Statutory Debarment and Reinstatement of BAE Systems plc, 29814-29815 [2011-12628]

Agencies

• DEPARTMENT OF STATE

[Federal Register Volume 76, Number 99 (Monday, May 23, 2011)]
[Notices]
[Pages 29814-29815]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12628]


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Department of State

[Public Notice: 7465]


Statutory Debarment and Reinstatement of BAE Systems plc

Bureau of Political-Military Affairs; Statutory Debarment and 
Reinstatement of BAE Systems plc and Policy of Denial Concerning 
Certain Non-U.S. Subsidiaries Under the Arms Export Control Act and 
the International Traffic in Arms Regulations

ACTION: Notice.

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SUMMARY: Notice is hereby given that the Department of State, acting 
pursuant to section 127.7(c) of the International Traffic in Arms 
Regulations (``ITAR'') (22 CFR Parts 120-130), imposed a statutory 
debarment on BAE Systems plc (``BAES'') as a result of its conviction 
of conspiracy (18 U.S.C. 371) to violate certain provisions of U.S. 
law, including section 38 of the Arms Export Control Act, as amended, 
(``AECA'') (22 U.S.C. 2778) and at the same time reinstated BAES. 
Concurrently, pursuant to section 126.7 of the ITAR, the Department of 
State is providing notice of a presumption of denial (also referred to 
as a policy of denial) regarding certain of BAES' non-U.S. subsidiaries 
because of their substantial involvement in activities related to the 
conviction. These non-U.S. subsidiaries are: BAE Systems CS&S 
International, Red Diamond Trading Ltd., and Poseidon Trading 
Investments Ltd.

DATES: Effective Date(s): May 16, 2011.

FOR FURTHER INFORMATION CONTACT: Office of Defense Trade Controls 
Compliance, Bureau of Political-Military Affairs, Department of State 
(202) 632-2798.

SUPPLEMENTARY INFORMATION: Section 38(g)(4) of the AECA, 22 U.S.C. 
2778(g)(4), prohibits the Department of State from issuing licenses or 
other approvals for the export of defense articles, including technical 
data, or defense services where the applicant, or any party to the 
export, has been convicted of violating certain statutory provisions, 
including provisions of the AECA, and conspiracy (18 U.S.C. 371) to 
violate the AECA. The statute permits limited exceptions to be made on 
a case-by-case basis. In implementing this provision, section 127.7(c) 
of the ITAR provides for a ``statutory debarment'' of any person who 
has been convicted of violating or conspiring to violate the AECA. 
Persons subject to a statutory debarment are prohibited from 
participating directly or indirectly in the export of defense articles, 
including technical data, or in the furnishing of defense services for 
which a license or other approval is required. Statutory debarment is 
based solely upon conviction in a criminal proceeding, conducted by a 
court of the United States, and as such the administrative debarment 
procedures outlined in Part 128 of the ITAR are not applicable.
    On March 2, 2010, the United States District Court in the District 
of Columbia, filed judgment against BAES for conspiracy to violate, 
inter alia, the AECA and the ITAR, in violation of section 38 of the 
AECA and parts 127 and 130 of the ITAR. Notice is hereby given that, 
pursuant to section 38(g)(4) of the AECA and section 127.7(c) of the 
ITAR, BAES, headquartered in Farnborough, England, in the United 
Kingdom of Great Britain and Northern Ireland, was statutorily debarred 
on May 16, 2011, but that in accordance with section 38(g)(4) of the 
AECA and section 127.7 of the ITAR, and in conjunction with a Consent 
Agreement between the Department and BAES, the statutory debarment was 
concurrently rescinded. Ineligible status and statutory debarment may 
be terminated after consultation with other appropriate U.S. agencies, 
after a thorough review of the circumstances surrounding the 
conviction, and a finding that appropriate steps have been taken to 
mitigate any law enforcement concerns. The Department of State reviewed 
the circumstances and consulted with other appropriate U.S. agencies, 
and determined that BAES took appropriate steps to address the causes 
of the violations and to mitigate any law enforcement concerns.
    Further notice is hereby given that the Department of State, 
pursuant to section 38 of the AECA and section 126.7 of the ITAR, 
imposed on May 16, 2011 a policy of denial on the following BAES' non-
U.S. subsidiaries: BAE Systems CS&S International, Red Diamond Trading 
Ltd., and Poseidon Trading Investments Ltd., including their divisions 
and business units, and successor entities. This means that there will 
be an initial presumption of denial for all applications for licenses 
and other approvals involving these subsidiaries unless upon case-by-
case review the Department determines that it is in the foreign policy 
or national security interests of the United States to provide an 
approval. Section 126.7(a) of the ITAR provides that any application 
for an export license or other approval under the ITAR may be 
disapproved, and any license or other approval or exemption granted may 
be revoked, suspended, or amended without prior notice, in part, 
whenever: (1) An applicant or any party to the export or the agreement 
has been convicted of violating any of the U.S. criminal statutes 
enumerated in section 120.27 of the ITAR, which include the AECA; (2) 
the Department of State believes that 22 U.S.C. 2778, any regulation 
contained in the ITAR, or the terms of any U.S. Government export 
authorization has been violated by any party to the export or other 
person having a significant interest in the transaction; or, (3) 
whenever the Department of State deems such action to be in furtherance 
of world peace, the national security or the foreign policy of the 
United States, or is otherwise advisable. All new applications for 
licenses or other approvals to which BAE Systems CS&S International, 
Red Diamond Trading Ltd., and Poseidon Trading Investments Ltd., 
including their divisions and business units, and successor entities 
are a party will be reviewed consistent with this presumption of 
denial.
    Exceptions, also known as ``transaction exceptions,'' may be made 
to the policy of denial on a case-by-case basis. However, such a 
``transaction exception'' would be granted only after a full review of 
all circumstances, and paying particular attention to the following 
factors: whether an exception is warranted by overriding U.S. foreign 
policy or national security interests; whether an exception would 
further law

[[Page 29815]]

enforcement concerns that are consistent with the foreign policy or 
national security interests of the United States; or, whether other 
compelling circumstances exist that are consistent with the foreign 
policy or national security interests of the United States and that do 
not conflict with law enforcement concerns. Even if exceptions are 
granted, the policy of denial for BAE Systems CS&S International, Red 
Diamond Trading Ltd., and Poseidon Trading Investments Ltd., including 
their divisions and business units, and successor entities will 
continue until it is lifted by the Department.
    This notice is provided for the purpose of making the public aware 
that BAE Systems CS&S International, Red Diamond Trading Ltd., and 
Poseidon Trading Investments Ltd., including their divisions and 
business units, and successor entities are under a policy of denial and 
are presumed not to be qualified to participate directly or indirectly 
in activities regulated by the ITAR except as outlined herein. This 
includes engaging in any brokering activities; use of exemptions by or 
for the benefit of the BAES non-U.S. subsidiaries listed above; and, in 
any export from or temporary import into the United States of defense 
articles, related technical data, or defense services in all situations 
covered by the ITAR. Notwithstanding the foregoing language, all 
licenses, agreements, and other authorizations involving those parties 
under a policy of denial issued prior May 16, 2011 are not affected and 
are not revoked. In the event of reorganization, the terms of the 
policy of denial will follow and apply to all affected entities or 
units.

    Dated: May 16, 2011.
Andrew J. Shapiro,
Assistant Secretary of State for Political-Military Affairs, Department 
of State.
[FR Doc. 2011-12628 Filed 5-20-11; 8:45 am]
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