1989 at Tiananmen Square by the military of the People’s Republic of China. In February 1990, the U.S. Congress imposed a prohibition upon licenses or approvals for the export of defense articles to the People’s Republic of China. In codifying the embargo, Congress specifically named helicopters for inclusion in the ban.

Dating back to the 1980s, China sought to develop a military attack helicopter. Beginning in the 1990s, after Congress had imposed the prohibition on exports to China, China sought to develop its attack helicopter under the guise of a civilian medium helicopter program in order to secure Western assistance. The Z-10, developed with assistance from Western suppliers, is China’s first modern military attack helicopter.

During the development phases of China’s Z-10 program, each Z-10 helicopter was powered by engines supplied by PWC. PWC delivered 10 of these development engines to China in 2001 and 2002. Despite the military nature of the Z-10 helicopter, PWC determined on its own that these development engines for the Z-10 did not constitute “defense articles” requiring a U.S. export license, because they were identical to those engines PWC was already supplying China for a commercial helicopter.

Because the Electronic Engine Control software, made by HSC in the United States to test and operate the PWC engines, was modified for a military helicopter application, it was a defense article and required a U.S. export license. Still, PWC knowingly and willfully caused this software to be exported to China for the Z-10 without any U.S. export license. In 2002 and 2003, PWC caused six versions of the military software to be illegally exported from HSC in the United States to PWC in Canada and then to China, where it was used in the PWC engines for the Z-10.

According to court documents, PWC knew from the start of the Z-10 project in 2000 that the Chinese were developing an attack helicopter and that supplying it with U.S.-origin components would be illegal. When the Chinese claimed that a civil version of the helicopter would be developed in parallel, PWC marketing personnel expressed skepticism internally about the “sudden appearance” of the civil program, the timing of which they questioned as “real or imagined.” PWC nevertheless saw an opening for PWC “to insist on exclusivity in [the] civil version of this helicopter” and stated that the Chinese would “no longer make reference to the military program.” PWC failed to notify UTC or HSC about the attack helicopter until years later and purposely turned a blind eye to the helicopter’s military application.

HSC in the United States had believed it was providing its software to PWC for a civilian helicopter in China, based on claims from PWC. By early 2004, HSC learned there might be an export problem and stopped working on the Z-10 project. UTC also began to ask PWC about the exports to China for the Z-10. Regardless, PWC on its own modified the software and continued to export it to China through June 2005.

According to court documents, PWC’s illegal conduct was driven by profit. PWC anticipated that its work on the Z-10 military attack helicopter in China would open the door to a far more lucrative civilian helicopter market in China, which according to PWC estimates, was potentially worth as much as $2 billion to PWC.

Belated and False Disclosures to U.S. Government
These companies failed to disclose to the U.S. government the illegal exports to China for several years and only did so after an investor group queried UTC in early 2006 about whether PWC’s role in China’s Z-10 attack helicopter might violate U.S. laws. The companies then made an initial disclosure to the State Department in July 2006, with follow-up submissions in August and September 2006.

The 2006 disclosures contained numerous false statements. Among other things, the companies falsely asserted that they were unaware until 2003 or 2004 that the Z-10 program involved a military helicopter. In fact, by the time of the disclosures, all three companies were aware that PWC officials knew at the project’s inception in 2000 that the Z-10 program involved an attack helicopter.

Today, the Z-10 helicopter is in production and initial batches were delivered to the People’s Liberation Army of China in 2009 and 2010. The primary mission of the Z-10 is anti-armor and battlefield interdiction. Weapons of the Z-10 have included 30-mm cannons, anti-tank guided missiles, air-to-air missiles and unguided rockets.

“PWC exported controlled U.S. technology to China, knowing it would be used in the development of a military attack helicopter in violation of the U.S. arms embargo with China,” said U.S. Attorney Fein. “PWC took what it described internally as a ‘calculated risk,’ because it wanted to become the exclusive supplier for a civil helicopter market in China with projected revenues of up to two billion dollars. Several years after the violations were known, UTC, HSC, and PWC disclosed the violations to the government and made false statements in doing so. The guilty pleas by PWC and the agreement reached with all three companies should send a clear message that any corporation that willfully sends export controlled material to an embargoed nation will be prosecuted and punished, as will those who know about it and fail to make a timely and truthful disclosure.”

“Due in part to the efforts of these companies, China was able to develop its first modern military attack helicopter with restricted U.S. defense technology. As today’s case demonstrates, the Justice Department will spare no effort to hold accountable those who compromise U.S. national security for the sake of profits and then lie about it to the government,” said Assistant Attorney General Monaco. “I thank the agents, analysts, and prosecutors who helped bring about this important case.”

“This case is a clear example of how the illegal export of sensitive technology reduces the advantages our military currently possesses,” said ICE Director Morton. “I am hopeful that the conviction of Pratt & Whitney Canada and the substantial penalty levied against United Technologies and its subsidiaries will deter other companies from considering similarly ill-conceived business practices in the future. American military prowess depends on lawful, controlled exports of sensitive technology by U.S. industries and their subsidiaries, which is why ICE will continue its present campaign to aggressively investigate and prosecute criminal violations of U.S. export laws relating to national security.”

“Today’s charges and settlement demonstrate the continued commitment of the Defense Criminal Investigative Service (DCIS) and fellow agencies to protect sensitive U.S. defense technology from being illegally exported,” said DCIS Special Agent in Charge Bradley. “Safeguarding our military technology is vital to our nation’s defense and the protection of our war fighters both home and abroad. We know that foreign governments are actively seeking U.S. defense technology for their own development. Thwarting these efforts is a top priority for DCIS. I applaud the agents and prosecutors who worked tirelessly to bring about this result.”

“Preventing the loss of critical U.S. information and technologies is one of the most important investigative priorities of the FBI,” said FBI Special Agent in Charge Mertz. “Our adversaries routinely target sensitive research and development data and intellectual property from universities, government agencies, manufacturers, and defense contractors. While the thefts associated with economic espionage and illegal technology transfers may not capture the same level of attention as a terrorist incident, the costs to the U.S. economy and our national security are substantial. Violations of the Arms Export Control Act put our nation at risk and the FBI, along with all of our federal agency partners, are committed to ensuring that embargoed technologies do not fall into the wrong hands. Those who violate these laws should expect to be held accountable. An important part of the FBI’s strategy in this area involves the development of strategic partnerships. In that regard, the FBI looks forward to future coordination with UTC and its subsidiaries to strengthen information sharing and counterintelligence awareness.”

“Protecting national security is our top priority,” said Assistant Secretary of Commerce for Export Enforcement Mills. “Today’s action sends a clear signal that federal law enforcement agencies will work together diligently to prevent U.S. technology from falling into the wrong hands.”

Assistant Secretary Shapiro, of the State Department’s Bureau of Political and Military Affairs, said, “Today’s $75 million settlement with United Technologies Corporation sends a clear message: willful violators of U.S. arms export control regulations will be pursued and punished. The successful resolution of this case is the byproduct of the tireless work of our compliance officers and highlights the relentless commitment of the State Department to protect sensitive American technologies from being illegally transferred.”

U.S. Attorney Fein commended the many agencies involved in this investigation, including ICE’s Homeland Security Investigations (HSI) in New Haven; the DCIS in New Haven; the New Haven Division of the FBI; the Department of Commerce’s Boston Office of Export Enforcement. He also praised the Office of the HSI Attaché in Toronto, which was essential to the initiation and investigation of this matter, and the State Department’s Office of Defense Trade Controls Compliance in the Bureau of Political-Military Affairs, for its critical role in the global resolution of this matter.

The prosecution is being handled by Assistant U.S. Attorneys Stephen B. Reynolds and Michael J. Gustafson from the U.S. Attorney’s Office for the District of Connecticut, with assistance from Steven Pelak and Ryan Fayhee of the Counterespionage Section of the Justice Department’s National Security Division

Wednesday, June 27, 2012

The Fourth U.S.-Laos Comprehensive Bilateral Dialogue

Washington, DC
June 27, 2012

Today, the United States and the Lao People’s Democratic Republic met for the Fourth U.S.-Laos Comprehensive Bilateral Dialogue at the U.S. Department of State in Washington, D.C. Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell and Vice Foreign Minister of Laos Bounkeut Sangsomsak co-chaired the dialogue. The dialogue provided an opportunity to engage in a comprehensive discussion of bilateral and regional issues that reflected our expanding relationship.

The delegations discussed matters including the forthcoming entry of Laos into the World Trade Organization, ongoing bilateral efforts to help resolve the problem of unexploded ordnance in Laos, and our cooperation on a range of activities including health, educational exchanges, counternarcotics, law enforcement, trafficking-in-persons, and environmental protection. The delegations also discussed ongoing efforts to resolve the cases of American personnel still missing in Laos from the Vietnam War period.

In the meeting, the United States reaffirmed its support for ASEAN centrality in the evolving ASEAN-led regional architecture in the Asia-Pacific and underscored the importance of ASEAN unity on pressing regional issues. The U.S. side noted the addition of Burma into the Lower Mekong Initiative (LMI) and reaffirmed its commitment to broaden collaboration and information sharing among the six LMI partner countries. The United States highlighted the importance of the Mekong River Commission for development and environmental protection of the region.

The United States affirmed its continued robust support for educational and cultural exchange programs, including the Fulbright Scholarship Program, the International Visitor Leadership Program, and English-language training programs.

The United States welcomed the positive trends in the bilateral relationship. Both delegations look forward to continuing regular consultations on a broad range of issues, including at the next U.S.-Laos Comprehensive Bilateral Dialogue.

Note: See Vang Pao, one of the leading figures in Laotian history.

Tuesday, June 26, 2012

Eco-Terrorism: Oakland Woman Sentenced for Role in 2001 Arson at UW Center for Urban Horticulture

Former Evergreen Student Secured Car, Served as Lookout in Firebomb Conspiracy

More than 11 years after a devastating arson, Briana Waters, 36, now of Oakland, California, was sentenced today in U.S. District Court in Tacoma for conspiracy, arson, possession of an unregistered destructive device, and using a destructive device during a crime of violence, announced U.S. Attorney Jenny A. Durkan. Waters was sentenced to 48 months, meaning she will return to prison for 11 months because of the approximately 37 months she has already served. One year ago, Waters abandoned her claims of innocence and admitted the firebomb devices used to destroy the University of Washington Center for Urban Horticulture were built at her Olympia residence and that she helped transport them and served as a lookout during the May 2001 blaze. At today’s sentencing U.S. District Judge Ronald B. Leighton told Waters, “You have had a corrosive effect on the respect for the law.” Judge Leighton said Waters’ perjured testimony and lies about federal agents at her 2008 trial was a serious crime. “Our courts are sanctuaries; we protect the pursuit of truth,” Judge Leighton said.

“Today’s sentencing closes a chapter on one of the most dangerous and damaging acts of domestic terrorism in our community,” said U.S. Attorney Jenny A. Durkan. “The $6 million Ms. Waters and the rest of these defendants owe in restitution will never truly compensate the researchers who lost their life’s work, their sense of security, and the endangered plants they were trying to propagate. We are fortunate no lives were lost in the fire. I commend the work of the first responders who controlled the fire and the dedicated agents and officers that tracked down these conspirators to hold them accountable.”

In 2008, a jury found Waters guilty of arson. However, Waters’ conviction was overturned after an appeals court held that a folder of documents containing anarchist materials was improperly admitted into evidence at her trial. During her trial, prosecutors showed how rental car, telephone, and bank records corroborated the testimony of two cooperating witnesses who put Waters at the scene, acting as the lookout the night of May 21, 2001, when arson destroyed the Center for Urban Horticulture in Seattle.

In their sentencing recommendation, prosecutors noted that Waters continued to obstruct the justice system through the lies she told at her trial. “Waters’ obstruction of justice and perjury were not only fresh crimes committed by Waters in 2007, they came at great cost to our system of justice. By falsely claiming to be innocent and by making what she knows to be groundless claims of misconduct, Waters fueled perceptions of injustice....The government does not believe that it is a coincidence that a major ELF arson—in fact, the largest ELF arson in the state of Washington since the Center for Urban Horticulture arson—took place in Snohomish County, Washington, while the jury was deliberating in Waters’ case. By falsely protesting her innocence and by constantly claiming government and judicial misconduct, Waters fueled an environment in which such crimes continue to occur,” prosecutors wrote in their sentencing memo.

The UW fire bombing was part of a string of 17 arsons across the west by the radical groups the Earth Liberation Front (ELF) and the Animal Liberation Front (ALF). The arson spree caused tens of millions of dollars in damage. In all, 15 people have been convicted of crimes related to a string of fires across the western United States investigated under Operation Backfire. All those connected with the UW arson have been ordered to share in restitution to the University of Washington and the state of Washington totaling $6,092,649.

Three other defendants, Jennifer Kolar, of Seattle, Washington; Lacey Phillabaum, of Spokane, Washington; and Justin Solondz have each pleaded guilty and been sentenced for the arson. Solondz was sentenced in March to seven years in prison, and Kolar was sentenced to five years in prison for the UW Center for Urban Horticulture fire and other arsons. Phillabaum was sentenced to three years in prison.

In addition to the defendants who have been convicted, the leader of the arson cell and the fifth participant in the UW Center for Urban Horticulture arson, William C. Rodgers, 40, of Prescott, Arizona, was indicted by a federal grand jury in Seattle in connection with the case. However, Rodgers committed suicide in December 2005, while being held in the Coconino County Jail in Prescott, Arizona.

This case is the result of a 10-year investigation by law enforcement. The Seattle Fire Department battled the blaze. Participating in the extensive investigation were the Federal Bureau of Investigation (FBI); the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF); the Eugene Police Department; the Oregon State Police; the University of Washington Police Department; and other state and federal law enforcement agencies.

The case was prosecuted by Assistant United States Attorneys Andrew Friedman and Thomas Woods.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.

Friday, June 15, 2012

Socialism in Practice: The Lethal Laboratory

By Gary North

What is the longest-running socialist experiment? What has its success been?

If someone asked you to defend the idea that socialism has failed, what would you offer as your example?

Where did modern socialism begin?

In America.

That's right: in the land of the free and the home of the braves. On Indian reservations.

They were invented to control adult warriors. They had as a goal to keep the native population in poverty and impotent.

Did the system work? You bet it did.

Has the experiment been a failure? On the contrary, it has been a success.

When was the last time you heard of a successful Indian uprising?

Are the people poor? The poorest in America.

Are they on the dole? Of course.

Last year, the US Department of Agriculture allocated $21 million to provide subsidized electricity to residents on the reservations whose homes are the most distant from jobs and opportunities. You can read about this here. This will keep them poor. Tribal power means tribal impotence.

The tribes are dependent. They will stay dependent. That was what the program was designed to achieve.

For some reason, textbooks do not offer a page or two on the corruption, the bureaucratization, and the multigenerational poverty created by tribal-run socialism. Here we have a series of government-run social laboratories. How successful have they been? Where are reservations that have systematically brought people out of poverty?

The next one will be the first.

Workers' Paradises
The Soviet Union lasted as a socialist workers' paradise from 1917 until 1991. As a direct result of that experiment, at least 30 million Russians died. It may have been twice that. China's experiment was shorter: 1949 to 1978. Perhaps 60 million Chinese died.

The system failed to deliver the promised goods. I can think of no topic more suitable for a class in economics than a discussion of the failure of socialism. The same is true of a course in modern world history. A course in political science should cover this failure in detail.

They don't, of course. They do not begin with the fundamental challenge to… (Read on)

Source: Mises.org