Unauthorized Uses of Exported Defense Articles Declined in FY 2012, Report Says
The State Department’s Directorate of Defense Trade Controls has posted to its Web site a report outlining the fiscal year 2012 performance of its “Blue Lantern” end-use monitoring program for defense exports. The report reveals that in FY 2012 about 20% of all Blue Lantern cases closed were unfavorable (compared to 27% in FY 2011 and 21% in FY 2010), indicating that the findings of fact were not consistent with the information in the authorization request.
The Blue Lantern program monitors the end-use of commercially exported defense articles, defense services and brokering activities subject to licensing or other authorizations under section 38 of the Arms Export Control Act and the International Traffic in Arms Regulations. Blue Lantern monitoring entails pre-license, post-license or post-shipment checks undertaken to verify the bona fides of proposed foreign consignees and end-users to confirm the legitimacy of proposed transactions and to provide reasonable assurance that (a) the recipient is complying with U.S. government requirements with respect to use, transfers and security of defense articles and defense services and (b) such articles and services are being used for the purposes for which they are provided.
According to the report, in FY 2012 the Blue Lantern program initiated 820 checks in 103 countries, up from 783 checks in 88 countries the year before. East Asia accounted for the largest share of these initiations at 34%, followed by Europe at 24%, the Americas at 16%, the Near East at 12%, Africa at 6% and South Central Asia at 5%.
Of the 706 Blue Lantern cases closed in FY 2012 (down from 592 in FY 2011), 144 (20%) were determined to be unfavorable. Unfavorable cases may result in the rejection, denial or revocation of a license application, removal of a party, update of the Office of Defense Trade Controls Compliance Watch List, or referral to the Enforcement Division for appropriate action. The report provides the following statistics regarding such actions in FY 2012.
- DTCC denied 13 authorization requests and returned 20 without action as a result of pre-license checks. DTCC also revoked five authorizations as a result of checks conducted after export authorizations were approved.
- Unfavorable Blue Lanterns referred to END resulted in nine directed disclosure cases involving potential civil violations of the ITAR (down from 19 in FY 2011) and nine referred to federal law enforcement, of which six assisted ongoing criminal investigations, one resulted in the reopening of an investigation and one resulted in an outreach visit to the exporter.
- Europe and South Central Asia had the highest rate of unfavorable checks at about 27%. Europe typically has the lowest unfavorable rate and this year’s findings are primarily due to 30 unfavorable checks involving a single entity that failed to sufficiently cooperate with DTCC’s inquiries and also revealed stockpiling concerns. The lowest unfavorable rate was in the Near East, which previously held the highest.
- The primary commodities involved in unfavorable checks included aircraft parts and military electronics in East Asia and firearms/ammunition/armor in the Americas.
- Omitting the 30 checks referred to above, the leading causes of unfavorable results were “derogatory information/foreign party deemed unreliable recipient” (41 cases, down from 76), “unable to confirm order or receipt of goods by end-user” (31 cases, down from 43), “foreign party involved in transaction but not listed on license/application” (28 cases, down from 30), and “indications of diversion or unauthorized retransfer or reexport” (11 cases, down from 34).