House of Commons - Quadripartite Committee

Quadripartite Select Committee Written Evidence

Memorandum from Dr Sibylle Bauer and Anna Wetter[77]

COMPARING SANCTIONS AND PROSECUTIONS RELATED TO EXPORT CONTROL VIOLATIONS IN THE EU

1. THE ROLE OF SANCTIONS AND PROSECUTIONS IN ENFORCING EXPORT CONTROLS

In 2006, the UK Quadripartite Committee recommended that Her Majesty's Revenue and Customs (HMRC) examine how other EU countries' experience in prosecuting export control breaches be exchanged and built upon more systematically. In the evidence session on 1 March 2007, the Customs Prosecutions Office explained that it had initiated work with Eurojust to examine this issue. This background paper is a contribution to this discussion.

Transfer controls for dual-use items (goods and technologies that have both civil and military applications, or may be used in connection with WMD programmes) are an important non-proliferation instrument, since they can prevent such products and technologies from reaching proliferators and a WMD related end-use. The EU Strategy against the Proliferation Weapons of Mass Destruction, adopted in December 2003, highlights the importance of export controls. UN Security Council Resolution 1540 of 2004 for the first time creates an international requirement to put effective export controls in place.

Controlling the export of dual-use items requires a comprehensive export control system that includes a policy-setting mechanism, clear and comprehensive legislation, a licensing system, industry outreach, international co-operation and information exchange, and an enforcement system. To deserve the name "system", enforcement must be characterized by clear procedures and allocation of tasks and responsibilities, a solid legal basis for action, and an institutional memory.

In EU countries, enforcement aims to prevent the proliferation of WMD and other export control violations, and to implement the EU acquis and other obligations in the area of non-proliferation and counterterrorism. Enforcement tasks include preventing or detecting violations of national export control laws and regulations, and investigating suspected violations. Arguably, prosecutions are an essential part of an effective system for enforcing export control legislation. [78]

If a country has no or few prosecutions, this can either be attributed to a perfect prevention and compliance record or, more likely, indicate failures to detect or prosecute such violations. Export control prosecutions face particularly strong challenges, such as: (a) unfamiliarity of prosecutors and judges with export control laws/regulations and non-proliferation/security issues, in particular as regards dual-use items, (b) the challenge of dealing with sensitive or classified materials in court; and (c) legal systems requiring proof of intent in all cases, whereas other systems may require "only" proof of knowledge or "reason to believe". Focus on prevention also requires the ability to address attempts to breach export control violations through applying criminal provisions related to conspiracy to commit a crime, which can for example be found in penal codes.

Comprehensive enforcement systems require mechanisms to detect breaches committed out of ignorance, negligence or intent, although the response to these three categories will vary. Ignorant or negligent behaviour should be addressed (both pre-emptively and in response) through raising awareness about the consequences of such actions. Whereas governments may prefer more flexible and varied forms of sanctions in such cases, perpetrators who acted with intent should be brought to justice through successful prosecutions. The special characteristics of WMD proliferation make this even more important. Arguably, the most dangerous proliferator is part of a larger network which works towards developing WMD for a state or a non-state actor. This type of proliferator tends to be indifferent to the deterrent factor of a harsh punishment (general prevention) since he or she is driven by a determination to succeed with the mission. Such a proliferator would need to be removed from the criminal arena to interrupt the proliferation risk (special prevention). General prevention could however play an important role in deterring those negligent proliferators who do not have an actual intent to provide a state or non-state actor with WMD but are for example driven by economic interests.

Prosecutions play another important role in non-proliferation efforts. They attract the attention of the media through which suspects are exposed, their punishments publicized, and thus send a clear message to those involved in the procurement processes for countries or non-state actors trying to develop WMD that their attempts to do so have been discovered.

In conclusion, since voluntary compliance with export controls cannot be assumed from all exporters, it is necessary to have mechanisms to enforce the controls. Examples of enforcement tools include monitoring of telecommunications, undercover operations and computer surveillance. It is necessary to have specific legislation and to define the powers of the agencies that undertake these tasks. Export controls can be undermined by corruption, forgery (the use of false documents) or smuggling (the unauthorized export of controlled items). There have also been cases where controlled items have been diverted to an unauthorized end-user or used in a way that was not authorized.

This background paper seeks to provide an overview of how EU countries approach breaches of export control laws, in particular related to dual-use items. To this purpose, section 2 introduces the legal and political framework for export control sanctions and prosecutions in the EU, as well as the type of sanctions in place in EU member states. In section 3, the paper summarises case studies of both failed and successful export control prosecutions in selected EU countries, from which generic lessons learnt, mistakes to be avoided and elements of best practice are concluded (section 4).

2. OVERVIEW OF LEGAL PROVISIONS RELATED TO EXPORT CONTROL ENFORCEMENT IN THE EUROPEAN UNION

2.1 EU dual-use legislation

The legal structure of the European Union is supported by three pillars. The first of these pillars is European Community (EC) law, which was founded on the Treaty of Rome and relates to economic and monetary union and the single market, inter alia. It is unique in that it constitutes a supranational system. By contrast, decision-making and the instruments applied in the other two pillars—the Common Foreign and Security Policy (CFSP) and Justice and Home Affairs (JHA)—have an intergovernmental character. Accordingly, the member states, through the European Council and the Council of Ministers, have the right to take decisions. Initiatives and decisions related to the second pillar have a largely political, rather than legal value, as they are not binding before the European Court of Justice. Decisions under the third pillar are used for harmonising legislation in member states and are binding on the members but only as to the result to be achieved.

The system governing export controls for dual-use items in the EU involves the European Council, the European Commission and individual member states in their respective capacities. Controls on the export of dual-use items are regulated by European Community law, which means in principle that such products can move freely within the Community. The entry of dual-use items into the EC is subject to customs controls following the provisions of European Council Regulation no 2913/1992 (the Community Customs Code) and European Commission Regulation no 2454/1993 (Implementing Provisions to the Community Customs Code). For items within the Community, it is up to individual member states to control their export from the EU through customs procedures and law enforcement. This also means that individual member states are responsible for developing export licensing procedures for dual-use items and for prosecuting violations of export control laws.

To harmonize the export control systems for dual-use items among EU member states, the European Council adopted Regulation no 3381/1994 in December 1994. The Regulation established the first European Community regime for the control of exports of dual-use goods and technologies. It was intended to protect the security interests of the member states and to help them meet their international commitments related to the control of dual-use exports to countries outside the EU. Another important purpose was to harmonize export control regulations to prevent distortion of competition among the member states. Following a review of EU law and treaties, it was decided that the EU export control system should be based solely on one European Community act. This led to the replacement of Regulation 3381/1994 with Regulation 1334/2000 (referred to hereafter as the EU Dual-Use Regulation).

The EU Dual-Use Regulation provides common rules on the kind of items that require authorization for export. Annex I includes a list of specific dual-use items. This list is based on the control lists agreed in the international export control regimes (Australia Group, Missile Technology Control Regime, Nuclear Suppliers Group and Wassenaar Arrangement) and is updated regularly, most recently by European Council Regulation 394/2006. [79]The EU Dual-Use Regulation further provides a legal instrument to control an unlisted item with immediate effect. The so-called catch-all control, found in article 4 of the Regulation, obliges an exporter to seek permission from the responsible authority before exporting any item to a particular end-user or for a particular programme whether or not the item exported appears on a control list, if: he has been informed by the authorities that the items are, or may be intended in their entirety or in part for a WMD related end-use, for use in connection with a military item on the EU Common Military List in an embargoed destination, or as parts of an illegally exported item. Furthermore, the exporter is obliged to inform the authorities if aware of such an intended end-use. Member states are responsible for effective compliance with the regulation within their territories, for example by deciding on appropriate sanctions.

2.2 Export control sanctions in EU member states

Both the EU Dual-Use Regulation 1334/2000 and UN Security Council Resolution (UNSCR) 1540 of 2004 mandate sanctions for export control violations. UNSCR 1540 obliges all UN member states to "take and enforce effective measures to establish domestic controls to prevent the proliferation of nuclear, chemical or biological weapons and their means of delivery, including by establishing appropriate controls over related materials". The resolution specifically provides that states shall "develop and maintain effective border controls and law enforcement efforts to detect, deter, prevent and combat, including through international cooperation when necessary, the illicit trafficking and brokering in such items...". Furthermore, States are required to "establish, develop, review and maintain appropriate effective national export control and trans-shipment controls over such items, including appropriate laws and regulations to control export, transit, trans-shipment and re-export and controls on providing funds and services related to such export and trans-shipment such as financing, and transporting that would contribute to proliferation, as well as establishing end-user controls; and establishing and enforcing appropriate criminal or civil penalties for violations of such export control laws and regulations".[80] UN member states have been requested to submit reports on their implementation of the resolution to the 1540 Committee. [81]

Article 19 of the EU Dual-Use Regulation requires each member state to "take appropriate measures to ensure proper enforcement of all the provisions of this Regulation. In particular it shall lay down the penalties applicable to infringements of the provisions of this Regulation or of those adopted for its implementation." It further specifies that the penalties "must be effective, proportionate and dissuasive." If the current revision of the Regulation extends EU wide controls to activities such as brokering and transit, the relevant national laws to penalise violations will also require amending.

It is up to each government to implement these requirements. Generally, a government must decide what constitutes an effective deterrent or other type of preventive punishment to an individual and a company. This in turn requires that sanctions apply to both individuals and companies. To be comprehensive, they should apply to all actors in the supply chain, eg producers, traders, financers, freight forwarders. Possible sanctions (criminal and administrative) include the loss of right to privileges such as use of open licences or a brokering permit, financial penalties, loss of property rights, a prison term or a suspended sentence.

The implementation of the obligation to criminalize breaches of export controls and to decide appropriate sanctions differs between EU member states. A survey of the penalties in place that are linked to export control offences in EU member states shows that they vary both in type and scale. The range of maximum penalties varies from 12 months of imprisonment (Ireland) to 15 years of imprisonment (Germany). The range of minimum penalties varies from fines (most member states) to three years of imprisonment (Lithuania).

A study on administrative enforcement practices in the EU conducted on behalf of the European Commission shows that nine of the 11 member states surveyed can impose administrative sanctions for export control violations. The way this authority is used varies considerably. In most of these nine countries, customs is the responsible agency. Sanctions include fines, confiscation and revocation of export licences. Warning letters are commonly used in case of first or minor violations. [82]

According to a separate survey of the EU Commission among member states on sanctions related to the EU dual-use regulation, two thirds of Member states have both administrative and criminal sanctions, while one third of member states have only criminal sanctions. Most member states also impose other sanctions including restrictions of use of General Export Authorisations, and most of them have legal provisions for additional penalties that have another legal basis than Article 19 of the regulation. Almost half of the member states have applied their criminal sanctions against exporters violating export control law. One third of Member States regard only intentional violations as criminal offences, whereas the remaining two thirds consider violations as criminal offences in any event. [83]

In the UK, deliberate offences can be punished with up to 10 years of imprisonment and/or an unlimited fine. All goods are liable to forfeiture regardless of whether the breach has been committed without the knowledge or intent of the exporter. Hence, the nature of the offence is strict liability. This is based on Section 68(1) of the Customs and Excise Management Act 1979 (CEMA). Section 68(2) of CEMA stipulates that any offence, deliberate or not, can result in a fine of three times the value of the goods which have been illegally exported or been subject to an attempt of an illegal export. For less serious breaches, traders may pay a compound penalty or restoration fee.

On 18 February 2005, Saroosh Homayouni was convicted by the Southwark Crown Court of 12 specimen counts under section 68(2) of the Customs and Excise Management Act, for knowingly having exported aircraft parts to Iran without an export license in contravention of an export prohibition. The offence resulted in 18 months imprisonment, suspended for two years. The asset worth £70,000 was confiscated. The individual was also banned from being a company director for 10 years. [84]

The question of intent is usually difficult to establish. Each case that reaches the Revenue and Customs Prosecutions Office (RCPO) has to be reviewed to establish whether a prosecution should proceed. The modalities are found in the Code for Crown Prosecutors. In short, the review has to confirm that there is sufficient evidence. This stage also takes the reliability of the evidence into account. The reviewer also needs to confirm that there is a public interest to open prosecution.

It should be pointed out that, despite the need to improve law enforcement, and possibly also to impose harsher sanctions, in many EU member states, one needs to bear in mind the delicate balance between looking after a state's security interests on the one hand and protect the fundamental human rights on the other hand. Article 6 of the European Convention on Human Rights serves to provide every individual with a right to a fair trial.

2.3 Harmonising sanctions across the EU?

In December 2006 the European Commission published a communication on the review of the EU Dual-Use Regulation proposing the inclusion of a provision according to which member states must apply criminal sanctions for serious violations of the Regulation. The proposal is a response to the call in the 2003 Thessaloniki Action Plan[85] for a common EU approach regarding the criminalisation of illegal dual use exports and the call by UNSC Resolution 1540. [86]The discussions are at an early stage, but should be seen in the context of broader debates that relate to EU competence regarding third pillar issues.

There have been a number of initiatives aimed at harmonising member states' law enforcement procedures and sanctions relating to EU legislation. At a meeting in Finland in October 1999, member states agreed to create a joint "area of freedom, security and justice" in the European Union that was intended to further develop cooperation between member states as envisaged by the Treaty of Amsterdam. It set up a number of milestones dealing with, inter alia, a "genuine" European area of justice, the Union-wide fight against crime, and stronger external action. [87]In September 2006, Commissioner Franco Frattini proposed removing the national veto under the third pillar, which was opposed by many member states, including the UK. [88]

In the context of efforts to develop a European area of justice, some EU member states signed a Convention on Mutual Assistance in Criminal Matters between member states in 2000 that entered into force on 23 August 2005. [89]

Common EU legislation needs to be enforced in an equally effective manner in all EU member states to maintain credibility. However, this does not require that all national implementation laws should necessarily be identical or that the division of competences between the relevant enforcement agencies be the same. The enforcement system should be adapted to the individual country's legal and political system, industrial structure, geographical location etc. A recent case before the European Court of Justice, which deals with enforcement of environmental laws (C-176/03, Commission v Council), sets a potential new standard by concluding that the Commission has competence to propose appropriate common sanctions if necessary to enforce EC legislation relating to the environment.

Regardless of whether sanctions will be harmonised across the EU, effective investigations and prosecutions require co-operation and information exchange of law enforcement authorities. The EU coordinates cooperation between its member states on issues that relate to law enforcement, prosecution and the judiciary through a number of mechanisms (agencies and networks) that could also help facilitate and support an effective implementation of the current Community legislation within the area of export controls for dual-use items. In the area of police co-operation, these are Europol (criminal intelligence office), [90]the European Crime Prevention Network, the European Police College, and the Police Chiefs Task Force.

Eurojust could assume a role in facilitating cooperation between member states related to prosecuting export control violations. It recently hosted a meeting on this issue. [91]Eurojust is a relatively new EU body established in 2002 to enhance cooperation between those authorities of the member states dealing with investigation and prosecution of serious cross-border and organized crime. The agency is the first permanent network of judicial authorities to be established anywhere in the world. Like Europol, it does not possess any executive power. Its functions include facilitating the execution of international mutual legal assistance, the implementation of extradition request, and hosting meetings between investigators and prosecutors from different states. The office is composed of 27 national representatives, one nominated by each Member State. [92]

3. LESSONS LEARNT FROM SPECIFIC PROSECUTIONS IN SELECTED EU COUNTRIES

This section presents prosecutions of violations of export regulations for dual-use items in four EU member states. The countries that are subject to case studies are Germany, the Netherlands, Sweden and the United Kingdom. [93]The cases represent types of legislations that could be used to prosecute export control violations. The aim to show alternative legislations explains the selection of cases, as does the low number of convictions of export control related crimes in the EU member states.

Since a prosecutor may face many types of perpetrators it is important to have different types of legislation in place. An illegal exporter could either be an actual WMD proliferator belonging to the A.Q. Khan network, a negligent exporter failing to comply with the licensing system or a businessman with financial interests in trading with dual-use products. Since the intent of the different types of perpetrators vary, they may need to be prosecuted under different acts, eg general smuggling acts (Swedish case study), export control legislation (Dutch and German case studies), and terrorist legislation (UK case study). This requires the prosecutor to be familiar with all applicable laws.

3.1 Sweden[94]

One of the few export control related convictions relating to dual-use goods in Sweden was first prosecuted in 1999 and appealed the same year. The case illustrates some of the legal challenges that prosecutors all over the world seem to face when a suspected export control violation is brought to their attention.

In 1998, the Iranian born Swedish citizen Ehsan Amouzandeh (E), who was running a pizzeria parallel to studying at college in a southern Swedish city, was contacted by his cousin in Tehran. The cousin claimed to be in need of a thyratrone for his studies at the university. Thyratrones send a high-voltage current through a device and can be used as a nuclear triggering device, but can also be used for medical and scientific purposes. The equipment was listed on the EU dual-use list at the time of the export. E was offered a profit if he agreed to help his cousin.

The cousin advised E to call the thyratrone supplier in the United States; however, the company, Richardson Electronics, referred him to the Swedish subsidiary located near Stockholm. When E was asked about the use of the thyratrone he replied that he needed it for his studies at his Swedish college and assured that the product would remain in Sweden. E falsified the end-user certificate using his mother's, brother's and friend's names and convinced the company that he was able to pay for the equipment (£1,200). The cousin had arranged for the payment through several financial transactions in Frankfurt, New York and London. E had been asked to use a shipping company that would arrange for the whole transport, including clearing the export with the customs service and paying for the terminal freight. E put the name of his pizzeria on the consignment and labelled it "electronic device". One delivery was made in 1998 and another attempted delivery in 1999. However, the second export was detected by customs personnel at Stockholm Arlanda airport before it was sent off to Iran when officers were investigating the activities around the previous export. When customs began to study the export documents of the first delivery, they found that the invoice was "unprofessional", the number provided on the export declaration was listed on the Nuclear Suppliers Group's list, the recipient in Iran had a "red flag" in the risk report as a sensitive recipient of material that could be used in nuclear programmes and that the place of origin of the product was the United States.

Customs were asked to carry out a customs audit including a visit to the pizzeria, in its capacity as exporter. Such audits can be made as an administrative measure without suspicion of crime.

When E was contacted by the Customs Criminal Investigation Division, he claimed that he had been unaware of the dual-use function of the product and had been convinced that his cousin would use it only for civil purposes. The lack of evidence proving E's knowledge of the use of the product limited the choice of laws that could be applied for E's prosecution. In addition, the district prosecutor did not apply the then (1991) Act on Strategic Products, but decided to prosecute using the general Act on Penalties for the Smuggling of Goods (SFS 1960:418) and the penal code including the statute related to falsification of documents (the falsified end-user certificate). E was sentenced to four months in prison by both the lower and the higher court but the latter convicted him for the serious offence as opposed to the former.

Due to the complexity of export control legislation, it seems necessary to gather export control expertise in special prosecution units to make prosecutions more effective. Sweden established a special unit composed of prosecutors in charge of cases relevant to national security in 2006. It co-operates closely with the Swedish intelligence services.

The Swedish case raises one additional concern. The prosecution shows that supplying export controlled products that are illegally exported by a broker (E), with or without the awareness of the supplier (Richardson Electronics), is not punishable according to Swedish law, unless the intent of the supplier to proliferate WMD can be supported by proof. This raises the question whether suppliers should have a bigger responsibility to check end-users and perhaps also be legally liable.

3.2 Germany[95]

In 2002, the German businessman Hans-Werner Truppel was found guilty of illegally exporting 22 tons of aluminium tubes to North Korea. The aluminium tubes had a potential use as casings for gas ultra-centrifuges that could be used to enrich uranium to weapon grade. This export control violation derives from a business relationship between Truppel and a former North Korean diplomat. The diplomat had put Truppel in contact with a Chinese company. Truppel and the Chinese company had since then been trading in non-sensitive goods. This explains why Truppel had built up confidence with the local German customs office and why the agency perceived him as a trustworthy trader.

In 2001, Truppel received a proposal from his North Korean contact to order aluminium tubes from a gross steel provider, Bek GmbH. The company had bought the tubes from the Krefal Handels GmbH which is a German subsidiary of British Aluminium Tubes. The tubes were transported to Bek GmbH from the UK in September of 2002 and stored in the German town of Ulm. A few days after the delivery, Truppel presented the required export declaration to the local customs office of export in Aalen, Germany. Without any special questioning, a customs clearance officer approved and stamped the export application form. The customs officer neither ordered a physical examination of the goods nor asked where the tubes could currently be found. In accordance with German customs laws, the tubes had hence been confirmed for export. However, Truppel had not revealed that he had received a fax from the North Korean the same morning stating that the goods were destined for a project in China, with Shenyang as the contract partner.

The German Federal Office for the Protection of the Constitution found out about the sensitive recipient through information from a foreign intelligence service, a day after the export had been cleared by customs. The office responded to the information by contacting the German licensing authority BAFA (the Federal Office for Economics and Export Control) and the German Customs Criminological Office, the Zollkriminalamt (ZKA). Both took immediate action. ZKA confirmed with the local customs investigation office in Stuttgart that it would assure the location of the tubes and inform Truppel that the export could not proceed until BAFA had authorized the export. BAFA began processing the license application. Truppel was told that any attempt to export the goods without a licence would be punishable according to German law. However, since Truppel feared considerable economic loss in case of a denial, he started to look for alternative customers. While BAFA was processing the license application the tubes were stored by the selling company Bek GmbH, but were under surveillance by the ZKA. Four months later, BAFA announced that the application could not be approved. By then, Truppel had found an import-export company in Hamburg that agreed to carry out the export to the initial customer. The company made an offer to transport the tubes to China, stored in a 40-feet container, and to declare the goods at the German customs office. Truppel told Bek GmbH that was storing the tubes that they were to be transported back to the UK, which enabled him to get access to the tubes. The goods were then loaded onto a French cargo ship that was destined to port Dalien in China.

While checking on the goods, the ZKA learned that the tubes had been removed from storage. The office then initiated a criminal investigation and due to good relations with its French counterpart, the ship could be intercepted in the next port, which was located in Egypt. The interception led to Truppel being taken into custody and the return of the tubes to Hamburg, where they were confiscated by German authorities. The Stuttgart district court convicted Truppel under the German War Weapons Control Act to four years of imprisonment, and the import-export company for abetting to the crime to one year and three months of imprisonment.

The case study shows how denial of a license application could turn a legal exporter into an illegal exporter due to fears of financial loss. Hence, it also raises the issue of allowing for preventive confiscation if an exporter is suspected to go ahead with an export in violation of an order. It also highlights the importance of law enforcement agencies working closely with industry.

3.3 The Netherlands[96]

On 16 December 2005, a district court in the Netherlands convicted the Dutch businessman Henk Slebos for illegal exports of dual-use goods on five counts. For this, Slebos was given a one year prison sentence which was reduced to four months, and his firms were fined €197,500. In addition, he was ordered to personally pay a fine of €100,000. [97]Slebos is currently appealing the conviction.

Henk Slebos is also believed to have served as a purchasing agent for the Pakistani nuclear programme in the late seventies and early eighties and has been convicted prior to 2005 for other export violations. Slebos' illegal activities leading up to the 2005 conviction were revealed about seven years prior to the trial, when the German businessman Ernst Piffl was sentenced to 45 months of imprisonment by a German court for having exported centrifuge parts to Pakistan in violation of German export control laws. During trial proceedings Piffl said he regretted having contributed to Pakistan's nuclear programme and decided to start cooperating with Germany's foreign intelligence service. In 2001, he helped reveal that the logistics for one equipment order (bottom bearing pre-forms that can be used in centrifuges) were to be organized by the intermediary Slebos and to be sent to the Institute of Industrial Automation (IIA) in Pakistan. IIA had links to Khan's Research Laboratory (KRL). This information was passed on to the Dutch counterparts since Slebos was a Dutch national living in the Netherlands. The Netherlands Ministry of Economic Affairs, which is responsible for export licensing, responded to the information by issuing a written warning, using the catch-all clause, which stated that Slebos was not to receive authorization to export the products to the IIA. In consequence of the successful international cooperation, which involved mainly British, US, German and Dutch intelligence services, the order could be intercepted and prevented from ending up in the hands of KRL.

After a raid of Slebos' office by Dutch agents in 2004, it was found that in addition to attempts to export bottom bearings in 2001, he had apparently supplied the IIA with thousands of other steel bearing balls that precisely matched the design specifications for the bottom bearings of the Urenco centrifuge known as CNOR. [98]He was never charged for this suspected crime. He was however charged for having transferred "pivot bearings" to the IIA but was acquitted on this charge because the court could not establish that the Dutch government had promptly informed him that the sale was prohibited based on the Dutch catch-all clause. Slebos does not, apparently, dispute the facts of the export. [99]Nevertheless, this alerted the Dutch authorities of the importance to find ways of reaching Slebos with catch-all warnings, also acknowledging that he had ignored the numerous warnings sent to him by the Dutch ministries since the early seventies. The ministries had been unable to do more than issue warnings prior to a prosecution in 1985, since the exported items had neither been listed on the control list at the time, nor had the catch-all clause been introduced. The 1985 conviction concerned an attempt to re-export a US manufactured high-speed oscilloscope to Pakistan via the United Arab Emirates. The product was manufactured in the United States and on the Dutch export control list. Consequently, the Dutch prosecutors could successfully charge him for exporting controlled goods without the required license. For this violation, Slebos was sentenced to one year of imprisonment but after appeal, his sentence was reduced to a fine and a six months suspension since the court of appeal argued that the prosecution had not proven the intent for nuclear end-use and took into account that Slebos had no previous criminal record. Despite Slebos' conviction in 1985 he managed to maintain contact with Khan's network in the 1990s and beyond. A much larger amount of Slebos' products than what could be linked to the intercepted order in 2004 is believed to have been transported to clients in Pakistan.

Due to the presence of intelligence officers and their active participation in the search of Slebos's office in 2001, without authorisation thereof stated in the search warrant, the evidence which was collected in these searches was ruled inadmissible by the court. [100]Hence, one conclusion from the Dutch case is that the lack of evidence may result in minor punishments that seem unlikely to serve as deterrents to future export control violations.

3.4 The UK[101]

On 5 January 2003, six North African men were arrested in London on charges of "being in the possession of objects which give rise to reasonable suspicions of the intention of carrying out, preparing or instigating an act of terrorism" and for "trying to develop or produce a chemical weapon", ie describing violations of the UK Terrorism Act of 2000. [102]The investigation was carried out by agents from the Anti-Terrorist Branch of the London Metropolitan Police, Scotland Yard, and the British domestic intelligence agency M15. [103]Following the arrests, authorities discovered traces of ricin in the apartment located in Wood Green in northern London. Castor beans were also discovered as well as equipment for crushing the beans. The arrested men were believed to have ties to a terrorist cell known as the "Chechen network". Members of the cell are supposedly Algerians who have received training in Chechnya and in Georgia. [104]The suspects were arrested after a tip by French intelligence agencies and the ricin that was discovered was thought to be only part of a larger batch that presumably had been removed from the apartment before the arrests. [105]

Four men were charged under section 57 of the Terrorism Act to have possessed "articles... which give rise to a reasonable suspicion that (this) was for a purpose connected with the commission, preparation or instigation of an act of terrorism".[106] Furthermore, the suspects faced a joint charge under the Chemical Weapons Act of 1996 for being "concerned in the development or production of a chemical weapon", prior to 5 January 2003. [107]

Later the same month another person was charged with conspiring to develop or produce chemical weapons. In addition, he was accused of having a fake French passport and identity card. [108]The possession of these articles made the police suspicious about potential involvement in the commissioning, preparation and instigation of acts of terrorism. A second individual was arrested with the group, who faced two charges under the Forgery and Counterfeiting Act of 1981, [109]and a third person only a week later in Manchester where he had stabbed and killed a police officer in the raid. The latter was also charged for having committed terrorist offences. [110]

Two days after the first arrest, the chief scientist advisor could inform the British anti-terrorism authorities (the Biological Weapon Identification group at Porton Down) that the lab tests did not indicate any presence of ricin. [111]However, another employee claimed that the preliminary finding was incorrect and that it did include ricin. It was this latter information that was passed on to the media and which was also used by the US Secretary of State Colin Powell, to support his presentation to the UN Security Council on 5 February 2003 in which he emphasized a need to militarily intervene in Iraq by claiming that the regime was aiding al-Qa'ida terrorism. [112]

The jury acquitted one of the main suspects of the most serious charge—conspiracy to carry out a chemical attack, on 12 April 2005. Nevertheless, it found him guilty of "conspiracy to commit a public nuisance by the use of poisons or explosives to cause disruption, fear or injury". The suspect was sentenced to 17 years of imprisonment. [113]

Although the concern that weapons of mass destructions were being prepared in the UK could not be supported in this specific case, it shows that terrorism legislation may also be relevant for prosecuting export violations should the products be exported. This usually requires that the prosecutor can prove that the exporter, manufacturer, supplier or broker had the intent to proliferate weapons of mass destruction. This said, it needs be emphasised that there should be distinct boundaries when to prosecute a case under this type of act in contrast to other relevant export control laws.

One conclusion to be drawn from this prosecution is that investigating crimes that involve illegal possession of chemical, biological, radiological and nuclear (CBRN) materials require an investigation team with forensic skills. In other words, procedures at the crime scene should take into account the special features of dual-use materials since such procedures could help to preserve an unbroken chain of evidence.

4. FACTORS CONTRIBUTING TO SUCCESSFUL PROSECUTIONS[114]

The case studies show that a number of factors increase the chances for a successful prosecution. First, comprehensive and clear legislation should be in place, including liability for the different types of activities in the supply chain, such as exporting, shipping, trading, brokering and financing of dual-use goods. One actor may engage in more than one of these activities, and both individuals and companies can carry out the activities. Depending on the type of activity, intent may be more or less difficult to prove, and the character of liability has to reflect this. Moreover, one needs to distinguish between intent to violate export control laws or intent to contribute to a WMD programme.

Legislation should include a comprehensive catch-all clause, which needs to be carefully worded. There should be a link from export control laws to criminal law (or some corresponding arrangement) to enable the possibility to prosecute attempts to violate export control laws, for example. Such a system could also serve as a preventive measure. There should be appropriate sanctions addressed at both individuals and companies. For reasons of prevention, it is crucial to punish attempts to smuggle dual-use items. There also needs to be a regular legal revision to harmonise and streamline laws, which may have become patchwork after successive amendments, and to take political, legal and technological developments, as well as changes in trade patterns and threats into consideration. The need for specific amendments may also become obvious through loopholes detected through prosecutions (in particular failed ones). Ideally, loopholes are detected before a proliferator finds them.

Second, national prosecutors need to be not only aware of all existing laws related to export controls of dual-use goods but also trained in how to use them. In addition to training in applying the regular export control laws, specialized prosecutors need to be familiar with the relevant national laws which implement international conventions and treaties related to chemical, biological, radiological and nuclear weapons as well as national legislation providing authority to implement UN Security Council resolutions, including those that impose economic or financial sanctions and resolutions aimed to combat terrorism, all of which may be relevant in an export control prosecution.

Third, in order to detect the smuggling of dual-use goods, enforcement officers need regular contacts with industry and should make regular company audits. A joint strategy for outreach to industry would be the best approach within the enforcement community. The different regulators need to harmonise inspections and exchange information about visits. Risk management should include risk profiles on persons, items, places and routes.

Fourth, to interdict and stop the smuggling of a dual-use product, customs officials, border police and investigators need to have the legal and technical capacity both to stop shipments and to confiscate goods. Preventive confiscation could be considered for specific cases.

Fifth, setting up an effective investigation procedure requires clearly stating the division of legal powers and roles between customs officials, police officers and other potential actors in an investigation. Investigators need the legal competence to search premises, access bank and credit records, and to monitor electronic and telecommunication. It must be clear when the judicial approval to take these measures is required. Investigators need authorisation to cooperate with colleagues in other countries that hold relevant information and powers to facilitate investigations outside national territory. Bilateral agreements related to extradition and mutual assistance in criminal procedures are also essential for this purpose.

Sixth, an effective export control prosecution depends on clear national legislation stating who has the legal competence and duty to prosecute violations of export control laws. Some states (including the UK) have systems which may authorize special customs prosecutors to prosecute export violations. In these countries it is crucial not only that the legislation on who should prosecute is clear, but that this system also works in practice to rule out the possibility that violations fall between chairs of prosecutors. It should also be clear in which country a prosecution should take place if the case includes criminal activities in more than one state. Furthermore, prosecutors need to know what actors could be subject to prosecution under these different laws. This once again highlights the need for special training of prosecutors.

Seventh, appropriate sanctions can be of administrative or criminal nature. Administrative sanctions can include monetary sanctions and the loss of export licences, of the right to privileges (for example simplified procedures) and of property rights through confiscation and destruction of the confiscated product. Criminal penalties can include fines, imprisonment and suspended sentences. Fines have been classified as either administrative or criminal sanctions, depending on factors such as the authority that decides and the laws on which they are based.

Last but not least, the various actors involved in the process need to work effectively together, including those responsible for licensing, customs procedures, investigation and prosecutions of suspected violations of the rules governing exports of dual-use items. Cooperation, coordination and communication are required at the intra-agency, interagency level and international levels. Cooperation at the intra-agency level involves raising awareness and developing special expertise within the different agencies. Interagency cooperation implies facilitating the flow of information (eg of license denials) between all relevant institutions, ie customs, licensing, police, intelligence, the foreign ministry and the prosecutor's office, for example through joint databases. Communication requires the development of routines and procedures for exchanging information and investment in the information technology that can make communication fast and effective. This may also require drawing up agreements on intelligence sharing and opportunities for individuals to meet (eg through an interagency working group). International cooperation with neighbouring countries is essential to combat cross-border crimes and enables countries to share information concerning criminals and suspects. To achieve this objective, formal agreements of mutual assistance in criminal investigations are crucial. Generally, effective coordination requires clear distribution of roles and responsibilities among the various actors. An enforcement system must deserve the name "system", which requires clear procedures and a clear division of responsibilities and tasks. This has to be thought through in advance, not only once a system's effectiveness is tested in practice.

March 2007

<http://ec.europa.eu/trade/issues/sectoral/industry/dualuse/legis/action_plan.htm>.