[Federal Register Volume 66, Number 100 (Wednesday, May 23, 2001)]
[Notices]
[Pages 28419-28421]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-13024]


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DEPARTMENT OF COMMERCE

Bureau of Export Administration


Action Affecting Export Privileges; TAL Industries, Inc.; In the 
Matter of: TAL Industries, Inc., 901 Corporate Center Drive, Suite 207, 
Monterey Park, CA 91754, Respondent

Order

    The Bureau of Export Administration, United States Department of 
Commerce (hereinafter ``BXA''), having notified TAL Industries, Inc. 
(hereinafter ``TAL'')

[[Page 28420]]

of its intention to initiate an administrative proceeding against it 
pursuant to section 13(c) of the Export Administration Act of 1979, as 
amended (50 U.S.C. app. secs. 2401-2420 (1994 & Supp. IV 1998)) 
(hereinafter the ``Act''),\1\ and the Export Administration Regulations 
(currently codified at 15 CFR parts 730-774 (2000)) (the 
``Regulations''),\2\ based on allegations that TAL committed 24 
violations of the former Regulations, to wit, 1 violation of 
Sec. 787.3(b), 13 violations of Sec. 787.5(a)(1), and 10 violations of 
Sec. 787.6 of the former Regulations, as follows:
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    \1\ The Act expired on August 20, 1994. Executive Order 12924 (3 
CFR, 1994 Comp. 917 (1995)), which had been extended by successive 
Presidential Notices, the most recent being that of August 3, 2000 
(65 FR 48347, August 8, 2000), continued the Regulations in effect 
under the International Emergency Economic Powers Act (50 U.S.C. 
1701-1706 (1994 & Supp. IV 1998)) until November 13, 2000 when the 
Act was reauthorized, See Pub. L. 106-508, 114 Stat. 2360.
    \2\ The alleged violations occurred in 1994 and 1995. The 
Regulations governing those violations are found in the 1994 and 
1995 versions of the Code of Federal Regulations (15 CFR parts 768-
799 (1994-1995)) (hereinafter the ``former Regulations''). The 
former Regulations define the violations that BXA alleges occurred. 
Since that time, the Regulations have been reorganized and 
restructured; the Regulations establish the procedures that apply to 
the matters set forth herein.
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1. 15 CFR 787.3(b): Conspiracy

    Beginning in 1992 and continuing into 1995, TAL committed 1 
violation of Sec. 787.3 of the former Regulations by conspiring and 
acting in concert with others to violate the Act and former 
Regulations. The goal of the conspiracy was to obtain Department of 
Commerce export licenses authorizing the export of machine tools from 
the United States to the CATIC Machining Company, Ltd. in Beijing, 
China for use in the machining of parts and components of civil 
aircraft that were planned for a joint project with the McDonnell 
Douglas Corporation (hereinafter the ``Trunkliner program'') and then 
to divert the machine tools to unauthorized end-users in China, 
including the Nanchang Aircraft Manufacturing Company. To accomplish 
the goal of the conspiracy, the conspirators, including TAL, took 
actions in furtherance of the conspiracy, primarily by making or 
causing to be made false and misleading representations of material 
fact, directly and indirectly, to BXA and other U.S. Government 
agencies. The false and misleading representations included 
misrepresentations about the end-user and end-use of the machine tools. 
The conspirators, including TAL, represented that the CATIC Machining 
Center, Ltd. in Beijing, China would be the end-user of the machine 
tools and the end-use of the machine tools was for the Trunkliner 
program. However, the CATIC Machining Company, Ltd. in Beijing, China 
was not the end-user nor the ultimate consignee of the machine tools, 
and the machine tools were not for use in the Trunkliner program.

2. 15 CFR 787.5(a)(1): Misrepresentation and Concealment

    a. On or about May 26, 1994, TAL committed 10 violations of 
Sec. 787.5(a)(1) of the former Regulations by making or causing to be 
made false or misleading representations of material fact to BXA and 
other U.S. Government agencies in connection with 10 separate export 
license applications submitted to BXA by Douglas Aircraft (the 
McDonnell Douglas Corporation) for the export of machine tools to 
China. For each of these 10 license applications, TAL falsely gave 
assurances and represented on end-user and ultimate consignee 
statements, export control documents as defined in Sec. 770.2 of the 
former Regulations, that the CATIC Machining Company, Ltd. in Beijing, 
China would be the end-user of the machine tools and the end-use of the 
machine tools was for machining the parts and components of civil 
aircraft in the Trunkliner program. However, the CATIC Machining 
Company, Ltd. in Beijing, China was neither the end-user nor the 
ultimate consignee, and the machine tools were not for use in the 
Trunkliner program.
    b. On or about June 7, 1994 and on or about June 23, 1994, TAL, 
through the McDonnell Douglas Corporation, committed two violations of 
Sec. 787.5(a)(1) of the former Regulations by falsely representing to 
BXA and other U.S. government agencies that the machine tools were to 
be exported to the CATIC Machining Company, Ltd. in Beijing, China, 
they were for use in the Trunkliner program, and the Trunkliner program 
was being was carried out in accordance with the 1992 contract. 
However, the CATIC Machining Company, Ltd. in Beijing, China was 
neither the end-user nor the ultimate consignee, the machine tools were 
not for use in the Trunkliner program, and the Trunkliner program had 
been delayed and was not being carried out in accordance with the 1992 
contract.
    c. On or about June 5, 1995, TAL, through the China National Aero-
Technology Import and Export Corporation, committed 1 violation of 
Sec. 787.5(a)(1) of the former Regulations by submitting a letter to 
BXA falsely representing that the machine tools that were authorized 
for export to the CATIC Machining Company, Ltd. in Beijing, China and 
diverted to the Nanchang Aircraft Manufacturing Company in Nanchang, 
China in violation of the terms and conditions of the licenses would 
not be unpacked until authorization was received from the U.S. 
Department of Commerce. However, the stretch press had been unpacked 
and placed in a building in Nanchang, China.

3. 15 CFR 787.6: Export, Diversion, Reexport, and Transshipment

    Between on or about November 12, 1994 and on or about February 18, 
1995, TAL committed 10 violations Sec. 787.6 of the former Regulations 
by violating or causing the violation of the terms and conditions of 10 
separate Department of Commerce export licenses. The 10 export licenses 
named China National Aero-Technology International Supply Company as 
the purchaser, China Aviation Supply and Marketing Corporation, North 
China Branch, as the intermediate consignee, CATIC Machining Company, 
Ltd. as the ultimate consignee, and the Trunkliner program as the end-
use. TAL violated the terms and conditions of each of the 10 export 
licenses by diverting the machine tools to unauthorized end-users in 
China, including the Nanchang Aircraft Manufacturing Company.
    BXA and TAL having entered into a Settlement Agreement pursuant to 
Sec. 766.18(a) of the Regulations whereby they agreed to settle this 
matter in accordance with the terms and conditions set forth therein, 
and the terms of the Settlement Agreement having been approved by me;
    It is therefore ordered:
    First, that a civil penalty of $1,320,000 is assessed against TAL, 
which shall be paid to the U.S. Department of Commerce within thirty 
days from the date of entry of this Order. Payment shall be made in the 
manner specified in the attached instructions.
    Second, that, pursuant to the Debt Collection Act of 1982, as 
amended (31 U.S.C. 3701-3720E (1983 and Supp. 2000)), the civil penalty 
owned under this Order accrues interest as more fully described in the 
attached Notice, and, if payment is not made by the due date specified 
herein, TAL will be assessed, in addition to interest, a penalty charge 
and an administrative charge, as more fully described in the attached 
Notice.
    Third, that for a period of ten years from the date of this Order, 
TAL Industries, Inc., 901 Corporate Center Drive, Suite 207, Monterey 
Park California 91754, shall be denied its U.S. export privileges as 
described herein (hereinafter the ``denial period''). TAL and all of 
its successors, assigns, officers, representatives, agents, and 
employees, may not participate, directly

[[Page 28421]]

or indirectly, in any way in any transaction involving any commodity, 
software, or technology (hereinafter collectively referred to as 
``item'') exported or to be exported from the United States that is 
subject to the Regulations, or in any other activity subject to the 
Regulations, including, but not limited to:
    A. Applying for, obtaining, or using any license, License 
Exception, or export control document;
    B. Carrying on negotiations concerning, or ordering, buying, 
receiving, using, selling, delivering, storing, disposing of, 
forwarding, transporting, financing, or otherwise servicing in any way, 
any transaction involving any item exported or to be exported from the 
United States that is subject to the Regulations, or in any other 
activity subject to the Regulations; or
    C. Benefitting in any way from any transaction involving any item 
exported or to be exported from the United States that is subject to 
the Regulations, or in any other activity subject to the Regulations.
    Fourth, that no person may, directly or indirectly, do any of the 
following:
    A. Export or reexport to or on behalf of TAL or its successors, 
assigns, officers, representatives, agents, or employees (hereinafter 
the ``denied person'') any item subject to the Regulations;
    B. Take any action that facilitates the acquisition or attempted 
acquisition by the denied person or the ownership, possession, or 
control of any item subject to the Regulations that has been or will be 
exported from the United States, including financing or other support 
activities related to a transaction whereby the denied person acquires 
or attempts to acquire such ownership, possession or control;
    C. Take any action to acquire from or to facilitate the acquisition 
or attempted acquisition from the denied person of any item subject to 
the Regulations that has been exported form the United States.
    D. Obtain from the denied person in the United States any item 
subject to the Regulations with knowledge or reason to know that the 
item will be, or is intended to be, exported from the United States; or
    E. Engage in any transaction to serve any item subject to the 
Regulations that has been or will be exported from the United States 
and that is owned, possessed or controlled by the denied person, or 
service any item, of whatever origin, that is owned, possessed or 
controlled by the denied person if such service involves the use of any 
item subject to the Regulations that has been or will be exported from 
the United States. For purposes of this paragraph, servicing means 
installation, maintenance, repair, modification or testing.
    Fifth, that, after notice and opportunity for comment as provided 
in Section 766.23 of the Regulations, any person, firm, corporation, or 
business organization related to the denied person by affiliation, 
ownership, control, or position of responsibility in the conduct of 
trade or related services may also be made subject to the provisions of 
this Order.
    Sixth, that this Order does not prohibit any export, reexport, or 
other transaction subject to the Regulations where the only items 
involved that are subject to the Regulations are the foreign-produced 
direct product of U.S.-origin technology.
    Seventh, that TAL shall produce to the Department of Commerce any 
documents, in its custody, care or control, that were supplied to the 
United States in the case of U.S. v. CATIC, et al., No. 99-353 (PLF), 
and TAL hereby certifies that these documents are all the documents 
that are relevant to the sale, licensing or diversion of the machine 
tools from the McDonnell Douglas plant in Columbus, Ohio that were 
allegedly to be used in the Trunkliner program;
    Eighth, that for the purposes of authenticating documents and as 
otherwise agreed to by the parties, TAL shall, at its own expense, made 
its appropriate employees, representatives, officers or agents 
available to the Department of Commerce to testify at any 
administrative proceeding initiated by BXA in connection with the sale, 
licensing and diversion of the machine tools from the McDonnell Douglas 
plant in Columbus, Ohio that were allegedly to be used in the 
Trunkliner program.
    Ninth, that the proposed charging letter, the Settlement Agreement, 
and this Order shall be made available to the public.
    This Order, which constitutes the final agency action in these 
matters, is effective immediately.

    Dated: Entered this 11th day of May, 2001.
Dexter M. Price,
Acting Assistant Secretary for Export Enforcement.
[FR Doc. 01-13024 Filed 5-22-01; 8:45 am]
BILLING CODE 3510-DT-M