Information they received led the Commerce agents to believe the helicopter was a prototype for helicopters that would be modified for military applications and eventually exported to Iraq. The Commerce Export Enforcement (EE) office in Dallas requested that its sister office in Fort Lauderdale assist with the helicopter investigation. Because of the August 1990 Iraqi invasion of Kuwait, the possibility of illegal exports to Iraq, and the connection of the Dallas case with a South Florida company, the Fort Lauderdale EE office initiated a separate investigation to determine if Cardoen or Swissco had made prior illegal exports or would attempt to violate the U.S. embargo of Iraq.
Carlos Cardoen meets
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EE in Fort Lauderdale made a detailed analysis of past export records maintained by freight forwarders dealing with Cardoen and Swissco, and requested local forwarders be on the lookout for future exports by Swissco or to Cardoen. They also worked closely with their licensing counterparts in Washington to review all export license applicants related to Swissco and Cardoen. The investigation gave EE reason to believe that over a five year period Teledyne Wah Chang, a division of Teledyne Industries and Swissco had exported over 130 tons of zirconium to Cardoen's bomb plant, Industrias Cardoen, Ltda., in Chile.
Although export license applications showed the zirconium was for use in explosives for "mining operations," witnesses alleged the zirconium was actually used as an incendiary additive in the production of cluster bombs sold to the government of Iraq. Further investigation uncovered copies of Cardoen's cluster bomb production manuals that outlined how the zirconium was used in the manufacture of these munitions. In addition, the head of Swissco's Miami office, a high level official in Cardoen's operations and his international sales and marketing representative, testified at the trial that the end user statements on the license applications submitted to BIS were false and there was no intention of using the zirconium for "mining operations."
In fact, the testimony given at the trial made it clear representatives from Teledyne Wah Chang were told the zirconium was intended for use in cluster bombs rather than mining, that the Teledyne representatives had made several visits to the Cardoen facilities in Chile, that the use of the zirconium for "mining operations" was never mentioned as the intended end use for the zirconium, and that tests on cluster bombs were held in the presence of the Teledyne officials.
Two of the defendants in the trial, Mr. Edward A. Johnson, the manager for ordnance sales for Teledyne Wah Chang, and Ronald W. Griffin, a research technician for the Teledyne division, claimed the approval of the Commerce licenses granted to Teledyne and Swissco were based on U.S. Government policy to help Iraq in the Iraq-Iran war.
Commerce agents spent many hours with their counterparts in the licensing branches, inquiring whether any pressure was applied to approve the Teledyne licenses, whether there was any indication at the time of the license approvals that the zirconium was to be used for other than "mining operations," and whether they would have approved the applications if they had known the zirconium was to be used in munitions. EE believed that there was no substance to the allegations by Johnson and Griffin, and during the trial , BIS's licensing officials provided strong evidence in support of the prosecution's case. Commerce contended the licenses obtained by Teledyne Wah Chang and Swissco were based on false statements. BIS's Export Enforcement special agents were joined in this investigation by special agents from the U.S. Customs Service in support of the prosecution's case.
Nasser Beydoun, a witness at the Cardoen trial, shown here standing next to a military jet carrying a cluster bomb. Mr. Beydoun was murdered in Brazil in June 1995.
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Teledyne Industries, Inc., pled guilty to charges of criminal conspiracy, false statements, and violations of the Export Administration Act and the Arms Export Control Act prior to the trial and agreed to pay the U.S. Government criminal fines and civil penalties of approximately $13 million, to resolve the charges related to the illegal zirconium exports to Cardoen and the illegal zirconium exports in another related case.
Teledyne's division, Teledyne Wah Chang, was denied export privileges for three years, all but three months of which was suspended. In addition, Teledyne Wah Chang's authority to use general license G-NSG was suspended for nine months.
Augusto Giangrandi, a Cardoen associate who testified for the prosecution during the trial, was denied export privileges for a period of ten years for his part in illegally conspiring with Cardoen to export zirconium from the U.S. to Chile contrary to the terms of the Commerce export licenses. Five years of the Denial were suspended.
The nine week trial ended in April 1995 with the following results:
Swissco Management Group, Inc., which was tried in absentia, was found guilty of conspiracy to export approximately 130 tons of zirconium without the required U.S. export licenses, and guilty of exporting the zirconium in violation of the terms of a Commerce export license. The company has been sentenced to pay a fine of $1,309,230 as a result of this investigation. The Department of Commerce has also denied the export privileges of the company for a period of ten years.
Edward A. Johnson was found guilty of conspiracy to export approximately 130 tons of zirconium without the required U.S. export licenses; guilty on two counts of making false statements on Commerce export license documents; and guilty of exporting the zirconium without obtaining the appropriate State Department export license. At an August 7 hearing on this matter, Johnson was sentenced to a 41 month prison term and a $25,000 fine. The Commerce Department has also denied his export privileges for a period of ten years.
Ronald W. Griffin was found innocent of the charge of making false statements to Federal Agents.
The Export Administration Act (EAA) provides that both criminal penalties and administrative sanctions, including civil monetary penalties and the denial of export privileges, may be imposed for the same violation. In addition, under the EAA and the Export Administration Regulations, the Department of Commerce may deny the export privileges of any person who is convicted of violating certain statues including the EAA, for up to ten years from the date of conviction. Under Commerce denial orders those who provide "dual use" U.S.-origin goods and services to denied parties may find themselves subject to both criminal and civil penalties, including being denied export privileges.
This article originally appeared in the Autumn 1995 issue of "The BXA Insider" and was authored by Robert Schoonmaker and Bill Sargent.
Robert Schoonmaker was the Commerce Special Agent who handled this investigation and now serves as the Special Agent In Charge of the EE Los Angeles Field Office. He received the Department of Commerce's highest award -- the Gold Medal -- for his work on this case.
Bill Sargent was a Senior Program and Policy Analyst with BIS and a member of the BXA Insider Editorial Board. He now serves as BIS's Web Master