Imagine you’re engaged in commerce. You’re dotting your i’s and crossing your t’s within the strict requirements of the U.S. Arms Export Control Act (AECA) and International Traffic in Arms Regulations (ITAR), and you learn that your business partner is now debarred by the U.S. Department of State (DOS).

While the likelihood that such an issue would sneak up on you may be low, it happens.

In April 2018, DOS published the list of “168 persons and entities who have been statutorily debarred for convictions of violating, or conspiring to violate, the AECA.” The list is published in the Federal Register by the DOS Bureau of Political-Military Affairs. Once on the list, the individual or entity remains there for three years (or more), though statute permits the president to make exceptions. If the businesses of these individuals requires access to ITAR controlled documents, they are effectively dead in the water with respect to legally accessing the information or conducting commerce.

Not sure if an individual or entity is on the “statutorily debarred parties” list? There is a tool for you to check their status – the DOS Debarment Tool  – with debarments dating back to July 1988 listed.

The process from conviction to debarment

Let’s investigate the history of a group recently added to the published list in the Federal Register, AMA United, an Egyptian procurement agency.

The DOJ describes their activity:

Beginning in February 2011, the defendants began trying to obtain munitions items on behalf of AMA United Group’s client, a factory in Cairo.  The items the defendants sought included a land mine as well as bomblet bodies and “trumpet liners,” two components that are integral to manufacturing the housings for explosives in an aerial warheads.

In 2015, AMA United Group’s principals pled guilty to violations of AECA. In December 2016, AMA United Group, Malak Neseem Swares Boulos and Amged Kamel Yonan Tawdraus – both Egyptian citizens – were each sentenced in the Eastern District of New York. They each received three years and six months home confinement, $100 special assessment and a fine of $2,500. Additionally, their company, AMA United Group was given one year of probation. Once convicted, the company and individuals were statutorily added to the debarred list.

Another example, Yue Wu, a citizen of the People’s Republic of China was sentenced to 18 months in prison for “Conspiracy to Violate the AECA” at the U.S. District Court in Seattle.

According to the DOJ:

January 2012, WU began his efforts to obtain a type of accelerometer which is used in satellites and spacecraft and can only be exported from the United States if a license is issued by the U.S. State Department.  On multiple occasions WU attempted to convince a contact to send the accelerometers to China either disguised in a different export, or via a different country.  WU did not know that the person he was working with to obtain the equipment was an undercover law enforcement agent.  Over the next two years, via email and telephone communications from China, WU continued to try to get the contact to ship him the accelerometers through various schemes.

Once convicted, Wu was now statutorily debarred.

How to avoid being debarred from ITAR activities?

That isn’t difficult. Adhere to the AECA and ITAR rules and regulations.

Additional reading:  The ITAR, Part 127 pertinent excerpt –

Statutory debarment. It is the policy of the Department of State not to consider applications for licenses or requests for approvals involving any person who has been convicted of violating the Arms Export Control Act or convicted of conspiracy to violate that Act for a three year period following conviction and to prohibit that person from participating directly or indirectly in any activities that are subject to this subchapter. Such individuals shall be notified in writing that they are statutorily debarred pursuant to this policy. A list of persons who have been convicted of such offenses and debarred for this reason shall be published periodically in the Federal Register. Statutory debarment in such cases is based solely upon the outcome of a criminal proceeding, conducted by a court of the United States, which established guilt beyond a reasonable doubt in accordance with due process. Reinstatement is not automatic, and in all cases the debarred person must submit a request for reinstatement to the Department of State and be approved for reinstatement before engaging in any activities subject to this subchapter. 

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Christopher Burgess (@burgessct) is an author and speaker on the topic of security strategy. Christopher, served 30+ years within the Central Intelligence Agency. He lived and worked in South Asia, Southeast Asia, the Middle East, Central Europe, and Latin America. Upon his retirement, the CIA awarded him the Career Distinguished Intelligence Medal, the highest level of career recognition. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century” (Syngress, March 2008).