Saturday, April 14, 2007

Real Punishment Must Follow Defense Export Violations

JINSA Report #655

In the mid-1990s, Israel followed U.S. notification rules for its planned sale of the Phalcon early warning radar plane to China. Later in the decade, the U.S. government had a change of political heart about China and forced Israel to cancel the sale at tremendous economic and political cost.

The atmosphere deteriorated further in 2004, again over China, resulting was an 18-month suspension of Pentagon cooperation and the dismissal of two high-ranking Israeli Defense Ministry officials – the latest one only two weeks ago.

Given the importance of the U.S. technological edge and our concerns about China, it might have been reasonable to be unhappy with Israel – except that the U.S. government did a lot less to an American company that did a lot more damage to American security. ITT Corporation’s night vision division (ITT Night Vision): a) sold top-of-the-line night vision equipment to China without a license, b) had its employees lie about it, c) “lent” protected equipment to clients and failed to get it back, d) paid a multimillion dollar fine in 2004 based on “full voluntary disclosure,” but e) lied and f) was fined $100 million in 2007 for its lapses. Then the story gets juicy.

The Justice Department release said, “The sensitive night vision systems produced by ITT Corporation are critical to U.S. war-fighting capability and are sought by our enemies and allies alike. ITT’s exportation of this sensitive technology to China and other nations jeopardized our national security and the safety of our military men and women on the battlefield. [This plea agreement] addresses the violations of the past, ensures compliance in the future, and serves as a strong warning to others who might be tempted by the profits of such illegal exports.”

Only until they see (28 March). “ITT will pay a $2 million criminal fine… will forfeit $28 million to the United States as the proceeds of its illegal actions… [and pay] a $20 million monetary penalty to the Department of State.”

What about the other $50 million? Never mind, according to, ITT won’t be paying it. “ITT can reduce this penalty on a dollar-for-dollar basis by investing $50 million toward the acceleration, development and fielding of the most advanced night vision technology so that the members of the U.S. Armed Forces can maintain their battlefield advantage.”

So ITT Night Vision coughs up its ill-gotten gains, pays $22 million in fines and makes a $50 million investment in its own new technologies. Some deterrent for a multi-billion dollar corporation. And the kicker – far from punishing ITT, the U.S. Air Force has provided it with a $10.4 million contract to upgrade digital electronics and control consoles at a missile complex in Florida.

Take that, you nefarious jeopardizers of “American national security and the safety of our men and women on the battlefield”!

The U.S. government forced Israel to fire offending (though not criminal) Defense Ministry officials because that was all it could do. On the other hand, it had the power to put the criminal leadership of ITT Night Vision in jail, and declined. If not jail, maybe a punishment that would truly deter future criminal behavior – we propose taking the $50 million from ITT Night Vision for a competition among U.S. companies for improved night vision equipment from which ITT Night Vision would be barred. That would be punishment a company could understand and from which others could learn.

Source: The Jewish Institute for National Security Affairs - JINSA