By: Danielle McClellan

Spectrolab is an experienced and sophisticated exporter, according to BIS’s Order related to the illegal export of a Large Area Pulsed Solar Simulator (EAR99).  You may be thinking, EAR99 items don’t need a license so how is there an illegal export, but as the title states…screening is important and will find violations that otherwise are not obvious to the naked eye.

In this case, Spectrolab sold and transferred a Large Area Pulsed Solar Simulator to a party on the Entity List in Pakistan. SUPARCO (Pakistan’s Space and Upper Atmosphere Research Commission) was added to the list in 1999 after it was found that they were involved in nuclear or missile activities. SUPARCO used a procurement agent to obtain the simulator from Spectrolab in 2014. Initially the agent said the item was for Pakistan’s Institute of Space Technology (IST) but soon after Spectrolab was made aware that SUPARCO was involved in the transaction. The procurement agent provided Spectrolab with the names and every party involved in the transaction except SUPARCO. Spectrolab screened the names, but not the addresses that they received from the agent which would have alerted them that SUPARCO was on the Entity List as their address was listed as IST.

Spectrolab even hosted an inspection and training session on installation and operation with an engineer from SUPARCO. The engineer even attended the training wearing a SUPARCO badge. As a result, Spectrolab was fully aware that SUPARCO was the end user of the simulator before they ever exported it. Spectrolab failed to run or re-run its screening software to screen either the SUPARCO name or address in connection with the final shipment, a direct contradiction of their own export compliance plan.

There were a few things that went wrong in this case for Spectrolab:

  1. They didn’t screen the companies address; if this was initially done the entire process would have stopped before it even started. BIS noted in the Order that Spectrolab used an export control screening software.
  2. No one raised the question of why the engineer worked for SUPARCO instead of IST or why the end user was SUPARCO instead of IST. This is really where the break down occurred
  3. They didn’t re-run their screening software before shipping the item to Pakistan

The biggest take away from this case is to screen everything about your customers, and that the government expects you to catch on to oddities related to your shipments. In this case, the company name changing, it’s not surprising that no one knew that SUPARCO was on the Entity List, there’s thousands on that list. The issue is that there was a red flag with SUPARCO coming into the transaction but not being listed on the documents. Entities who are on the denial list will be sneaky, and BIS expects you to catch that…that just didn’t happen in this case.

Order:  https://efoia.bis.doc.gov/index.php/electronic-foia/index-of-documents/7-electronic-foia/227-export-violations