The Department of Justice announced July 28 that a multinational company headquartered in the U.S. has agreed to plead guilty to resolve charges that it committed criminal violations of export controls by selling hardware, software, and semiconductor design intellectual property technology to a Chinese university on the Bureau of Industry and Security’s Entity List.
A DOJ press release states that for more than six years the company and its subsidiary in China engaged in a conspiracy to commit export control violations in connection with the provision of tools subject to the Export Administration Regulations to the listed university through a front company without seeking or obtaining the requisite BIS licenses. Employees of the subsidiary did not disclose to and/or concealed from other company personnel, including export compliance personnel, that exports to the front company were in fact intended for delivery to the listed university and/or the Chinese military.
According to the DOJ, the company has agreed to pay criminal penalties of nearly $118 million along with more than $95 million in civil penalties to BIS. With each agency agreeing to credit against its respective fines a portion of the payments made to the other, the company will pay aggregate net criminal and civil penalties and forfeiture totaling more than $140 million.
The criminal penalty amount reflects a 20 percent reduction off the statutory maximum. The DOJ notes that aggravating factors include the parent company’s failure to voluntarily disclose the misconduct as well as the nature and seriousness of the offense, which involved exports of sensitive semiconductor design tools and technology and a Chinese military university involved in the development of supercomputers with applications for military and nuclear explosive simulations. Mitigating factors include the company’s efforts to enhance its export control compliance program. The company received only partial credit for its cooperation with the DOJ’s investigation because it failed to proactively obtain and disclose relevant communications and facilitate interviews of certain China-based employees.
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